Enormous amounts borrowed in Budget 2021 to change very little
14 October 2020
Party Leader and Spokesperson on Northern Ireland
Speech by Labour Party Leader Alan Kelly on Budget 2021.
Yesterday was a historic occasion. It was the first time a Budget was announced outside of Leinster House, it was the largest Budget in the history of the State, but it was historic for another reason too. Yesterday, the government missed a golden opportunity to make the most of a crisis, and to use this pandemic to transform Ireland for the better. The government has borrowed an enormous amount of money to essentially change very little.
This time last year, the biggest worry which we faced was the threat of a no-deal Brexit, a threat which still hangs over us. But COVID has been a major disruptor that has changed an awful lot in our society in a very short space of time. Things that were unthinkable last year became a reality this year. We have all heard the harrowing stories of loved ones being lost, of livelihoods being destroyed, and of people struggling terribly with their mental health. The pandemic has also exposed, for everyone to see, aspects of Ireland that were previously hiding in plain sight.
As my colleague Ged Nash has laid out so incisively, the pandemic has proved beyond doubt that Ireland is a country with a two-tier health service inside a two-tier economy. Everybody has known for decades about our two-tier health service, how people are being treated based on their income and not based on their medical need. And all of us here know the impact that this has had on people’s lives, how people are forced to wait for treatment for years with their loved ones anxiously hoping for a positive outcome.
Labour has been campaigning for years for this wrong to be addressed, and we are now calling for A New Social Contract in Ireland. In the middle of this global pandemic, yesterday’s massive stimulus Budget was the greatest chance any Irish Government has ever had to finally move towards a universal public single-tier health system, to finally do what Dr. Noel Browne tried to do 70 years ago, and create an Irish National Health Service. And the question is did the Government do that yesterday? Did the Government take the radical steps needed as we face into the most challenging winter that our health system has ever faced?
The answer is they did not and the consequences for the people who have suffered because of this state of affairs are serious, and they are long term. Patients who cannot be seen to because they are on waiting lists. Health workers who are stressed beyond breaking point while doing their utmost to serve the public. They have all been let down by this Budget. They don’t need our applause, or kind words, they need safe staffing. The collective mental health of our health workers cannot afford to be sold a pup now when it comes to increasing staffing numbers.
The government has claimed it will deliver an additional 1,146 acute beds, and hire an additional 16,000 staff next year. Neither are achievable. The best example we have of the health system dealing with large numbers of new recruits recently was the Be on Call for Ireland, and we all heard the stories of healthcare workers who volunteered in March, and were only contacted for interview in July or August.
When it comes to ICU beds, the Government says it will increase the numbers from around 280 at the moment to 321 by the end of 2021. We know how concerned the country is about our ICU capacity, which is why Labour set aside €450 million in our costed alternative Budget to buy at least 2 private hospitals and increase ICU capacity efficiently and immediately. This is not something that should be left to chance.
The extra 1250 community care beds in 2021 are welcome, because we need to be concerned about non-COVID healthcare, and particularly cancer and coronary care. I am still awaiting an answer from the Taoiseach comparing the number of patients being diagnosed with cancer and other major illnesses compared to last year. The government cannot take its eye off the ball when it comes to non-COVID healthcare, especially as we face into the most difficult winter in the history of the health service.
I still cannot understand why the Minister for Health reneged on his commitment to John Wall from Ennis, to provide medical cards to people with terminal illnesses. The cost to the state would be no more than a few million euro, and the Minister promised to do this both as opposition spokesman and as Minister. Reneging on that now is at best inexplicable, and at worst, downright mean.
Along with the question marks over what the Government says it will do in relation to health staff and beds, there are also major question marks over the Government’s housing figures, and whether the number of new builds in 2021 will be anywhere near what the Government says they will be. There were also significant gaps in the Budget in terms of the transport sector, and there was a lack of vision for how rural Ireland could benefit from more remote working.
It is as clear as day to anybody who studied the detail of yesterday’s Budget that Fine Gael have run rings around Fianna Fáil and the Greens. To give credit to the Government and be balanced, there was a lengthy list of support for businesses, many of which we welcome. But there was no such long list of support for workers. The Government could find the money to restore the PUP, extend tax breaks to property developers and funds alright, but it could not find the money to reverse its cuts to the PUP or to increase weekly social welfare rates, pensions, and jobseekers allowance by even €5 per week.
And this is important, because the context of our two-tier health system is our two-tier economy. Many commentators over the years have disputed whether there is a two-tier economy in Ireland. That dispute is over. Every economic indicator, from the Central Bank to the Department of Finance’s own projections, paints a picture of two radically different economies in our republic, and two radically different experiences for the people in each of those economies.
The first economy, which is centred on the multinational sector and particularly pharmaceuticals and IT, is thankfully thriving. In fact, such is the growth in this sector, with its many well-paying jobs, that, in spite of the shut down of major parts of the economy this year, GDP is only expected to decline by somewhere between 0.4% and 2.5%. That is a phenomenally small contraction considering everything that has happened.
But this is not telling the full story, because the second economy, the domestic economy, is on its knees, with the Central Bank estimating that domestic demand will fall by at least 7.1% this year.
The bottom line is that the official numbers are now indisputable and are showing something which the Labour Party has been highlighting for many years. Official Ireland is now finally, at long, long last, waking up to the fact that we have a two tier economy in our country….one economy for the well paid, the comfortable and the well connected, and another economy for low paid workers, struggling families and stressed out citizens. One economy has been relatively well insulated from the effects of the pandemic, while the other has not. Is it any wonder that we have a two tier health system when it sits within this two tier economy? It doesn’t take a genius to work out which tier of the health service that lower paid workers and low income families are most likely to have to use.
And the COVID numbers back this up. Any examination of the scale of the COVID outbreaks in the different suburbs of Dublin shows a very clear economic divide between wealthier areas and disadvantaged areas, with the latter more likely to have higher numbers of cases.
Again, it is the two tier economy now clear for all to see. Because it is lower paid workers in sectors such as retail, who are not working from home, but are bravely going into work every day, putting themselves and their loved ones at risk to provide the services which our society needs to function. And it is low-paid workers who this Government has failed in the largest Budget in the history of the State. The best example of this is Government’s refusal to increase the minimum wage, the pay of the very lowest paid workers, by as little as 20c per hour.
The contrast could not be starker. The largest Budget in the history of the State, and the Government refuses to increase the minimum wage of the lowest paid workers by 20c per hour. The largest budget in history, and nothing done to tackle the highest childcare costs in Europe, which are an anchor around families all across the country.
The bungling of this golden opportunity will have real world impacts.
Let’s take the example of a young couple renting in Dublin, with one child, with one or both working in a retail job, such as a supermarket.
Did this Budget do anything to address the high cost of their childcare? No, and Ireland will still have some of the highest childcare costs in the world after this Budget.
Did this Budget do anything to address the cost of rent? No, and Ireland will still have a housing and rental crisis after this Budget.
Did this Budget do anything to address their take home pay? No, and Ireland will still have a huge divide between higher and lower earners in our two tier economy after this Budget, the most unequal in Europe before tax and welfare spending.
Did the Budget give them a legal right to sick pay if they fall ill? No, it did not, despite Sick Pay being recommended by senior health officials in August as a measure the Government should take to tackle the pandemic.
What the example of this young family points to is that the Government has bungled the historic opportunity which it had with this Budget. Because it is not about the amount of money that you pump into the economy, it is what you do with it that counts.
There are many measures which the Labour Party welcomes and supports, particularly in relation to tackling climate change and supports for businesses. But again, in both cases, the Government failed low paid workers and pensioners in particular, and which has led to those in receipt of fuel allowance being worse off than they were last year. In fact people will now be down €49 a year. Last year, the Government extended fuel allowance by 4 weeks, to the value of €98 per person per year. This year they cut that 4 week increase, and instead increased the value of the fuel allowance by €3.50, which is exactly €98, but when you add in the effect of the carbon tax, those in receipt of fuel allowance, which is everyone in receipt of a state pension, are going to be worse off as a result of the largest Budget in the history of the State, and at a time when many will be forced to heat their homes for longer due to the pandemic. I personally know many older people have suffered terribly from this pandemic, from having to cocoon due to being more vulnerable to the virus, and having to stay away from loved ones, not to mention the awful anxiety and loneliness many have felt over the past 7 months. I would ask the Government, in all honestly, how can you say that it is right to make older people financially worse off in this pandemic? So much for the just transition of the Green Party.
Labour also proposed increasing disability services by €50 million more than the Government did yesterday, and we want a commitment for when day services will recommence, given the challenges that many families have faced during this pandemic.
And this failure to support workers and the vulnerable will have negative effects that we will all feel. The Government has effectively maxed out the country’s credit card, and what is the country getting in return? All the supports in the world for businesses will do nothing if people do not have the money in their pockets to be able to spend money to keep those businesses going. And yet the Government is refusing to reverse the cuts they made to the Pandemic Unemployment Payment, the payment which is the lifeline for hundreds of thousands of people working in the domestic economy. It is these very people who will spend this money in local businesses and SMEs to put bread on the table. The Government also failed to increase social welfare rates by €5, something which Labour would have done, as we set out in our costed Alternative Budget.
So, in summary….was this an historic budget? Yes.
Was it a budget for business? Yes. Fine Gael certainly ran rings around the Greens and Fianna Fáil.
Was it a budget for workers? Absolutely not.
Was it a budget for renters? Absolutely not.
Was it a budget for parents? Absolutely not.
Even in the context of this awful pandemic, when you announce the largest Budget in Irish history, you had better have something concrete to show for it, and you better get bang for your buck.
Because we will not be able to borrow this much money indefinitely.
And when the time comes to repay this money, will we have a positive legacy, such as an Irish National Health Service? No, it appears not.
As I set out, Labour would have done things much differently.
We would not have wasted the opportunity. Labour would have had the vision to start Ireland on the road to an Irish National Health Service by buying two private hospitals. Labour would have massively increased investment in new build housing. Labour would have created a universal public childcare service and cut the cost of childcare in half for parents. Labour would have protected workers by restoring the PUP payment to €350. Labour would have implemented a new social contract.
#Budget2021 was a golden opportunity, and the Government has blown it.