I would normally start by welcoming the opportunity to speak on an important occasion like this; although it is an occasion, it is not very important. I have studied the two documents and there is very little in front of us of real significance and relevance to people today.
The first document is the April 2015 update on Ireland’s stability programme. The second document is the 2015 spring economic statement. Essentially, the two documents are the financial envelope to pay for the election promises of Fine Gael and Labour. The Government has never done this before. A moment ago, the Minister made virtue of saying that finances should not be dictated by the electoral cycle but that process has been invented today. We had similar documents last year and in previous years but because there is to be an election within 12 months, there is a set-piece today. Essentially, the Government is standing down the Dáil from its proper business for a week so we can discuss its financial envelope for the next general election. That is not an appropriate way to start this business. The Government has lectured others about spending money in electoral cycles but we have never seen the likes of this happening before.
People may ask about what we are talking and specifically what election promises have been made. These are promises that have been announced by Ministers in recent weeks or since the beginning of the year. That is excluding everything that has been in the newspapers for the past 48 hours. In the past two to three months, Ministers have promised more paid maternity or paternity leave, tax relief for landlords who agree not to increase rent and a free second year of child care, as well as tax reliefs and subsidies for child care. Another Minister promised to abolish the public sector pension levy, while others have indicated the introduction of a living wage and rates holidays for small start-up businesses. Yet another Minister has indicated the self-employed should be given the same jobseeker’s allowance entitlements as people who are in the PAYE system. Ministers have spoken about the reduction of the universal social charge for self-employed people and bonus pay for couples if they split paternal leave. Ministers have spoken about the removal of the bank veto on personal insolvency arrangements, although there has been nothing about that today. Others have spoken about the return of the first-time buyers’ grant, with Ministers – including those who spoke today – talking about increasing the bank levy to force banks to reduce variable interest rates.
These are the specific promises contained but not mentioned in today’s financial envelope. These were mentioned even before the two most senior Ministers from a finance perspective came out with their list over the past few days of what they propose to do in order to buy the election in the next 12 months. The people of Ireland will see this for what it is. I know the Government might feel the people of Ireland should be more grateful for the reductions made in the top rate of tax last year or that it should be doing better in terms of public esteem. The Ministers might be disappointed that people are not thanking them on the street.
The Taoiseach has said that people phone to thank him but we take that statement with a grain of salt, as others would also do. The Government has sought to hijack the Dáil for a week and take over the media so that people will hear Ministers congratulating other Ministers on a wonderful job being done. They got their time but the exercise may be counterproductive. The public will see this for what it is, which is pure political spin. The Government is doing us a disservice. Is this what it meant by “democratic revolution”? Is that the setting aside of Dáil time so we can all come to listen to Ministers for hours and days on end? We will listen to senior Ministers today, the Taoiseach tomorrow and the next line of Ministers after that. Maybe there will be two weeks set aside in the autumn to discuss the budget. That seems to be what the Ministers see as the democratic revolution. It is an abuse of this House to turn it into the launchpad of a general election campaign.
I have examined the documents. There were contradictory statements in them. The Minister for Public Expenditure and Reform, Deputy Howlin, stated that the finances of the State are now in a demonstrably better position as a result of the decisions taken by the Government. The Government is congratulating itself and the Minister is nodding in agreement with his statement. That says it all.
The Minister was honest enough to later say the people of Ireland, by way of referendum, introduced these European financial rules that forced the Government of Ireland today and tomorrow, as well as every other government in the EU, to abide by these rules and regulations. That is why we have stability programme updates. The Irish people decided by referendum that we would not have runaway Governments anymore and we will not spend money we do not earn. The Irish people decided if there is a major debt, we will take steps to reduce it. All the Government is doing, correctly, is implementing the democratic decision of the Irish people as public servants. The Government has no legal authority to do anything other than comply with the referendum result and the financial packages set out by Europe. We accept that but the Ministers have argued that the wonderful achievements in the economy arise from their actions. They should not delude themselves. The Irish people passed the referendum to allow this to happen; it is their work and sacrifice that is responsible rather than the work of a Minister.
For the first three years, the Government followed the agreement in place with the troika. It now has to follow EU rules on managing finances from now on, which is quite proper. We can consider the big ticket items of this Government, which the Ministers had a role in and which they chose to follow but which are outside of the previous programmes. When the Government makes a decision which nobody else asked it to implement, how does it measure up? Where are the big ticket items in the announcements from the Ministers?
The documents set out projections for Government debt, for example. The question must be asked as to whether Irish Water is today a standalone, commercial semi-State company or on the Government’s balance sheet. The straight answer is that it is on the Government’s balance sheet. The Government indicated that in setting up Irish Water, it wanted to make it an independent semi-State company and have it operating on normal commercial business lines. Both the Government and Irish Water have failed to meet this objective.
Last year, EUROSTAT rejected the Government’s proposal to have Irish Water taken off the Government’s balance sheet and on a second occasion, EUROSTAT again rejected taking it off the Government’s balance sheet, as per the statement issued four weeks ago. That is the second time the Government has been refused. That is extraordinary, as the Taoiseach came before a committee to discuss Estimates for his Department in February, with the Central Statistics Office, CSO, coming under that remit. On 28 February, just a short while ago, he told the Oireachtas committee dealing with finance and public expenditure that the CSO was “working to finalise the report in the next two to three weeks” and that the assessment “will then be provided to EUROSTAT”. The Taoiseach indicated that the CSO was advised that the final response from EUROSTAT is likely to take at least two months from date of receipt, and it is clear that the Taoiseach gave the impression that we would have a decision on this matter by the summer. That is not true and the Taoiseach did not know about what he was talking; EUROSTAT made it quite clear that it will be the end of October before it makes any further announcement on the classification of Irish Water in the national accounts. The Taoiseach told the committee one version but EUROSTAT stated some weeks later another version. The Taoiseach should have known this as it only makes classifications on national account issues twice per year.
There will be much discussion today about funds available for taxation purposes and increases in expenditure. We can consider how the Government handled its biggest project, which is the €1 billion of expenditure that has gone into Irish Water, and that leads to questions about its ability to run affairs when the Government is not governed by an arrangement we put in place or which the EU did instead. To date, €1 billion in taxpayers’ money has been spent setting up Irish Water, and we have all heard about the payments for bonuses and consultants. The Government has forced the Irish taxpayer to pay commercial rates bills to local authorities for Irish Water.
In the first phase of the installation of water meters, various contractors have incurred additional costs. They include Siteserv, which will seek additional funding from the Government arising from the difficulties it is experiencing in installing water meters. When these costs are combined with the cost of the new conservation grant, one finds that the cost of phase one will be more than €1 billion. This figure excludes the one third of all motor taxation receipts that has been siphoned off from the local government fund and handed over to Irish Water as a direct subvention.
The second phase involves the installation of an additional several hundred thousand water meters. The cost of delivering this phase, which will run to several hundred million euro, has not been included in the figures. None of this expenditure will be used to improve water infrastructure.
The employees of local authorities who have always carried out this work on the ground are being asked to do more for less. Irish Water is a €1 billion failure, a financial fiasco that must be abolished and the Fianna Fáil Party in government will abolish it.
The corporate governance of Irish Water is fundamentally flawed and unacceptable. The company is part of the Bord Gáis-Ervia group of companies. The Government constructed Irish Water in a manner that ensured its board does not have one independent external director. This practice is unacceptable and should not be allowed to continue. The board consists of staff in the Irish Water-Ervia group and it is not fit for purpose. Is it surprising that a controversy has arisen regarding the appointment of major contractors such as Siteserv to Irish Water when the company’s board does not include a single external director? This approach shows how the Government set about establishing its pet project. It should not have been allowed.
The Government promised to eliminate cronyism. Last year, in an example of Government cronyism, it appointed a person to the board of the Irish Museum of Modern Art in order that the appointee could be elected to the Seanad through the back door. Subsequently, Fianna Fáil proposed legislation to ensure all appointments to State boards would be made on a statutory basis. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, single-handedly rejected this approach, stating that he had requested Ministers, on a voluntary basis, to do the right thing. It is hardly surprising that cronyism persists when the Government refuses to address appointments to State boards.
It is clear to anyone who has observed recent events that for several years the Minister has sat on information held in the Department of Finance on Siteserv. He has decided to establish an inquiry solely because the matter has entered the public arena. If these issues were of concern to him two years ago, he should have established an inquiry at that time. It should not be necessary to shame him into taking action through the release of documents under freedom of information legislation.
As I stated immediately after the Minister spoke on this matter on radio last Friday, the inquiry he has established is by insiders into insiders. It is cronyism to have insiders inquiring into themselves. It is also wrong that the Minister issued, under IBRC legislation, a direction to the special liquidator that he carry out this review. I understand the Minister did not consult the special liquidator before directing him to do this job on his behalf. In doing so, he has abused his ministerial powers and forced a conflict of interest on the special liquidator. As Deputies have thrashed out in the House, the special liquidator is not a suitable person to carry out the review owing to the conflict of interest that arises. The fig leaf of appointing a retired judge to monitor the issue is wholly insufficient. It amounts to an acknowledgement by the Minister that the process he has set out is flawed. An independent commission of inquiry is needed to get to the truth and members of the public will not settle for anything less. The Fianna Fáil Party will oppose the whitewash the Minister has proposed.
I will now address the financial emergency measures in the public interest legislation, which comes within the remit of the Minister for Public Expenditure and Reform. Five Financial Emergency Measures in the Public Interest Acts have been passed since 2009. Pay and pensions across the public service have been reduced by 14% and public service numbers have declined by 10% in the same period. These pay cuts and job losses were mirrored in the private sector and no household was immune from their effects. It is welcome that the economy is improving as a result of the hard work of Irish people. The assumptions underlying the Financial Emergency Measures in the Public Interest Acts no longer hold. Financial resources permitting, the legislation must be undone, rolled back and removed from the Statute Book in an orderly manner. The Minister and I are almost singing from the same hymn sheet on this matter. He can no longer justify the legislation and will be praying that nobody challenges it. However, given that the basis on which the legislation was introduced no longer exists, it should be wound down in an orderly manner.
Pay talks must commence in the public service with a view to increasing pay. The process has already commenced in the private sector and is ongoing. The priority in the first instance must be to look after those who are on low and middle incomes. It is better to have improvements in pay work their way up the economy than to take a trickle-down approach, as the Government has done since it started to address the issue last year when it cut taxes for those on the highest rate. Improvements in public sector pay should concentrate on net take home pay. This means incomes can be improved by increasing pay rates and reducing the universal social charge, PAYE and PRSI rates and pension levies. Retired public servants who are in receipt of pensions must also be involved in any discussions this summer. The pay talks must also be transparent because taxpayers in the public and private sectors will want any changes to be in their interests and independently verified. This was not the case in respect of the Haddington Road agreement.
A third issue has been sadly absent from the Ministers’ contributions. One Minister wants tax reductions, while the other wants pay increases. The issue of public services cannot be ignored in this debate. The growth in the economy must lead to improvements in the public services on which every family relies. The pupil-teacher ratio must be improved, for example. The Minister referred to the recruitment of new teachers. The purpose of the increase in teacher numbers is to respond to the increase in student numbers, rather than improve the pupil-teacher ratio. We must ensure that hundreds of thousands of children are not taught in overcrowded classrooms. Career guidance and resource teaching must also be restored.
As Deputy Michael McGrath noted, it is unacceptable that 400,000 people are waiting for outpatient appointments in the health service. Elderly and sick people are waiting for fair deal applications to be improved, waiting times for operations have increased and queues in accident and emergency departments are larger than ever. In addition, mental health and suicide prevention measures are not being funded adequately.
In recent years, the Government has completely neglected people who are seeking housing. Its inaction in this area has resulted in an increase in homelessness and housing waiting lists. Rent supplement rates must be increased to assist in this area. The problem is being exacerbated by the Government. The mix between taxation and expenditure measures it has adopted in the past four years demonstrates that its principal effort each year has been to cut front-line services first.
In response to each Government budget, the Fianna Fáil Party has argued that the adjustment should be balanced 50:50 between taxation and expenditure measures. We are pleased the Ministers opposite have come to see the merit of the approach we have advocated for the past four years and are now moving in our direction.
Every family benefits from public services and requires improvements in essential front-line services. We must all contribute to such improvements. We cannot allow the debate to be reduced to a simple trade-off between improvements in public services and improvements in public sector pay.
The Minister spoke about demographic challenges, noting that the health service will require an additional €200 million per annum and an additional €200 million will be required to pay the pensions bill because people are living longer. He also referred to the need to recruit an additional 3,500 teachers to accommodate the increasing population. As such, demographic changes mean he will need €600 million of the €700 million available to him just to stand still. People want improvements in services. They do not want the vast majority of the money available used to address demographic changes, with all remaining moneys used to reduce taxes. Front-line services need to be improved.
I read something interesting in the document provided. The first item of chapter 7, which deals with policy and strategy, is public service pensions. New entrants to the public service join a new pension scheme that is based on career averages. This new scheme will not have a significant effect for another 40 years. The second issue referred to in the chapter is the abolition of the State transition pension. This measure will mean people will have to sign on for jobseeker’s allowance for one year when they reach 65 years. It will not deliver savings but it will hit older people.
The next item in the policy statement is long-term care with the Government wanting to revisit the sustainability of the fair deal scheme. Every policy to secure long-term economic sustainability the Ministers have mentioned is actually an attack on the elderly. The Ministers said everything today except the truth. Retired public servants in the years to come will have reduced pensions, the Government has cut the transition pension and now it wants to re-examine the fair deal scheme. Every policy proposal in this document is an attack on the elderly. I am amazed the Government did that today.
I would have liked to see a more equitable approach to what the Government is proposing. However, these are the Minister’s proposals and I am shocked he has done this to the elderly. Maybe he feels they should pay more. I actually think he is penalising them for living longer. That is the underlying theme to this. Health, pensions and the fair deal scheme are costing more because people are living longer. The Minister is begrudging people their good health in their retirement. Everything proposed here is a hit for the elderly.
While reductions in capital expenditure need to be reversed, it also needs to be done on a regional basis, not just within the M50. The Minister for Finance did not refer to the sale of State assets. He spoke briefly about the sale of the Government’s shares in Permanent TSB. We know Fine Gael is gung-ho to sell the State’s shares in Aer Lingus. I am sure the Minister had to compromise on that to get his 50-50 arrangement for budget day activities. The Government also has shares to sell in AIB and Bank of Ireland. For years, when in opposition, the two Ministers opposite gave out about the money going into the banks. Today, they have changed their language, talking about investment in our banks. How the wheel has turned. When Fianna Fáil was putting the money into the banks, the Ministers opposite called it a bailout, a waste of money and a blackhole.
Today, all of a sudden, every penny we put into Permanent TSB, Bank of Ireland and AIB is now a good investment of which the Government is proud. I take it as a compliment that five years on, the Government has accepted what we did was an investment in our banks.
We are proud that it is such a sound investment, even though the Minister, when he was in opposition, decried it at the time.