Budget 2022 fails to deliver a new deal
12 October 2021
Spokesperson on Finance, Public Expenditure and Reform
Response to Budget 2022 - Check against delivery
This Budget takes our State into the second century of its existence.
In 2022 we will mark the centenary of the foundation of the Free State. That in itself gives cause for reflection.
Coming out of this phase of the pandemic, the need for a deep assessment of where we have come from and where we are going to is even more acute.
What should our priorities be? How can we do things better? What kind of country should we strive to be?
The pandemic has exposed some stark and uncomfortable truths about our society, our economy and our environment.
A health system with yawning gaps that could only be filled by taking control of beds in private hospitals. A precarious housing system unworthy of a modern republic where it took a ban on evictions to slow the rise in homelessness, figures that are once again increasing.
A two-tier economy of extremes. The reality of low pay and job insecurity for far too many.
A country well behind in its climate commitments.
Thanks to the resolve and downright courage of our frontline workers and key workers across and our innate qualities of community and solidarity, we have come through this unprecedented challenge.
It would be churlish not to recognise the decisive impact unprecedented State supports had on securing jobs, incomes and businesses and importantly protecting lives at the very worst of times.
We should never forget that 5,000 lives have been lost since March 2020 and our thoughts today are with their families and friends.
We must remember them, and honour the dedication of those who put their lives on the line for all of us through a determined effort to make Ireland anew. To reimagine this country.
To shape something better as we approach our second century.
To fulfil the early promise of this country when the tricolour was raised over Dublin Castle almost a hundred years ago.
To translate the values of Tom Johnson’s Democratic Programme into action to make our country fairer and more equal.
A real pandemic dividend worth more than an extra day off or a once-off cash payment.
History shows us that global crises like the pandemic usher in era-shaping change. It is up to us to determine what that change should look like.
Coming out of Covid this was a chance to deliver a new deal for a fairer Ireland? It does nothing of the sort.
The four wasted years between 2016 and 2020 were years of missed opportunities. Suffocating economic and fiscal conservatism and a lack of ambition prevented this country from seeing its hard -won new prosperity build the homes we need, design the free education system on which opportunity for all depends and right the wrong of low pay.
Based on the evidence of this anaemic, directionless budget, the lessons of those lost four years have yet to dawn on the government parties.
Nothing short of a New Deal for a Fairer Ireland is needed. Instead all we get is tinkering around the edges. A few euros thinly spread here and there.
It is reassuring to see that this government retains the title of world class leakers. The strong record on leaking has been taken to new heights in the last week. We’ve had more leaks than you’d find in a Welsh greenhouse.
This in truth is a Budget by committee. And you can see the join.
It is incoherent. There is no single overarching theme. No ambition. No real vision. No real unifying purpose.
Just like the government that produced it.
Labour will oppose this budget. It utterly fails to meet the tests we have set down.
This budget will not fully tackle the soaring costs of living for workers and those on low incomes.
It takes us no closer to the creation of a single tier Irish National Health Service.
We are still as far away from free education and a public childcare system as we were yesterday.
It moves us only gingerly to a real national retrofitting effort for our homes and to a real Just Transition for workers.
It’s housing pledges will do little to fix this crisis in the here and now.
Tomorrow, rents will still rise. Waiting lists will grow. Our carbon emissions will not fall quickly enough and the gap between the minimum wage and a real Living Wage of Euro 12.90 will only widen.
Labour will not support this budget.
Work, welfare and the cost of living
Last month the Taoiseach couldn’t guarantee to Alan Kelly that the lights would stay on this winter. And miserly Michael’s €5 a week on social welfare rates won’t keep the bills paid.
Did anybody do the maths? A €5 hike in Jobseekers barely meets the rate of inflation. A fiver on a contributory pension is below the rate at which the cost of living is rising.
Minister Fleming’s report is right. Today it’s official. FF is out of touch. This is the party that once prided itself on championing pensioners and the small man and woman as they would put it. Is it any wonder they have an identity crisis? Nobody knows that FF is for anymore. Including its own TDs.
You have failed to do the single most important thing you could do in this budget. That is to fully protect those who are the least well off from the escalating energy and food prices they can do nothing about. No amount of spin can hide that.
A fiver a week after two years of standstill for hundreds of thousands on social welfare is scandalous!! Only those with the hardest of necks will defend this slight perpetrated against the least well off.
In the head to head between FG and FF, FF lost. That’’s the truth of it. Any notion that there is a whit of difference between FF and FG has been buried today.
Ministers McGrath and Donohoe are now virtually philosophically inseparable. You rarely see one without the other. The Ant & Dec of Irish politics, two decent guys in their own right but politically indistinguishable from one another. Pretty soon one will have to stand to the left and the other to the right so we can be sure which one is which.
The failure by FF TDs to convince Minister McGrath that the pension must go up by more than a fiver must hurt. The Sunday Independent didn’t refuse Deputy O’Dea’s ink this week. He nearly drowned my radio with crocodile tears on Morning Ireland too. This is what he said in the Sindo; “Anything less than €10 per week means allowing more and more people to fall behind.” A truer word was never said.
Will Deputy O’Dea and other FF colleagues have the courage to join their fellow democratic socialist colleague Deputy McSharry in FF purgatory for six months in protest at this snub for pensioners? You can always vote against the budget, you know.
This package on social welfare core rates is abject. It’s a real two fingers. Increases of at least €7.50 a week are required to cover the rising cost of the basics, and the fuel and energy nobody can do without. With wage rates set to rise by around 5% it looks to me that this government has no issue driving a wedge between those at work and those who aren’t and whose jobs may have gone through no fault of their own. That is shameful.
In truth, we have to end this endless annual charade which strikes fear into those on social welfare.
This is an experience I am not unfamiliar with from periods of my own childhood. My real, lived experience. Will the payment go up, or down? How will I be able to manage? The stress is enormous.
It is core rates that do the heavy lifting, the real work of narrowing the gap. The line that pensioners will be better off by Euro 13 was bought by the media. It’s 13 euros if you are living alone, on a pension and qualify for the fuel allowance. Not everyone will, even after eligibility changes.
Every year in this House, successive governments fell over themselves to give ‘certainty’ to big business on corporation tax. When will we give certainty to pensioners and others on social welfare and link rises to at least the rate of inflation, or better still, a Minimum Essential Standard of Living.
Carbon tax credit
Minister we must also help the lower paid meet their rising fuel and energy bills. It is even more important given that your tax changes do nothing for the lower paid outside of a small change to the USC for those on the minimum wage.
Nobody who works for a living should have to make a call between food and bills. That could be the reality for some working families this winter.
As we have proposed, eligibility for the fuel allowance should broadly expanded to an extra 130,000 homes and the allowance should have risen by a fiver a week with four weeks added. I note there is no extension in the budget.
Your plans do not go near what is necessary to help ordinary working families. Because energy prices will just keep rising.
That’s why we called for a new carbon tax credit, worth €200 a week for a household with incomes below €50,000 and a low energy rating. This would have been a real signal from this government that you really get the struggles of decent hardworking families who slog in the everyday economy and that you’re on their side.
Working from home relief
The ‘working from home relief’ is hard to fathom. It’s nothing short of a massive subsidy for big companies. There are now about 875,000 remote workers. 95% want to keep doing it. What is being proposed is cumbersome and workers may prefer a tax credit, for example.
But the key point is this. Why are you stepping in to take on a responsibility that should be an employer’s? This move needs explaining.
The TSG advised caution here and it should be the firm who carries the cost and who reimburses the worker through an additional allowance or a pay rise.
When the lights are off in the office they are on at home, generating profit for the firm.
When you look at the profile of the firms where most remote workers are represented, they are not SME’s, they are major corporations for the most part. They have been let off the hook here. What’s next, the State buying you a new office chair for the box room?
This is no budget for the ordinary worker. Where is the sick pay scheme legislated for by Senator Marie Sherlock? Why must workers still wait? Why is Ireland still one of five European states without the statutory right to sick pay and when the pandemic is all but over?
The small increase to the NMW leaves us a long way off the Living Wage of €12.90. In fact, the gap has now widened.
If this government were serious about a Living Wage, all state workers and workers in all those firms the State engages to do work would be on the living wage.
You need to lead by example and stop with the tokenism and vague promises so beloved of the Tanaiste.
We have over 20% of all Irish workers on low pay. This is not a new problem and we need to make work pay, value work in all its forms properly and make Ireland a Living Wage country. This would be a pandemic dividend that’s truly worth something.
Minister, I’m up for an informed debate on how we should pay for the things we all say we need to do.
We need a serious, grown up conversation about tax. But it is a conversation this government is not prepared to have.
If you don’t want to listen to me, then please heed the warnings from Irish Fiscal Advisory Council. You need to listen to the ESRI. You need to hear what the Central Bank says. Learn the lessons of our recent history.
One in five of every euro collected by Revenue is from corporation tax. This is sometimes presented as a reflection of our success. I see the risk, the danger.
The windfall is great, but it is precarious. Corporation tax is now the stamp duty of the 2020s. We know where that ended up. A price is still being paid.
Yet, you still drive on with tax cuts few want. Bribing the average worker with a fiver of their own money when the real value would be drawn from affordable housing or public childcare.
Euro 500m would make education free overnight. Everyone except FF, FG and the Green Party can think of a better home for half a billion euros.
IFAC has noted that this budget package and the longer-term trajectory under the SES is at the edge of what is prudent. I’ll decode this for you. You cannot spend billions, borrow billions and cut taxes at the same time.
The risk to our economy and society is enormous. Hundreds of thousands of workers and thousands of businesses paid the price the last time FF tried this three-card trick. Do you ever learn?
Take the advice of IFAC and ditch the tax cuts. And don’t insult the intelligence of Irish workers and tell them small tax cuts are good for them. This tax break will not, for example, see any benefit for a retail worker on the median wage? Where is his or her pandemic bonus?
Taxes on wealth
It is worth reminding the House what the Central Bank Governor said recently; “permanent increases in current spending should be balanced with revenue raising measures elsewhere in the budget.”
There are virtually no new ways proposed today by you to raise the money we need to treat the sick or house our people. You are relying instead on the existing revenue streams and heavy borrowing alone.
The danger should be obvious but this government is blinded by ideology.
The Governor, hardly a lefty, has proposed the broadening of the tax base and the reduction of certain reliefs to achieve sustainable spending and investment.
Yet, again, in this budget you simply refuse to seriously tax wealth and non-productive assets. It’s beyond belief.
Where each of us stand on this fundamental issue of taxes on wealth, on fairness and on economic inequality should define our politics.
And here the stifling conservatism of FF and FG shines through again.
For the second year running, the Department of Finance has flatly refused to cost a net wealth tax on assets of over €1m.
This is doable but the political will is just not there. This is an ideological blind spot. I get that you do not want to overly tax work, neither do I, but wealth should be another matter.
The top 20 % of Irish citizens wealth-wise have median wealth of over €853,000 per person, more than the other 80% combined in terms of the total.
The ESRI has shown how €248M could be generated on a 1% wealth tax on assets over €1million and double that for a couple and with a mere 1% of total households affected. That’s all. 1%. What are you afraid of?
All the research shows that most Irish wealth is held in assets – development land, investment portfolios, shares – with a lot of it passed down the generations. This concentration of wealth hammers social mobility and copper-fastens privilege. Kids born into the top decile in Ireland will be fine – no matter what. This is no meritocracy, regardless of how early most of us get up in the morning. This is not how a Republic should work. But it is how this one does.
It is incredible to think that it can take five generations for children from poor families here to reach the average income compared with only two in Denmark. This is an indictment and asks questions of how our economy really does.
Yet, here we had another missed opportunity to make Ireland that bit less unequal. Major reliefs and taxes such as Capital Acquisitions Tax is left untouched. A 3% increase could have netted €42 million.
For context, that could have almost doubled the catch-up fund for children whose education and development was disrupted by Covid.
My party has shown, again, how an additional €1billion in revenue can be raised through targeted reductions in expensive reliefs and marginal increases in taxes on wealth, yet the government turns a deaf ear again in this budget. (BANK LEVY?)
We showed how a 0.3% increase in stamp duty on shares could provide €120m to the exchequer with no impact on the everyday economy for example.
There is no argument in favour of keeping schemes for highly paid MNC employees to encourage them to set up home here. The Special Assignee Relief Programme or SARP is a millionaire’s scheme. Look at the figures. Eighteen people earning between €1 and €10 million had benefited from the scheme in a single year. It is some hustle. It should be closed down and will save Euro 42 million.
The story of SARP is one of fewer jobs propped up by ever-increasing costs to the exchequer. It is alarming that the cost of the scheme has risen by a staggering €50,000 per job year on year.
The system of tax breaks and reliefs is stacked in favour of high rollers and those in the know. For a large part, they are not the wealth creators. They are the wealth keepers. You plan to keep it that way.
It is our view that we need to move to a new industrial strategy that focuses on developing high potential innovative Irish firms to export and go global from here. A wholesale review of how we can do that needs to be undertaken (including on the effectiveness of existing reliefs) and especially on foot of the global corporation tax reform agenda. Our excessive reliance on FDI for high quality jobs and tax receipts should serve as a wake-up call.
Health and Care
Minister, a headline in yesterday’s Irish Times made me shudder. It read ‘Private Hospitals Approached to Tackle Waiting Lists’. The private hospitals are rubbing their hands. They have the HSE over a barrel and they know it. They can name their price. This is not what Slaintecare, four years on, was supposed to look like.
I note you plan to spend Euro 200m on an initial plan to clear some waiting lists. In truth you would be better taking Alan Kelly’s advice and buying two private hospitals, accessing an additional 200 beds. It would be more cost effective.
It would be a bold move and would act as a bridge to Slaintecare, and a real signal that you are committed to the single-tier Irish National Health Service that we got a flavour of in 2020 and early 2021 and your government seems intent on burying.
The Minister for Health is expecting a clap on the back for announcing that under 7s will have access to free GP care. It’s a scolding he should get. It was Alex White who brought in free GP care for the under 6s in 2015. Six years on it’s gone up by a year. Well done everyone. At this glacial rate of progress it would take 400 years to get to free GP care for all. And still, you go for the tax cuts first.
It is a source of shame that we are the only country in the EU without a universal system of free GP care. And that is on FG.
Bringing all children and not just those who are seven and under, under this umbrella would cost just €80m for next year. Again, you show a paucity of ambition for public healthcare.
How can we take your hollow commitment to Slaintecare seriously if you refuse to fund the foundations of a universal basic care service in the community? (Rebecca and period poverty).
Now that the days of cut-throat corporation tax are at an end, this country needs to look at how else we can be competitive. A good start would be to make our education system genuinely free.
Education is the great social equaliser, but only if you can afford it. The Minister for Education got herself a piece of the budget action with her dramatic ‘last minute’ plea for 1,000 SNAs. This is nothing to be proud of. Why was this last minute? Is it not important enough to have been boxed off early.
What the Minister should really clarify is how many of these positions are to meet demographic demand, and how many are real additional places to meet unmet demand.
For an extra €40million school books could have been made free for all primary and secondary students. You chose not to do this. More tinkering around the edges is all we get and no vision.
Any positive changes that make it easier for young people from less well-off families to make it to and stay in third-level is welcome. That’s a given.
Our future success depends on innovation, on research and development, on collaboration between third and fourth level and industry, on a steady stream of talented and ambitious graduates.
Our colleges and students need to know how they will be funded. They are running to stand still.
Biting the bullet on how we fund third and fourth level isn’t easy to squeeze into a Tik Tok video? The Minister for Further and Higher Education opens his social media accounts more often than he opens the Cassell’s Report. That’s the reality.
The EWSS has been a really successful initiative. It has kept people in work and tied them to their firm. It runs out in December and it is important that a cliff edge is to be avoided. You have announced that a form of subsidy will continue beyond the expiry date.
Over 300,000 jobs supported by the EWSS and 37,000 number of firms. I get why some firms need to be supported back to viability and need help to pay the wages for now. The EWSS is a very generous scheme. It’s an expensive but necessary form of corporate welfare. But here’s the rub. There is not a single condition attached.
Here you have a chance to, in return for a wedge of taxpayers’ money bring in decent work clauses, attach a condition that nobody on the scheme would lose their job.
Time and again I have said that we should adopt a German-style short time working scheme with conditions around decent work, pay, training and upskilling. You have again failed to do this and at a time when there is a real skills gap and labour shortages emerging in our economy. This is really poor public policy making and is quite unforgiveable, as is the failure to attach a better work and pay condition to the continuation of the 9% VAT rate for the hospitality sector. Another deadweight cash transfer to a sector addicted to low pay. You can make them sign up to the JLC like the childcare sector. To your shame you choose not to.
The limited actions this budget sees for housing and for renters tells its owns story. Tens of thousands waiting for local authority and affordable housing cannot wait until the end of the decade for Housing for All to deliver. Their housing needs need to be met today. We brought in Deputy Bacik and Senator Moynihan’s renters’ Bill to have rents controlled and frozen now, to allow for the system to catch its breath until homes are built. There is little here today that will end the precarity of renting for tens of thousands of citizens. A tweak here and there to HAP and rent supplement will not do the trick.
CHECK AGAINST DELIVERY