This is a do-nothing budget by Fine Gael
9 October 2019
Spokesperson on Foreign Affairs and Northern Ireland
Yesterday, Fine Gael and the Independent Alliance, with their Fianna Fáil partners, delivered a depressing budget.
Brexit is a real and present danger to our economy.
But that does not mean that all social progress should halt.
This is a “do nothing” budget by Fine Gael that won’t protect many of the people most vulnerable to a no deal Brexit.
It won’t protect most people on social welfare, who have received an effective cut because the cost of living is rising.
It won’t protect most carers or people with disabilities, because the small amount of extra spending is outweighed by rising costs.
Fine Gael itself is responsible for some of those rising costs.
Labour implemented a rent freeze when in government.
Fine Gael allows annual rent increases of 4% in its Rent Pressure Zones and a free for all outside of them.
But wages aren’t increasing by 4% and most social welfare payments received zero increase from this government.
Paschal Donohoe’s speech glossed over the extra €200 million that will spent this year to cover the massive cost overspend in the National Children’s Hospital and the National Broadband Plan.
Each of them will cost an additional €100 million in 2020, and the same again for years to come.
The government’s Summer Economic Statement identified €1.9 billion of pre-commitments to public spending, to cover population growth and national pay agreements.
Yesterday, the Minister slipped in the extra €200 million as another piece of “pre-committed” spending.
It was only pre-committed because you lost control of both of these major projects.
You could have done a lot of good with that €200 million to shelter people from the effect of a no deal Brexit.
But there were other opportunities to raise revenue in a socially just way that would not disrupt the economy.
The banks are making hundreds of millions in profits, but are still writing off losses from the crash, so they pay no corporation tax.
The bank levy was only maintained at €150 million, whereas you could have raised enough additional money to raise social welfare by at least the equivalent of inflation.
We are in a very different economy now from 2011.
Then, there was a €11 billion hole in the public finances.
Today, the public finances are in balance.
And Fine Gael – supported by Fianna Fáil – have delivered a depressing budget.
Depressing in every sense.
It will depress spending in the economy.
It has no vision for the future.
And it will be no cause for celebration among the lowest paid workers and people who rely on social welfare to put food on the table.
In our current economic circumstances, there was simply no need to implement such a restrictive budget even with the threat of a no deal Brexit.
The challenges we face are different from 2011.
And the appropriate solutions are different.
The main threat we face is the loss of trade with the UK, or an increase in prices due to tariffs or currency fluctuation.
The solutions are investment in alternative industries, state supports to help open up new markets and enterprise-level supports to preserve jobs during the rough period.
Unlike in the last crash, we are not facing a sudden drop in tax take or a collapse in our banking system.
We have the ability to use our national resources in imaginative and productive ways to counter-act the economic downturn from Brexit, and to build the low carbon economy of the future at the same time.
But Fine Gael seem to be stuck in the past.
The solutions to the hole in the public finances are not the same as a challenge which requires us to restructure the economy to adjust to a new trading relationship with Britain.
What is needed now is for the government to step forward with a positive vision of our future economy.
For example, the state should be building homes again, to solve the housing crisis once and for all.
And not just homes, but near zero emissions houses and apartments, which can now be built for nearly the same cost as a conventional building, but which are much cheaper to keep warm.
Instead, Fine Gael has doubled down on its failed housing strategy.
It might have been a cause for celebration that €2.5 billion is to be spent on housing.
But Paschal Donohoe didn’t actually say “housing” yesterday. He said “housing supports”.
Over three-quarters of a billion euro (a third of the housing budget) will now go to HAP and other payments to private landlords every year.
This is not a solution.
For 750 million euro you could build well over three and a half thousand homes on public land.
Instead, thousands of families will remain in limbo, in a temporary rental arrangement rather than a long-term home.
The government is not thinking at the right level of scale.
Before the Celtic Tiger economy went horribly wrong, our economy could produce 40 to 50 thousand homes a year.
I agree that the peak production year of 90 thousand homes was unsustainable.
But in 2018, the CSO reports only 18,000 new dwelling completions.
The economy has recovered but building has not ramped up.
The profit-driven private development model is not delivering supply.
The solution is for the state to step in to build tens of thousands of homes every year.
Labour’s vision is a €16 billion fund, to build 80,000 homes over five years.
We would build on the land that Labour kept in public ownership, which reduces building cost to about €200,000 or less per home.
We would restore the capacity to engage in house-building through regional Housing Executives as part of local government to consolidate and reinforce their expertise to develop land and build or commission housing according to their plans.
We would then rent out this housing to anyone who needed it, to provide affordable, secure homes.
This is the common model that houses anything from a third to half of the population of many European cities.
It provides a social mix inside a single tenancy type.
For some, it will provide a home for life.
For others, it will provide an affordable rent that allows them to save for a deposit for home ownership.
Fine Gael has no such vision.
Instead, they are just putting more money into the hands of private landlords, while we wait for private developers to build homes people can afford… rather than expensive student accommodation or Minister Murphy’s co-living bedsits for professionals.
We don’t just have a crisis of supply.
We also have a crisis of affordability. When the private developers do build homes, they are simply unaffordable.
Even the government’s own version of “affordable” housing is out of reach of those who do not have the capacity to build up a large deposit.
Fine Gael’s housing policy is disastrous, and Budget 2020 has done nothing to give hope to those who are years waiting to have a secure, affordable home of their own.
Budget 2020 has put more money into healthcare.
But that’s not the main problem with our system.
International comparison shows that we spend as much, or in some cases far more, than other countries that manage to have better health outcomes.
A big part of the problem in our health service is having public and private systems duplicating services, working in parallel silos.
The all-party SláinteCare Report recognised this, and proposed a single state healthcare system.
Labour is committed to this vision.
In the worst of times, we brought in free GP care for under-6s.
Fine Gael were reluctant then, and your reluctance to deliver a national health service is clear in the long delay before yesterday’s announcement of extending free GP care to under-8s.
We welcome this extension. But it would only have cost €80 million to extend free GP care to all under-18s.
Why is Fine Gael doing so little, so slowly?
It can only be because Fine Gael is not really committed to changing our failing and deeply unfair health system.
Fine Gael has also been consistently reluctant to take climate change seriously.
Labour acknowledges the scientific evidence and expert support for raising carbon taxes.
But as the Taoiseach himself said this morning, they need to be part of a much larger parcel of policies to reduce greenhouse gases and make our economy more sustainable.
Labour’s alternative budget showed that public transport fares could be reduced by 10% and a major retrofitting programme could be rolled out to begin retrofitting council housing.
These are examples of real action on climate to lower the cost of home heating, and to lower the cost of transport to make it possible for people to move away from reliance on their cars.
The Government has suggested that it did all it could in difficult circumstances.
But Paschal Donohoe still managed to find €150 a year for the self-employed, which is €3 a week.
And he found €5000 for those who will inherit expensive family homes.
Following on from the Taoiseach’s repeated public pledges about cutting taxes for the better off, Budget 2020 had several quiet steps to lower tax for the wealthiest in our society.
For this reason, I do not accept that Fine Gael has done all that it could to protect the most vulnerable from a no deal Brexit.
Fine Gael, the Independents and Fianna Fáil are using Brexit to hide their lack of consideration for the poorest and most vulnerable in our society.
And Budget 2020 shows, once again, that this government has no vision and no long-term plan.
Labour wants an equal society, and our alternative budget shows that much more progress could have been made for workers, on climate, on housing, on healthcare and to ensure a fair start for every child in our country.
I want to conclude my remarks by giving just one example of Labour’s vision for our future as a low carbon, dynamic economy.
Bord na Móna is a state enterprise – owned by the people of Ireland, through the shares held by the government on their behalf.
In the past, Bord na Móna employed thousands of people in good jobs in areas of the country that were the least developed economically.
Burning peat is a “sunset industry”.
We have learned in recent decades that burning fossil fuels causes climate change.
But that doesn’t mean that Bord na Móna has to die.
There is a tremendous opportunity to give it a new lease of life.
But Fine Gael has no vision.
Paschal Donohoe announced a Just Transition Commissioner focused on the Midlands, which will support “over 400 environmentally sustainable jobs, with up to 100 more jobs through expanded peatlands rehabilitation.”
Is that it?
There are over two million people employed in our economy, and Fine Gael’s answer to regional disadvantage and unemployment over 6% in the Midlands is to support 500 jobs.
I welcome every new job, especially in disadvantaged areas.
But how much will these 500 jobs transform our economy?
Labour would go much further.
I’d like to read onto the record Bord na Móna’s new Mission Statement:
Bord na Móna has a new national mission to:
- Support national energy security by fast-tracking renewable energy development across our land bank
- Build a circular economy aiming for higher value recycling and eliminating waste
- Develop new sustainable businesses across our land bank
- Continue to support significant employment across the Midlands of Ireland
Underneath this new Mission, Bord na Móna has engaged in a range of pilot initiatives, including wind energy, recycling, rehabilitation of bogs and even fish farming.
What we need now is to have a full review of what has been learned by these initiatives, and what is the potential for scaling up.
That is the ambition that is missing from this government.
We own Bord na Móna, and a range of other state enterprises.
There is no reason why we should not prepare a large-scale programme of investment in our state enterprises, to fulfil the mission of sustainability that Bord na Móna has rightly adopted.
EU rules pose no barrier to a state investing in its own enterprises just as any investor would do.
We have billions of Euro in the Strategic Investment Fund.
Where is that money invested while it is on standby?
Why are we not planning to make an actual “strategic investment” with this money?
I believe we should have a national vision of creating thousands of new sustainable jobs through our state enterprises.
The private sector has an important role to play, but there is no reason why we cannot accelerate the transition to a low carbon economy by major investment through our own enterprises.
This is the kind of vision our country needs for what Ireland could be as a dynamic, low carbon economy in ten years or twenty years from now.
Countries like Denmark and the Netherlands are well on the way to implementing similar visions, with cities like Copenhagen on track to be carbon neutral.
We are far behind, for no reason other than a lack of vision, and a lack of strategic investment.
Labour wants an equal society, closer to what has been achieved in the Nordic countries and the Netherlands, where social democratic economics have been followed, and where the economy has been guided to benefit people and the environment.
That is Labour’s vision for Ireland.