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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] Last year, the SME Brexit loan scheme was announced. It was a €300 million fund, which was finally launched in March 2018, some six months after the budget. According to the latest statistics to the end of June, ten SMEs have progressed to the finance provider approval stage with less than 1% of the €300 million pot actually lent to businesses at that stage. Only 127 companies out of almost 2,700 have received the Be Prepared for Brexit grants from Enterprise Ireland. These are very identifiable, tangible measures where we are not delivering the type of supports and the safety nets that are needed.

  I will make one final point on Brexit. Given what is at stake, it is understandable the focus has been on defending what we have, which is no border on the island of Ireland, and the need for free trade, North, South, east and west to continue unimpeded. Brexit also opens up huge opportunities for Ireland. The message that must go out consistently from all of us and from Government to the international audience is that Ireland is very much open for business and extra investment when the UK leaves the European Union in March 2019. The Government needs to focus on this aspect, as well as dealing with the immediate priority of defending the here and now and what we have. One issue I picked up on in the budget booklet is the assumption the exchange rate will remain at €1 for 89p sterling right the way through 2019. One might say that is based on the central scenario of a deal and a transition period but that could go very much the other way. There could be a very significant fall in the value of sterling through 2019, which would have a real, immediate and severe effect on the capacity of export businesses in this country.

  As we enter into a critical period of Brexit negotiations, everyone in Fianna Fáil and, I am sure, everyone in the House wishes the Government, the Irish officials and the EU negotiating team every success in the coming weeks as they seek to get the best deal possible for the European Union and our country. It is important to put on the record, apart from Brexit and the dependence on corporation tax, some of the other risks that are emerging in a very evidential way in our economy. There is a significant risk of overheating and a loss of competitiveness. We experienced it before. Real capacity constraints are emerging. We are seeing labour shortages, particularly in construction. Our competitiveness ranking is something of which we must be very conscious and on which we must keep a clear and focused eye. The housing crisis, the lack of progress on the provision of broadband, transport blockages and the cost of doing business are all concerns for Ireland's competitiveness and the risk of overheating. Making good-quality broadband available nationwide would be transformative for parts of Ireland. Faith in the ability of the Government to deliver the national broadband plan is ebbing away at an accelerating rate. Delivering this plan is vital to our national interests and essential if we are to bring about any degree of balanced regional development. People want to know if it will happen and when it will happen.

  The cost of living is rising. While the headline figures may show prices broadly stable, when one delves deep into the CSO statistics, one finds that all the costs that families and individuals cannot avoid such as transport costs, energy costs, interest rates and rent costs are rising at rates well above the headline consumer price index, CPI, inflation rate. The cost of motor insurance premiums, petrol and diesel and so on are rising. It is a key risk and it is also a major issue affecting families on a day-to-day basis.     

  As we all know, we are facing the threat of ever-escalating tensions surrounding trade. As a small open economy we are acutely vulnerable to global trade disputes and growing protectionist policies. With the Trump Presidency, the risk of an all-out trade war cannot be completely discounted. While we have not been significantly affected to date, higher tariffs on more goods will have an impact on us sooner or later if there is not a change in direction. Fianna Fáil, as a party, believes in free trade. We believe that breaking down trade barriers can benefit more people and the evidence resoundingly supports this. There are difficulties with free trade but the benefits very much outweigh the costs.

  Among the remaining legacies of the financial crash is Ireland’s large national debt, which stands at over €200 billion, which is around €43,000 per person. On a per capita basis, it is the third highest in the developed world. Fortunately for now we are living in an era of very low interest rates but it will not last forever. In 2014 the interest on Irish Government debt was predicted to stand at €8.5 billion in 2018. In fact, as a result of the direction of interest rates and ECB interventions and so on, it will be about €5.5 billion. That means the interest on debt will be €3 billion less this year than what was forecast for this year a number of years ago. Inevitably this will come to an end at some point. The ECB is eager to return to normal monetary policies, to unwind its quantitative easing programme and to start to increase interest rates, perhaps as early as the latter half of 2019. This will mean we will pay more on our debt, which will have a significant impact on future budgetary decisions.

  I highlight all of these issues to lay down a marker. When one looks at all these risks, it is hard to escape the conclusion that one or more or a combination of these risks will materialise over the period ahead. Economic conditions have been very favourable for Ireland over the past number of years. As a result the economic rebound has been stronger and faster than most predicted. It has been stronger and faster than the Government predicted and stronger and faster than independent economists and analysts predicted. When one examines the profile of the risks we are facing as a country, we would be very naive to believe this will last forever. This makes it all the more important we engage in better long-term planning and forecasting.

  Fianna Fáil supports the reforms in the budgetary process; it was a feature of the confidence and supply agreement. We now have a resourced Parliamentary Budget Office and it is a fantastic resource for all Members of the House and particularly for the Committee on Budgetary Oversight. We, as a party, called for the Government to provide five-year forecasts as part of today’s economic and fiscal outlook and they are now set out within the booklet with forecasts right up to 2023. It is an important measure.

  With regard to climate change, the latest report from the UN’s climate change advisory group makes for very grim reading. It paints an appalling vista. While the focus today will be on the Government’s decision not to increase carbon tax or excise on diesel, we need to see a greater focus on the positive measures needed on the climate change agenda. There is an urgent need for more investment in sustainable transport initiatives. We need to see better grants for retrofitting buildings. We need to support renewable energy in a meaningful way and we need to put consistent policies in place. I will give one example on that front. Local authorities right around the country are grappling with planning applications for solar farms and, despite asking for the past number of years, they have not yet been provided with a national policy or national guidelines to guide how they are to assess and deal with those applications. It is symptomatic of a lack of a co-ordinated national policy on climate change. In May 2018, the Environmental Protection Agency, EPA, stated that Ireland will achieve a 1% reduction on 2005 emission levels by 2020, instead of the target of 20%. This is an appalling performance and one that will cost us dearly, both financially and from an environmental perspective.

  The Fianna Fáil Party entered into discussions on this budget with a focus on the issues that really matter to people in their everyday lives. They are housing, health, education, cost of living, improving the tax environment and other issues. We campaigned in 2016 on the promise of an Ireland for all. We did not win the election but we gained some influence through the agreement we entered into. Even from Opposition, we have to date done our best to give effect to our policies. We can point to a range of specific measures we have delivered, while at the same time providing the political stability most people in this country desire. I look forward to working with the Minister, other Opposition spokespersons and all Deputies on the detailed scrutiny of the finance Bill in the weeks ahead.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen As has been alluded to, today's budget is the third from this Government. It is the final budget of three provided for in the confidence and supply agreement. Many believed there would only be one and that Fianna Fáil would have used the precarious and perilous state of uncertainty for political gain and that we would have been opportunistic. It could not have been further from the truth and today proves that to be a fact. Like a tide going out revealing who was swimming naked, the aftermath of the February 2016 election revealed the true character of many parties in the House. Many who have criticised today's budget took a ten-week holiday and went on manoeuvres while others tried to form a Government and provide leadership. At a time when the centre ground was under threat from all sides and at a time when the outcome of an election led everyone to believe that instability was the order of the day, Fianna Fáil put country before opportunism.

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