Dáil Budget Speech by Fianna Fáil Spokesperson on Public Expenditure and Reform Seán Fleming TD

Published on: 05 December 2012

I look forward to making a contribution on detailed aspects of the budget. I want to highlight issues that will affect the majority of ordinary families and people. This budget effectively tightens and squeezes the majority of families. Despite promises that this would be a fair budget, it is anything but. It follows the pattern of last year. Fine Gael defended its constituency of high earners while Labour capitulated on its so-called core values. Contrary to grandiose claims, this is not a radical or reforming Government, rather it is a complacent one. The Minister for Social Protection presides over a €685 million overspend, while the Minister for Health must look for another €360 million this week. Everything this Government does is dictated by political expediency, as demonstrated by the unseemly row and horse trading between Fine Gael and Labour Ministers in the run up to the announcement today.

Over the past two years and during the previous election, commitments were given to the people which today are being broken. Put simply, this is a U-turn budget from a U-turn Government. In every area from third level fees to child benefit to class sizes to carers’ payments to employees’ PRSI to property tax, Government parties have shown they are willing to say anything to get elected until they are safely ensconced in their offices when they cast those promises aside. We are witnessing a Government that is obsessed with style over substance. Last month, the people voted in a referendum to enshrine children’s rights in the Constitution. Today, the Government is cutting child benefit. That is its answer to the people who voted in the referendum. It is also cutting the overall budget for the Department of Children and Youth Affairs by an additional €16 million. That is happening a few weeks after the people at the Government’s request enshrined the rights of children in the Constitution. The response of this Government is to cut child benefit and funding for the Department of Children and Youth Affairs.

Labour has spoken out against the bank guarantee on many occasions in the past. Despite this, last week, every Labour Deputy voted to renew that for a further 12 months. The Government claims it wants to protect the most vulnerable, but last year, it introduced a budget that was unfair and this budget is the same. The test of fairness is how one goes about achieving the adjustment of €3.5 billion. This side of the House accepts this figure must be achieved, but the test of fairness is how one goes about it. The Government has discretion as to how to apportion the split between additional taxation and expenditure cuts. We believe fairness dictates a 50-50 split between tax increases and expenditure reductions. Once the decision was made by the Government to load the burden of the €3.5 billion on expenditure cuts, it was inevitable that this budget would hit the poorest and most vulnerable the hardest. Fairness went out the window in the interests of political expediency.

I will address specific measures in the budget and will inevitably concentrate on issues that affect families, children and parents. The cut in child benefit can only be described as an anti-family measure. Today’s €10 reduction in child benefit, taken in conjunction with last year’s reduction, will take €200 million out of families’ incomes. The reduction makes a mockery of Labour’s red line approach on child benefit about which we have heard before. Child benefit is a core payment to 600,000 families that helps sustain the health, wealth and well-being of 1.5 million children. Child benefit is a universal payment that provides vital income support for families in meeting the costs of rearing children, especially during a time of unemployment and economic hardship. In October, the Minister for Social Protection told us she would only consider cutting child benefit when we were able to offer Scandinavian levels of child care.

There was no mention of it in the statement today. Throughout the country ordinary families are struggling to make ends meet and meet their basic child care costs. This crude attack will cause significant hardship for families. The Minister will also impose additional expenses on working low income families.

I wish to explain the changes made to child benefit because they will have escaped many people. The Minister had already announced cuts to child benefit to be introduced on 1 January, which were not repeated today but which will affect every family claiming child benefit. At present the rate is €140 for the first and second child and this will be cut by €10 per week to €130. The current rate for the third child of €148 will also be reduced to €130, according to the previous announcement and the announcement made today. For the fourth and subsequent child the current rate of €160 will also be reduced. Families will wish to know how it will affect them. Families with one child will see a reduction of €10 per month. A family with three children will see a cut of €38 per month, or €436 being taken from the mother’s hand per annum. For a household with four children the cut will be €696 per annum. This is a very severe cut and it is important that people understand what is going on.

It is not only in this area the Minister will make cuts. He will also make it more difficult for people to obtain mortgage interest supplement. This scheme had worked well over a number of years and helped people avoid falling into arrears with their bank repayments. It costs approximately €3,500 per recipient, which is good value compared to what would be paid in rental supplements if the recipients were in private rented accommodation. The measures introduced by the Minister are coming into effect as time goes on and they will have a substantial impact in 2013. The Minister for Social Protection, Deputy Joan Burton, stated that rather than it being a preventative measure she wants a person to be in arrears for at least two years. This means a person must struggle for a year and then deal with his or her bank or financial institution, meet the conditions of the deal reached for an additional 12 months after which he or she will qualify for mortgage interest supplement. If people can meet the deal offered by the bank the Minister will then tell them they do not need mortgage interest supplement, so she is on the way to phasing it out.

Another issue which needs to be mentioned is the one parent family payment. The age limit for this payment has been 14 years, but legislation was passed earlier this year which means from 1 January 2013 the age limit will be reduced to ten years for new applicants. This must be taken into account. In the first week of January the Minister will also reduce by approximately €20 the income disregard which can be earned without the one parent family payment being affected. This measure was announced on a previous occasion but will come into effect next year.

The measures announced by the Minister will hit families where it hurts most by removing another €50 from the pocket of those who qualify for the back to school allowance. One must be on a very low income to qualify for this allowance. The Minister stated this will save €17 million, but this saving is on the back of the poorest people of Ireland, because by and large one must be in receipt of a welfare payment to qualify for the back to school allowance. At present the payment is €250 for children over 12 years of age and this will be reduced by €50. The payment for children under 12 years of age will be cut from €150 to €100.

With regard to older people, the household benefits package is valued throughout the country. Our senior citizens and people with disabilities depend on it. We know it is a significant cost to the State and we know it must be considered carefully. Approximately 400,000 people depend on the household benefits package. The main areas it covers are gas, electricity, telephone costs and the television licence. Many utility companies make excessive profits through what they charge the State for the package. The Minister for Social Protection should drive them harder and get better bargains for the State rather than making cuts. The €61 million saving should be shared between the companies providing the services, which have a monopoly, and none of it should be brought to bear on elderly people or those with disabilities.

Was the budget poverty-proofed? The answer is that it could not have been because the Ministers only saw it a few days ago. Was it gender-proofed? It could not have been because only four Ministers, all men, were in possession of it until a few days ago. They could not have gender-proofed it. Was it equality-proofed? It was not. It was rushed to the printers in the past day or two without detailed discussion. If it had been gender-proofed and the Minister had thought about it carefully he would not have done much of what he did. Many of the measures announced in the past hour and a half are anti-women and anti-mother. I am shocked the Minister announced he wants to tax maternity benefit. He will tax mothers who give birth to children. As I outlined earlier, child benefit payments to a woman – and most child benefit payments go to women – with three or four children will be reduced by more than €600.

The measures announced by the Minister will hit women who have children. They will also hit new applicants for the one parent family payment as the age limit will be reduced to ten years of age and families with children over this age will not be eligible to apply. The Minister, Deputy Joan Burton, has the view they should not all be out working and somebody should mind the children when they come home from school. As I also outlined earlier, the amount which can be earned before the reduction in the one parent family payment takes effect will also be reduced. We know the overwhelming majority of those in receipt of the one parent family payment are women.

The Minister has done a very nasty thing by cutting the carer’s respite grant. This is a grant for carers who look after elderly or disabled people, including disabled children in receipt of domiciliary care allowance, in their home. I cannot believe for an amount of €26 million the Minister has decided to cut the respite care grant and will reduce it by €325 from €1,700 per annum to €1,375 per annum. This grant is what allows people to keep their sanity. They need the respite care grant so they can have a break for a week or two at some stage during the 52 weeks of the year. They provide 24-hour cover 365 days a year and need to be able to pay someone to come and look after their dependent relative. They need a break. However, the Minister will cut the respite care grant payable to the carer. This is nasty and unnecessary. The Taoiseach and the Minister, Deputy Howlin, are two decent men and I ask them to reconsider this. Two categories of people receive the respite care grant, namely, those in receipt of carer’s allowance and those who do not qualify for it because of the means test but still provide 24-hour cover 365 days a year. The only payment the latter group receives for providing full-time cover for an elderly or sick relative is the respite care grant of €1,700 a year. I cannot believe the Minister is cutting it. The majority of carers in Ireland are women. This is another anti-woman move. This is also the case with regard to the changes to the household benefits package because the majority of elderly people are women as they tend to live longer. The reduction in the household benefits package will affect elderly widows.

I cannot believe the Minister has done this to the women and the mothers of Ireland – taxing maternity benefit, cutting child benefit, cutting the eligibility for one-parent family payment, cutting the carer’s respite care grant, cutting the back to school clothing and footwear allowance, and hitting the household benefits package that will affect more women than men.  I am shocked that he has done this.  Had he taken a few days extra, he would have seen that.  The mistake was made when the Minister decided to achieve the majority of the €3.5 billion by way of expenditure cuts.  Had he done it the way we suggested, he would still have achieved his targets.  Our document is on the public record.  Some of what the Minister has done is in our document published two or three weeks ago, but had he followed our approach, we would have had an equal split between the taxation and expenditure cuts.  Instead, the Minister chose to load it on the lowest paid who most need the support.

In respect of the Department of Social Protection benefits, the Minister has cut the period in which people can avail of jobseeker’s benefit, from 12 to nine months for people who were working for three, four or five years and who, through no fault of their own, have lost their jobs, and from nine months to six for those who have worked ten, 20 or 30 years and who never missed a day’s work or a week’s contribution.  The Minister is cutting their benefit from nine months to six months to save €82 million.  The Minister might say that will encourage them to get back to work.  That would be fine if there were jobs available, but the only option he is giving jobseekers, who are at their weakest and most vulnerable, having lost a job after working for decades and who know nothing else, is to cut their jobseeker’s benefit.  The Minister is essentially saying that new Labour’s way is for these people to go to Frankfurt, Quebec or Queensland or wherever to get a job.

The Minister has also made it more difficult for employers to employ people.  He has cut the employers’ redundancy rebate at a saving of €30 million.  We all would agree that the future success of the economy lies in small local businesses which employ between two and five people.  If a downturn in business occurs through no fault of their own, the small business operator must lay off workers.  If the employer cannot get that redundancy payment rebate, he or she will think twice about employing a person.  That is a disincentive to employment.

The Minister has also cut the back to education allowance.  He has discontinued the €300 payment per annum at a saving of €24 million.  He has also cut the respite care grant.

This brings me on to a bigger issue directly affecting the Minister for Public Expenditure and Reform, Deputy Howlin.  He should bear this point in mind because I have not made it previously.  There was an application in the Dáil this week for Supplementary Estimates for the Department of Social Protection and the Health Service Executive to the tune of €685 million and €360 million, respectively.  As the Minister knows only too well, there were a number of Supplementary Estimates last week totalling €73 million across a range of Departments.  These Supplementary Estimates were voted by the Dáil because of the Government’s flawed budget last year.  The Minister’s figures were wrong, we told him his growth projections were wrong and we told him the health budget was wrong as well.  The Minister has had to come back in recent days with Supplementary Estimates to the tune of €1.118 billion for all those Departments.  There has been well in excess of €1 billion by way of Supplementary Estimates.

In preparing for the Supplementary Estimates debate last week, the Library and Research Service gave me details of all the Supplementary Estimates.  I asked how much there was in Supplementary Estimates in previous years and the staff gave me the figures for each year back to 2007.  There have never been in recent memory Supplementary Estimates of the scale of those that have gone through the House this week.  That is remarkable, and it is a statement of fact.

They amount to €1.118 billion.  I will spell it out to the Minister in further detail.  When the Taoiseach set up the new Department of Public Expenditure and Reform, I thought it was a good idea and I supported it.  In the Government’s first full year in office, we have seen this Department fail utterly.  The Taoiseach should take out the scorecards he stated he had for the Ministers.  Here is the biggest Supplementary Estimate in living memory coming after the setting up a Department with responsibility for public expenditure.

What use did that Department serve?  I will explain it to the people.  Since the Minister stood in this House exactly one year ago, all of the Departments that are under his direct control as Minister for Public Expenditure and Reform overspent by €3 million every day, €20 million a week or €100 million every month for the past 12 months, and there have been Supplementary Estimates recently in the order of €1.2 billion.  The list is available and the Minister knows it well.  I have never seen such a poor outcome for a new Department and I did not expect I would be going down this road.  I did not expect Supplementary Estimates of such scale but those are the irrefutable facts.

We told the Minister this time last year that the health Estimate was flawed.  The figures were wrong; they did not stand up.  Everybody knew they were flawed.  The Minister, Deputy Howlin, needs stronger legislative powers to be able to stand up to the Ministers, Deputy Reilly and Deputy Burton, and tell them they cannot overspend.

Deputy Howlin comes into the House at the end of the year and thinks he can slip through €1 billion in Supplementary Estimates that arise from flawed budgeting.  There was no overspending in the Department of Health.  The Minister, Deputy Howlin, had a flawed budget for that Department to start with.  Everybody told him the figures passed by the House last year were not adequate for the job.  The Minister is talking today about achieving another €781 million in cuts for next year.  That is not true.  It is fairyland stuff.  The Minister spun it for the year and he is doing it again.

In the Department of Education and Skills, there is another broken promise from the Labour Party in the form of an extra €250 in student fees, all to raise €55 million.  It is a small figure in the education budget but the Minister is making students pay.  The Minister, Deputy Quinn, stated a week ago that he is happy with his budget and he has come here today looking to cut €123 million from that budget.  These are issues that need to be addressed by the Minister, Deputy Howlin, and his Department over the course of the year.

As we are all aware, this time next year the troika will have gone home.  There is only one thing standing between Ireland and the troika going home, and that is how the Minister manages the Government’s finances between now and then.

Last Thursday was an interesting day in this Chamber.  The public is focused on us today and they all tune in once a year to see what is going on in the House, but I would take them back to Thursday last when the Labour Party voted to renew the bank guarantee in this Chamber.  That seems to run counter to everything that party’s members stated they would do before they took office.

Also last Thursday, the Minister, Deputy Howlin, presented a Supplementary Estimate for his Department to provide for pensions for retired civil servants, 84 of which were in excess of €100,000.  When will he learn that the people do not want to hear of a Supplementary Estimate providing for these high pensions?

I want to be clear.  These pensions were for the retired Sir Humphreys.  The modern-day Sir Humphreys captured the Minister to look after the retired Sir Humphreys because they will be in that category some fine day.

The pensions were for civil servants only.  If that had happened in a local authority where it had trouble in the last month of the year meeting the payments for its retired workers, it would have had to have found the money for those pensions out of its own resources and make the necessary cuts.

Civil servants, however, were able to walk into the Minister, Deputy Howlin’s office and say: “Minister, we need money for the retired civil servants”.  There was no mention of retired council workers or any retirees in other State agencies who do not have the same access to the Minister.

The issue of public sector pay and reform was not sufficiently dealt with here today.  We have had some reform and the Minister has spoken a lot about abolishing quangos.  In 2011, he said that 48 agencies would be abolished or merged by the end of 2013 but we can see that will not happen.  One third of the 48 State agencies earmarked for abolition or merger in 2012 will have completed the process by the end of the year, but the others will not.  In addition, of the 46 planned for 2013 it appears that only half of them will be on time.  Part of this is down to the failure to pass legislation in this Chamber by the respective line Ministers who are obviously putting up a resistance.

The Minister for Public Expenditure and Reform makes great play about efficiencies, shared services and public sector reform.  I support the principle of shared services whether it operates across the HSE, local authorities, the Garda Síochána or Government Departments, including the Department of Education and Skills.  The public have seen one example of what this Government means by sharing services and that is the third-level grant processing scheme, commonly known as SUSI.

As the Minister knows, this came into being this summer.

The Minister, Deputy Quinn, apologised for the delays but I think he was also apologising for the Minister for Public Expenditure and Reform because this is a reform issue.  Some 66,000 people applied for third-level grants but, as of today, half of them have not yet been approved.  Most TDs are now coming across a new phenomenon in their constituencies.  I have had numerous examples of where people were informed in writing that they qualified for a 100% grant, only to be told later that the grant had been reduced by 50% or not approved at all.  When I followed that up by tabling parliamentary questions I was told that due to the volume of cases, errors inevitably occur.  People are having to leave third-level institutions due to those administrative errors.  They took up college places on the basis of letters they received – I have copies of those letters – yet subsequently letters were issued which stated something different.  It affects students from low-income families who should be eligible for such grants.

I wish to comment on the Department of Children and Youth Affairs because we have had the children’s referendum.  Apart from cutting child benefit, the Government is also cutting funding to various youth programmes to save €5 million.  In addition, the subvention rates towards child care costs and places are also being cut by €3.7 million.  Expenditure for the schools completion programme is being cut, as is money for the national children’s strategy and the early intervention programme.  I am shocked that a few weeks after the children’s referendum the Government is cutting the Department of Children and Youth Affairs budget for 2013 and child benefit on top of that.

The Minister could have assisted job growth in the economy by ensuring that money earmarked and passed by this House for capital expenditure on publicly funded projects was used for that purpose in 2012.  We now see a massive underspend of €400 million, however.  At the end of October, he told us that would not happen when the underspend was €336 million.  A month later, the figure had reached €405 million.  Every one of the jobs that is not proceeding represents a loss of employment.  We estimate that there are 4,000 fewer people at work today because the Minister did not spend the €405 million on projects for which he received funding.  Those 4,000 people are suffering due to the ineptitude of various Government Departments in not getting the jobs done.

I appeal to the Minister concerning the €3 billion worth of publicly funded contracts that are due to happen next year.  We on this side of the House will do everything to assist him, but will he please ensure the Construction Contracts Bill goes ahead as a matter of priority?  So many subcontractors and their direct employees are not being paid for their labour, and every TD is experiencing this in constituency work.  The main contractor is being paid by the line Department or the contracting agency on behalf of the State, yet subcontractors and their direct employees have not been paid.  That is because of the tendering process and the lack of proper mechanisms to ensure that competent and financially strong contractors would get these jobs in the first place.  It is a scandal that people who work cannot get paid.  This House is unanimous on that issue.  I want to get this legislation over the line because it has been months since we debated it on Second Stage.

The budget contains a number of taxation measures, including the property tax which my colleague Deputy Michael McGrath has outlined in detail, that are not necessary at this time.  They should not proceed now.  There are a number of very unfair cuts right across the areas of health, social welfare, education and others, that should not happen.  They are falling disproportionately on the poor because the Government has decided to make most of the adjustments in expenditure cuts, rather than on people who could pay more.  Many of the cuts are unfair and we oppose them.  We will be trenchantly opposing this budget due to its unfairness concerning families and the ordinary people of Ireland generally.

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