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Budget Statement 2019 (Continued)

Tuesday, 9 October 2018

Dáil Éireann Debate
Vol. 973 No. 2

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(Speaker Continuing)

[Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath]  At the front line of the crisis, the number of people sleeping in emergency accommodation is a national scandal and a scar on our nation. The Government gave its word to those living in this nightmare that nobody would be in hotel accommodation on an emergency basis by July 2017. The Government did not just miss this target by a few weeks or even a few months; 15 months on the number of people in emergency accommodation has hardly moved. One would need a heart of stone not to have been moved by the story of the girl named Amanda on "Morning Ireland" last Friday who has spent two years living in a hotel room with her family. The reality is that there are many more in the same situation. Almost 3,700 children are homeless and will sleep in emergency accommodation throughout our country tonight. This can never be regarded as the norm or as acceptable. The State must lead from the front in tackling the crisis by getting back to building public housing in a sustained and ambitious manner.

Fianna Fáil welcomes the additional funding allocated to homelessness and the increased allocation for the construction of social housing. It is a step in the right direction. Under this Government's watch, home ownership has become a distant dream for more of our people. Home ownership rates are falling rapidly under Fine Gael. That is the record. Fianna Fáil makes no apologies for insisting on a major focus on affordable housing in this budget. Today's announcement in this regard is a breakthrough. It must now be put into effect.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen Hear, hear.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath We have secured a €300 million affordable housing package over the next three years, including more than €200 million in new Exchequer funding. This will provide thousands of homes which will be made available to eligible first-time buyers. These homes can be sold at up to €50,000 below the cost of construction, subject to an overall maximum discount of 40% of market value.

On health, we need to know that what we have before us today is an honest health budget. Fianna Fáil has not been privy to the toing and froing over recent weeks between the HSE and the Departments of Public Expenditure and Reform and Health but one gets the distinct impression the process was chaotic and, as always, very late in the day. I have no hesitation in saying that this was the most difficult area in our negotiations in terms of getting feedback about specific measures or the overall allocation for health for 2019. I do not suggesting the Minister held anything back as I do not believe he did. It seems that the process of not only running the health service but agreeing the health budget is crisis driven. In the coming months, a Supplementary Estimate of €700 million will be required for health. This year, the Government has been bailed out by an unexpected corporation tax windfall but this is not a sustainable basis for funding our health service. Fianna Fáil has consistently argued for the need for a credible multi-annual budget for health. We have secured an additional €20 million for 2019 to tackle waiting lists through the NTPF. The scandal of children with special needs waiting up to three years for an assessment of need must be tackled and the additional funding on which Fianna Fáil insisted is welcome in this regard. On the current expenditure side, the health budget for 2019 is €1.5 billion more than what was originally allocated for 2018, for which people will expect to see better access and better services across our health system. We need accountability in health and the Minister needs to ensure this money delivers on the key priorities.

Almost two and a half years ago, Fianna Fáil made the historic decision to enter into a confidence and supply arrangement to ensure this country had a Government. In May 2016, there was no shortage of predictions that we would cut and run at the first opportunity and that we would not honour the commitment we gave. I am not going to say it has been an easy or comfortable position to be in, because it has not, but despite constant provocation from most quarters in this House, we have stood our ground and kept the word we gave to the Irish people.

Deputies: Hear, hear.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath From opposition, we have sought to influence budgetary policy and to move it in a more progressive direction. We have provided the political stability necessary for Ireland's economy to grow. We have brought about a noticeable shift in the make-up of budgets with an overall emphasis on investment in public services and increased capital investment. This was the platform on which we campaigned in 2016.

  This is the third budget under the agreement. I am not here to say that we got everything we wanted. We are not in government, there are no Ministers on this side of the House and we are not in charge of any Departments but we have had some influence on some measures at least in this budget and on the overall mix between expenditure and taxation. Rather than be a spectator, Fianna Fáil sought to use its influence to positive effect. In today's budget, we have made progress on a number of crucial policy areas on behalf of the people. The increased investment in services and vital infrastructure is about four times greater than the money allocated to tax cuts. Capital investment in our economy will increase by a quarter next year. We welcome that the overall general government deficit will broadly be balanced next year. I note that there will still be a structural deficit of approximately 0.7% and I understand the technical reasons for it in terms of the output gap and the calculations but, nonetheless, it is disappointing that we will again miss the medium-term objective of a structural deficit of not greater than 0.5%.

  The income tax package announced is modest. To make no change to our income tax system, as suggested by some, would result in people paying more tax next year. Fianna Fáil would not have supported a €3.5 billion budget package that made people worse off. We gave a commitment that we would secure reductions in the universal social charge, with an emphasis on low and middle incomes. Inclusive of the cut in today’s budget, we have secured reductions over the past three budgets in the three USC rates, with the 1% rate cut to 0.5%, the 3% rate cut to 2% and the 5.5% rate cut to 4.5%. Some USC bands have also been widened. We believe these gradual reductions have reduced the burden of the USC in fair and sustainable way.

  On income tax, we support the increase in the entry point to the 40% marginal rate of tax by €750. Fianna Fáil believes that people in Ireland enter the higher rate at too low a level of income and this is an important step forward. Had no change been made to the tax system, next year more than 64,000 taxpayers would have moved up to the higher rate of tax and many more would pay more of their income at the higher rate. As incomes rise, a static tax system means people pay more tax. This is a reality and so some changes were necessary in this budget. Fianna Fáil defends and supports this decision. The combined effect of these income tax changes is that an individual or a couple with an income of €45,000 per annum gain the most as a percentage of net income at 0.7%.

  In the budget negotiations, Fianna Fáil pushed for an increase in the home carer tax credit. This is a credit given to married couples or civil partners who are jointly assessed for tax where one spouse or civil partner works in the home caring for a dependent person, including children and persons with a disability. For many of them, the €300 increase in the tax credit is €300 into their pockets. This will be of benefit to couples where one spouse or partner stays at home to mind children or someone with a disability. It is my experience that many people entitled to this credit are not claiming it. I urge couples who largely rely on one income to check whether they benefit from this relief.

  Last Friday, the Minister announced that Ireland is set to receive an extra €1.1 billion in corporation tax this year.  No doubt this is a positive development but the increasing reliance on corporation tax and on a small number of companies is a key risk facing the economy and our public finances. While on this occasion the announcement was a billion euro extra had it been an announcement of an unexpected €1 billion shortfall in receipts, we would be in a very different environment in terms of this budget. If we cannot predict corporation tax receipts with any degree of certainty, there is a real exposure. In 2011, corporation tax receipts stood at €3.5 billion. In 2018, we are set to receive €9.6 billion under this tax heading. Corporation tax receipts account for more than 17% of the total expected tax take for 2018, 40% of which is paid by ten companies. Another even more startling way of putting this is that approximately 7% of all tax we collect in the country comes from ten multinational companies. It will be great while it lasts, but we have to face up to the fact that this is a risk for Ireland. Corporation tax is a volatile revenue stream.  The UK and the US are lowering their headline rates.

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