Budget 2020: Brexit Budget

Brexit Budget fails to protect those on low and fixed incomes

There will be a great deal of sadness, frustration and disappointment in hundreds of thousands of Irish homes tonight as older people in retirement and on pensions from the Department of Employment Affairs and Social Protection, carers and people with disabilities who rely on social protection incomes look down the list and see that there is nothing in this budget for them. A pensioner couple will get nothing.

While I welcome the increase in the living alone allowance, what about pensioner couples? Do they not have an entitlement to some consideration from the Government?

According to the ESRI, inflation next year will be approximately 1.5% without a Brexit. However, the ESRI has stated that if there is a difficult Brexit, inflation could rise, in particular for the prices of cheaper foods. Those Members who do a weekly supermarket shop will know that many of those foods are imported from England.

One does not have to be an economist to focus that if there is a hard Brexit, those prices will rise. Who will they hit? They will hit those on the lowest incomes, whether as a result of low pay, reliance on social welfare or retirement, who are shopping around for bargains. The ESRI estimates that in the event of a no-deal Brexit between, the cost will be between €892 and €1,360 per household.

Over and over again, the Minister for Finance said the budget was based on a no-deal Brexit. Nevertheless, the Government has decided to leave the poorest and most vulnerable people in the country out of the Brexit consideration. It is an unbelievable error of judgment with regard to the people the ESRI has told us are most likely to suffer from a difficult Brexit.

I refer to pages 90 and 91 of the budget 2020 expenditure report. It says the State pension this year, will be the same next year. Widow’s pension, which is €208.50 this year, will be €208.50 next year. The rate for those on unemployment benefit is €203 this year and it will be €203 next year.

A couple of concessions have been made. We welcome the increase in the living alone allowance from €9 to €14, which is the first increase since I increased it some years ago. The Government has given children over 12 whose parents are unemployed and on social welfare an extra €3 per week and it has given children under 12 whose parents are unemployed and on social welfare €2 per week.

There is nothing for all those families in work who rely heavily on child benefit. While there is some allocation in relation to childcare subsidies, it is a mess in respect of children who are under four years old. What about children over four? They eat and they will want to be reflected in the household budget in the event of a difficult Brexit, but there is nothing there for them at all.

While I welcome the increase in the child-dependant allowance, is the Government completely insensitive to the position of families on low incomes, social welfare incomes or retirement State pension incomes who will get nothing from the budget? If one looks at their costs, it is clear that some will be impacted by the carbon tax.

It is a particular disgrace in the context of the scenario the ESRI has set out as to the impact of a no-deal Brexit that there was not one word from the Minister for Finance on an increase in the minimum wage. We were meant to pass on 1 January 2020 the magic threshold of €10 per hour, but there is nothing from the Minister today on that. I assume, therefore, that the increase in the minimum wage of approximately 30 cent is parked pending Brexit.

That means all of those low-paid workers will get nothing, even though they are the ones likely to be most affected by price rises in the event of a difficult Brexit. We agree with the budget referencing the difficulties of Brexit. We have been supportive of the Government in the three years since the Labour Party left office on getting the best possible Brexit deal for Ireland.

However, I wonder what happened to the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, around the Cabinet table. Was she sand-bagged that she emerged with such a dreadful outcome? The people who are most likely to be affected have actually been left out.

The annual Budget debate is a bit like an NCT test on a Government, an opportunity to look carefully under the bonnet, check the brakes, inspect the engine and even give the tyres a few hard kicks to check if they are roadworthy.

So, one of the vital tasks of all Deputies from both sides is to sit Ministers down, tell them to breathe deeply and have a proper no holds barred examination of their stewardship. One duty that falls on us here is to use the Budget debate to put the public finances under an intense and fierce scrutiny.

We need also to expose the Government’s often shifting and contradictory outlooks on the key issues of Brexit, climate change and the nation’s economic state at a time of great international turbulence. These are questions that need to be asked and asked again and again until Ministers run out of excuses, fantasies about tax cuts and places to hide. Our task here is to nail the persistent evasions, to puncture the make- believe narratives, and unpick the deceptions that are at the heart of this Government’s story.

The French novelist Voltaire wrote a short novel called Candide whose famous character is a teacher called Pangloss who sees everything with unlimited optimism, that all is for the best in this the best of all possible worlds. Both the Taoiseach and his Finance Minister constantly exhibit the tell-tale signs of the Pangloss mentality. I sometimes wonder if there is a rivalry between them as to which of them can outdo the other in persuading the public that all is for the best under their benign leadership.

We all know that this is far from true except to Fine Gael’s true believers.

The Taoiseach and Minister and Finance went AWOL on the issue of social welfare payments. Neither of them copped that the issue has a Brexit effect and that is amazing.

We are supposed to have a Summer Economic Statement giving an honest basis for the Budget Oversight Committee to do its work. In practice it has become something like a light piece of summer fiction. Last year the Summer Statement was woefully dishonest and bore no relation to the subsequent budget or to the final end of year financial outturn.

This year has been no different and again we face the probability of extensive supplementary budgets in many key Departments with Health as usual at the top of the queue with a voracious appetite for eye watering additional funds to cover up the Minister’s hapless inability to manage his budget year after year.

Let us recall one startling fact about the public finances for 2018. There was the usual forecast of spending. Then there was the actual outcome at the end of the year around €77 billion. The gap between both was eye watering. Yes, Minister Donohue got it wrong by multiple billions. No wonder the Fiscal Council has shredded both his reputation and his record.

Few Ministers have ever been taken to task as robustly as this Minister was in the Council’s last report in June. ‘Not credible’ was the judgement set out in 170 pages last June. Not credible then and not credible now. A private sector CEO would be out on his ear for such a dismal result.

He has been saved time and again by the massive income coming in from corporate taxes. ‘We’re raking it in’ was the Taoiseach’s vain boast at Davos in January. Maybe so but to what useful purpose? In reality that flow of cash has been a mixed blessing if its sole purpose is to rescue errant Ministers from the consequences of their financial incompetence.

This year was supposed to be different. Health got a generous estimate with the express purpose of putting an end to the annual farce of late year adjustments. But not a bit of it. Mr Harris is back again for another windfall and he doesn’t even have the gall to apologise.

Let us say the overruns add up to €400 million. I suspect it may be a lot more but let us accept the reported €400 million figure. Has that cash delivered any genuine improvements in health outcomes? Not in waiting lists. Not in trolley numbers. Not in a whole list of defects that plague our healthcare. That €400 million should be available to deliver the kind of genuine game changers that Health care in Ireland needs.

We have 3 maternity hospitals in Dublin, Holles St, the Rotunda and the Coombe. Each has well established and long agreed capital plans for development at a time when the number of births is increasing rapidly. The Rotunda wishes to transfer to Connolly Hospital in Blanchardstown.  There is to be a new National Maternity Hospital at St Vincent’s to replace Holles St.

Then there are the many capital needs of existing general hospitals all over the country for extra beds, additional theatres, improved MRI and other diagnostic facilities. If the additional funds were needed to accelerate these projects then they would be no problem in approving the extra spend but that is not the case. We will be asked in December to wave through supplementary estimates for no other reason that Ministerial failure to deliver results within budgets that had already been increased.

Quite simply Fine Gael are not to be trusted with precious public funds. Unsafe and unsatisfactory is the proper verdict on their financial stewardship. You cannot make a judgement on a policy by simply saying that so many billions are to be spent in delivering it. The public will judge by results not by grandiose plans and promised billions. So far results have been few and far between.

I think that this Government has been far too slow in recognising the effects of an almost certain economic slowdown both in the USA, China and Europe. The erratic behaviour of the current US Administration and the very obvious evidence of a very serious slowdown in the UK will compound the impact of Brexit even if a deal is reached in the coming weeks.

I find precious little evidence that that serious attention is being paid to worrying international trends. The ECB is well alert to those trends and is adjusting its bond buying and interest rates to meet those challenges. Many of the big international companies operating here will weather any storms but our own domestic firms will find the going hard should markets contract through a tit for tat trade war.

I just have very little confidence that Ministers who fail so badly in managing finances in good times can be trusted when chill winds blow in from outside even if Brexit ends up with a benign outcome. Not even Dr Pangloss could manage to get good news from that.

Climate Change

This was to be the climate change budget. I rather doubt the rather tepid measures announced today will push Ireland much further up the league table of international defaulters. Laggard before. Laggard still.

In any overall strategy on climate change the transport sector has to be front and centre. If there is to be any genuine reduction in Ireland’s collective carbon footprint it will be primarily evident in the way we make the switch in the way we transport people and goods.

I see some An Post vehicles on the streets proudly boasting that they are zero emission vehicles. It’s a welcome sight and I hope to see more of the same in all vehicles used by public utility companies and public services. Could we have regular audits of how public organisations such as the OPW are moving to replace their fleets? It is then we will truly know just how committed the State is to climate change goals.

And one other thing. Apart altogether from the climate issue there are solid public health grounds to secure cleaner air in our cities and towns by replacing polluting vehicles. We now know from the excellent research done by the Environmental Protection Agency that there are numerous illnesses, many life- threatening, that flow from the polluted air we tolerate far too easily in this country. Many citizens die prematurely from asthma related illnesses and thousands of others endure distressing and painful conditions that come entirely from the failure of the State to insist on clean air as a human right.

The Taoiseach and his Ministers delight in making grandiose announcements of new investments to expand public transport. But their record on delivery falls far short of their lofty ambitions. Let me highlight a number of these.

  • Any day, morning and evening, the peak time buses and trains that serve my constituency are packed to capacity. Some are already full when they stop at intermediate stations. The time scale for the delivery of much needed extra rail carriages runs to years.
  • The absolute imperative has to be the electrification of the principal commuter lines such as the Connolly to Maynooth service as well as the those to Kildare and Drogheda. For that to be effective as a means to reduce diesel dependence there has be an accelerated drive to decarbonise electricity generation. Of course, that applies equally to the necessary expansion of electric cars.
  • I’m not at all convinced that the Minister for Transport is in any way sufficiently engaged in delivering rail electrification on the scale that is urgently required.
  • Nor am I convinced that the National Transport Authority is sufficiently equipped to advance this project while also managing the Bus Connects project a nd the Metro.
  • I simply do not believe that current arrangements are adequate to secure a timely delivery of this group of transport projects. There are already significant delays in almost every single element of the plans that have already been announced over and over again. Public resistance to particular components of each separate project, notably in Bus Connects, has already undermined public confidence in the way a much- wanted project is proceeding.
  • I have mentioned here a number of Dublin based initiatives which are undoubtedly costly and often disruptive. Other parts of Ireland have identical and justifiable needs. Cork, Galway and Limerick all need their own public transport projects as responses to the current congestion that is both economically damaging and unsightly to all.
  • What I want to see from this Budget debate is some clear evidence of serious commitment from all parties to a sustained multi annual investment in top class public tr ansport that will also be a considerable contributor to low carbon and healthier cities and towns. I hear words, targets and promises from Ministers but fear they lack genuine credibility. It is not the dizzy amounts of capital that jump out from Ministerial statements and umpteen launches that count. It is their proven inability to match delivery on time and within budget that marks them out as failures.

Another critical element is the retrofitting of homes. Many citizens are actively working to use personal savings and public grants to cut their own carbon footprints and conserve energy. There are hundreds of thousands of homes that were built decades ago that require substantial renovation to upgrade their energy ratings. It is a truly gigantic task to do this in a decade and there is little evidence that public agencies are alive to the scale of this task.

One serious deficiency is the shortage of skilled labour for the particular task of conservation as distinct from routine construction activity for homes and offices. I do want the Minister for Skills to come forward with a training programme to attract apprentices into this area. We do not have enough qualified personnel or dedicated contractors available to concentrate on this particular task. Similarly, there is a compelling need to offer low cost financial packages to homeowners who recognise the value of work that will deliver real savings to offset the cost of the work not to mention the additional comfort that this work can bring to their homes.

I want to make this point about carbon taxes. Last June the CSO published an interesting study of Environmental Taxes. That report revealed that such taxes contribute as much as €5 billion a year to the exchequer under various headings. The statisticians also estimated that Ireland paid a total of €4.1 billion in potentially environmentally damaging subsidies in 2016. It is somewhat lopsided to collect €5 billion in taxes from this heading and then give €4 billion back in subsidies and tax reliefs to the polluters. In addition, we will have to fork out perhaps as much as €150 million in penalties in the coming year. So, there is one obvious source of funding for climate initiatives such as a large- scale retrofitting programme.

 Each budget should contain a number of specific clawbacks of these subsidies by reducing both the tax reliefs and the direct subsidies. These subsidies just emasculate the effectiveness of environmental taxes because they actually encourage activities that add to carbon footprint in our economy. It is unfortunate that the climate change debate is obscured by arguments about one type of carbon taxes. The State’s response has to involve a much wider suite of measures about electricity, about home improvements and above all by a commitment to public transport on a scale never seen before.

Demography

Demography is a word rarely used in this chamber. But Demography has its own iron rules and challenges that can easily torpedo the best laid plans of any Taoiseach or Minister.

On my first day in Office as Minister for Social Protection 8 years ago I had the usual briefing from the senior staff of the Department. I had expected to be told of the pressures that I would face from the economic crash and the troika demands. What I did not expect was the blunt assessment of annual costs that would arise from an aging population.

People were living longer, an undoubted and welcome triumph of medical advances. I would need to budget for an additional €200 million each year to pay the State Pension even if there were to be no increases in rates.

That is no less true today than it was then and there is a further dimension now. The number of children is growing very fast now and many European countries look on amazed and even envious as Ireland’s population grows in a way that is rather unique. Current CSO figures indicate a remarkable youth share of Ireland’s overall population over 20% in the zero to 14 age cohort.

In the long term that is a fantastic bonus but right now it brings its own substantial costs in healthcare, in safe maternity facilities, in parental leave entitlements, in education at all levels from early childhood to third level. My concern is that the emphasis is on current costs and not enough attention is paid in the capital budget to meet these needs.

We all know how the Government has bungled the National Childrens’ Hospital with serious and unacknowledged consequences for every other aspect of the capital programme.

  • Our maternity hospitals are in dire need of investment as I outlined earlier.
  • Schools need to be built on time when there is a population bulge
  • Early childhood education has a paramount relevance both as a key component of childcare and as a proven catalyst for later educational achievement.
  • At the other end of the age cycle there are ever increasing care needs for senior citizens

One thing that disappoints me is the shockingly slow pace of delivery of the scheme to enable workers to save for a supplementary pension to add to their entitlements to the State Retirement pension. What is happening to this?

One thing that does concern me is the unintended consequence of current housing policy. Many people at work are now denied a clear path to home ownership. It seems Leo and his mates are content that people in their own age group should be content to rent all through their working lives. You don’t need a crystal ball to predict what this means decades from now when this group comes to retirement age.

They will need to go on paying rent from their retirement income while those who managed to own their homes will have paid off mortgages and will not have this pressure on their monthly income in retirement. I do urge all Ministers to have regard to this in their policy discussions.

Cultural Institutions

I want in this final section of my remarks to refer to Investment in cultural institutions. Unfortunately, this is a frequently neglected feature of budget debates. I raise it today to express my frustration at the paucity of information from Minister Madigan about timelines for some very important projects that feature in the Government’s own flagship NDP. I mention 2 in particular.

One is the expansion and renovation of the National Concert Hall, The timeline is vital here because it means the Hall will go dark for a considerable period while the work is underway. hat means a temporary home for both RTE orchestras not to mention the many other groups that use the NCH every year.

The second is the Abbey Theatre. Again, there are plans and commitments. I heard the Taoiseach talk about those plans at an Abbey event a year ago but he was sparing in the details and the timeline and in the time since nothing seems to have moved forward.

I may mention the very successful restoration work that was carried out at our neighbours here in the National Gallery. That was financed when cash was a lot harder to get than it is now but it has greatly enhanced the Gallery and the treasures it houses.

Conclusion

On a concluding note I want to express my dismay at the remarks made by the Taoiseach yesterday at a jobs announcement. He dismissed the concerns of the Fiscal Council about budget strategy out of hand in a rather derogatory manner. His remarks are rather reminiscent of Fianna Fail attitudes to criticism a decade ago. They show a Government that is now so long in office that any critical comments or analysis is sneered at.

I noted the Taoiseach was well versed in the Greek classics when he had Prime Minister Johnson to lunch a few weeks ago. In that case he is well aware of the dangers of Hubris. So I say to him now. When Hubris comes can Nemesis be far behind? It is a friendly warning.