This is a modest budget which has been, by some distance, the most over-spun in our history.
It represents a significant step-back from the Taoiseach’s intended radical and regressive policies. It includes many individual items which are welcome and it conforms to the core agreement that budget policy must be sustainable and progressive.
However, there are also major gaps in this budget. It contains no coherent long-term economic strategy. It fails to address some essential issues. It is tokenistic and lob-sided in preparing for the enormous economic and social threat of Brexit.
And most of all it will amount to nothing unless the government starts to deal with the delivery gap where there is increasingly less connection between what is announced and what is delivered.
Students of political history will remember that now-Commissioner Hogan was once forced to resign as a junior minister when his office mistakenly faxed a few budget headlines to a journalist an hour before the Minister for Finance announced them to the Dáil. If this standard were still being applied most of the government, including the Taoiseach, would have resigned weeks ago.
It is genuinely remarkable how often the Taoiseach has leaked and commented on the Budget in recent months and it is even more remarkable how different the Budget is from his rhetoric.
From the moment when he formally launched his bid for the Fine Gael leadership up to the last ten days, the Taoiseach set a particular tone for this Budget.
In speeches, interviews and innumerable leaks he set out his overriding priority. This was the reorientation of budget policy away from the people he dismissed as caught in a culture of dependency and victimhood and towards the highest earners.
Time and time again he and his ministers announced that this was going to be a budget which returned to the Fine Gael core priority – tax cuts which would benefit the highest earners the most.
And to back this up they spoke out against a wide range of progressive social spending.
Social protection payments were due to be held down. The Minister responsible even announced in August that pensioners would have to go back down the queue. The Taoiseach said that increases would be minimal. Health was told it would have to make do with what it had. And so on across nearly every public spending area.
The intention by our new Taoiseach to make a significant move to the right on budget policy is not an empty charge by the opposition – it has been his core policy message for four months.
To him there is a group which is deserving of attention and then everyone else – dismissed by him as caught in a “culture of dependency and victimhood”. In a phrase I hope he by now understands has caused immense anger, he has said we should focus only on those who “get up early in the morning”.
If we were to follow this approach, where would we leave those who are retired, who are sick, who have disabilities, or who have found themselves in need of a hand-up? What would it say about us as a society if we allowed this type of mentality to guide public policy?
This is the background to the discussions which were held in recent weeks.
The uncontroversial truth is that any insistence on trying to push through the Taoiseach’s regressive policy would have been a fatal breech of the agreement which enabled this Dáil to nominate a government.
The fact that the Budget bears so little relationship to the Taoiseach’s stated priorities is its principal saving grace.
When Fine Gael was much freer to set Budget policy, as it was in the last government, it delivered five out of five budgets which were highly regressive and were heavily weighted to highest earners. Last year, as a result of the Confidence & Supply Agreement this changed completely.
Every independent review confirmed that last year’s budget was more progressive. The now Taoiseach actually said at a press conference on budget night, and this is a direct quote, “this is the first fair and socially just budget for a very long time”.
I am very pleased that we were able to stop the attempt to return to unfair and socially unjust budgets.
What is especially notable this morning is that nearly all of the positive points being highlighted by Fine Gael members relate to measures forced on a reluctant government. In health and education, the only significant initiatives are ones which the government wanted to either delay or ignore.
If you want you can describe this as cynical or opportunistic – what matters is that it appears that Fine Gael’s core right-wing impulse is as strong as ever. It should be noted that the Taoiseach announced last month that he wants this direction incorporated in a new Fine Gael manifesto which is to be finalized in November.
We make no apology for using our position in this Dáil to act responsibly and deliver important policies. Unlike any other party we have taken a substantial risk by stepping away from the old model of how business was done here and have worked to be constructive. It was and it remains our view that the people expect their representatives to focus on substance and this is what we have done.
We have, of course, been subject to loud and passionate attacks from Sinn Fein and the far-left in the last 24 hours. No doubt this will continue during the rest of this debate. They will forgive us if we do not recognise their right to tell us what we should do with the mandate we won.
They face the problem that they entered this Dáil with the intention of trying to influence nothing. Look back at the debates on the formation of government and see their shrill demands that there be a majority government formed which would leave them in peace to oppose everything for five years. They are not angry with Fianna Fáil because of what’s in this budget, they are angry because Fine Gael’s impulses have been held back and it makes it harder for them to campaign.
Sinn Fein is particularly sensitive, wanting to be taken seriously on one hand but on the other complaining every time they are challenged in a debate. As we all know from the epidemic of bullying cases and the fact that the powerful local interest is always protected by party HQ, Sinn Fein doesn’t believe others have a right to criticise it. When it comes to refusing to answer questions, they beat even the Taoiseach.
When Deputy Adam’s and his party loyalists stand up to deliver the agreed line demanding other things in the budget we all remember that they held the Finance Department in Belfast but failed to produce and Budget last year or this year. By their failure to have the Executive re-established, massive cuts are being implemented in schools, hospitals and social services throughout Northern Ireland.
These cuts are of an order of magnitude bigger than anything implemented here. Community groups doing essential work are unable to get funding. And the situation will keep getting worse.
Who knows, perhaps the real reason Sinn Fein is leaving Northern Ireland with no voice at the Brexit negotiations is that it wants to avoid introducing a Budget and being accountable for it?
The self-righteousness and the extra volume we’re getting from Sinn Fein here is impressing no one.
While we are very pleased to have blunted the edge of Fine Gael policies and to have delivered significant measures to benefit all groups and especially those in need, we disagree with many of the government’s priorities. I will address a number of them later on.
However, it is important to consider first the overall budgetary situation and direction of our economy.
We believe that the basic thrust of fiscal policy should be balanced and that we should have a steady reduction in the significance of the national debt next year and in the medium-term. As part of this we have insisted on a policy of going ahead with a Rainy Day Fund to serve as a contingency.
In its letter to the Minister, the Fiscal Advisory Council said that the core assumptions behind the Budget are acceptable; however it raised a serious issue concerning our knowledge of the underlying state of the economy. The Council, echoing some detailed research work, has said that we do not adequately understand the impact of many policies or even the correct way to assess where we are in terms of the economic cycle.
We know from the contortions involved in creating GNI that getting correct statistics is an urgent matter. It is surprising that the government continues to give no priority to dealing with this. This is the impression given in the budget documentation – where the part of the CSO’s allocation which will go to improving the reliability and usefulness of these statistics is tiny.
It is also well below the priority given by the Taoiseach to other presentational matters.
As Deputies Calleary and McGrath said yesterday, important assumptions underpinning Budget figures announced by the Minister are unsure. In each case the government has decided to take an optimistic assumption concerning revenues or costs.
Independent commentators have suggested that the revenue projection for stamp duty is not much better than sticking a finger in the air. In terms of the tax on sugar in drinks, there is no reason to believe that the UK will succeed in implementing its regime by April – thereby impacting on the measures announced yesterday. As such there is more uncertainty built into the Budget figures than has been admitted.
A more important point is that the Budget contains a fiscal policy but the government continues to have no general economic policy.
It is remarkable how little has been done to review or develop the core economic model outlined before the recession.
For example, the IDA’s priority areas are as they were a decade ago. The identified drivers of growth have not changed. Nor have underlying assumptions about the productive capacity of the economy.
The reality is that the government’s sole focus is on trying to find ways of politically benefiting from the economy rather than trying to influence its direction. And in this it continues to tell a highly partisan story which undersells Ireland.
The fundamental reason why Ireland has had a strong recovery is the impact of investments and policy decisions made over a period of decades. Investment in people, in infrastructure and in pro-enterprise taxation are the reason why we have had strong growth – and complacency and regressive policies are why this growth has been accompanied by rising problems and unfairness.
One of the great lessons we should learn from past policy successes is that we have the capacity to shape the economy if we are willing to look beyond the endless search for short-terms headlines.
The best example of this is our high-tech sector. The Taoiseach loves attending photo-opportunities in high-tech companies but he doesn’t appear to understand why these companies are here in the first place.
They are here because a decision was taken to invest in research, to train the people and build the expertise required to put Ireland at the cutting edge of what we knew would be a dynamic sector. Many of the sectors we are now strongest in, and which employs tens of thousands of people directly and indirectly, didn’t exist when the crucial investments were made.
Twenty years ago the entire budget dedicated budget for research in education was zero. That was transformed. First of all we rebuilt large parts of the 3rd-level system, brought in institutional strategies and helped individual groups.
This was extended to world-class centres and increasing industry partnership. We did this through a diverse funding and policy model which didn’t try to direct everything into government-defined silos. We built a research system not just a few shiny centres for ministers to visit and claim credit for.
And in implementing this vision, every target was met ahead of time, with Ireland dramatically improving its international standing on every single research metric.
That’s why we host so many world-leading companies.
But unfortunately, the government doesn’t appear to understand this. And in doing this we are, to quote the Taoiseach’s former favourite band LCD Soundsystem, “we’re losing our edge”.
To compete and win in the future, and to create high-value jobs, we have to be more research intensive. One of the less-noticed but most significant announcements yesterday came from the Minister of State for Science and Technology.
Under pressure he admitted that the government looks as if it will fail to hit its research funding targets by a wide margin. The new science strategy looks as if it is already going to fail.
As Deputy Lawless has pointed out repeatedly, we are missing enormous opportunities due to the government’s failure to show a commitment to this area.
The Budget talks a lot about Brexit, which we all understand is a long-term economic threat for our country, but the specific measures, come nowhere near the urgent or ambitious response we need. In fact they come nowhere near to policies which were leaked and briefed during the last two months.
The funding will not double our international footprint as promised. It will not provide direct funding for businesses being undermined by Brexit. It will, at most, offer to loan the impacted companies an average of €3,300 each at a slightly reduced interest rate.
Incredibly, the Department of Enterprise, central to trade development, will get 40% less for Brexit developments than the Taoiseach is receiving for his communications unit.
Deputies Collins, Donnelly and O’Brien have already addressed some of these failings and will do so further during this debate.
In terms of investments which can build a strong economy and support a strong society well into the future, yesterday’s budget was basically silent. In this it is a reflection of a government which is increasingly focused on the short-term.
When the long-delayed capital plan is published in the coming weeks it will no doubt be presented as visionary and transformational. It will be nothing of the sort.
It will address many delayed and essential projects – and also basic demographic pressures due to numbers going to school, commuting to work or requiring care.
However the capital figures in the Budget mean that there will not be, in the next three years at least, any new vision for the development of our country.
Before going into detail about specifics in the budget it is necessary to address the controversy of the Taoiseach’s new Strategic Communications Unit.
At the most immediate level it is genuinely amazing that the Taoiseach has decided that selling a corporate message for government is a greater funding priority than the service which helps children with disabilities access supports, or town and village renewal or the Peace programme, or any number of important programmes which will receive less than this new unit.
However at another level this decision says worrying things about what we can expect from our new Taoiseach.
He has long been known as our most media-focused member of government. Privately and publicly, an active attention to how he is presented has seemed a greater priority for him than managing tough issues or proposing significant policy departures. His period as Minister for Health was a case-study in deflection and obfuscation, culminating in a rush for the door.
In justifying the Strategic Communications Unit he has said recently that there is a huge problem with people not knowing what the government is up to – that there is a thirst for more information about government and that this needs to be filled by a central coordinating body.
Where does this evidence come from?
I can tell the House that Deputy Chambers is insistent that he has never gone to a door in Dublin West and heard a demand that government must spend more on communications.
There is no doubt that it is the duty of government to communicate with the public. However the evidence is that this is not what the Taoiseach actually wants.
The Taoiseach doesn’t want to inform the public, he wants to sell a message to the public – and we know by now that he sees no difference between selling the government’s message and selling both himself and his party. At the end of the day it all remains, as he reminds us in every tween, a ‘campaign for Leo.’
Frustrated at the refusal of the public to roll-over in gratitude to Fine Gael, at the last election he believes that the positive stories have to be sold better.
That’s not communication, that’s propaganda.
If the Taoiseach wants us to take him as being sincere then there is something he could do. If he genuinely wants to improve communication of what’s going on, then he should give a commitment that the Unit will also publicise bad news.
Instead of scheduling the release of bad statistics on Friday afternoons with no ministerial comment, he could schedule them for a midweek morning and present them himself.
He has bruised many ministerial ribs elbowing them out of the way as he gets into the photos for their announcements. Would he commit to giving as much of his time to answering questions when things go wrong?
In August the Taoiseach was hyper-active in the media, but both he and his Minister went missing when the appalling homelessness figures were released.
Last Friday the Taoiseach had nothing to say about record hospital waiting lists – while his Minister was also nowhere to be found.
Taoiseach, you are already highly sensitive about the charge that you are more interested in style than substance.
That is unfair, we know full and well you would like to implement a more radical and regressive budget policy. If you want to stop people being outraged at the obsessive attempts to spin and manipulate news then you should back off on this new propaganda machine and start engaging with tough issues.
Tax & Social Protection
In terms of the specifics of the Budget, the tax package is, as I have said, significantly more progressive than was originally proposed. I am particularly pleased at the USC reductions which we have achieved, which ensure lower and middle income earners are helped.
I would have to say that there has been something almost surreal in our dealings with Fine Gael on USC. That party campaigned in the last election with colourful signs emblazoned with “Abolish USC”. There are many photos of the Taoiseach and his ministers holding them.
Yet they have been reluctant to agree a much milder policy.
Fianna Fáil is also pleased to have protected Mortgage Interest Relief from abolition. This relief has problems, but in the context of the current dysfunctional market and possible interest rate increases, abolition would have made a tough situation even more difficult for a vulnerable group.
The overall social protection package is substantially better than it would have been if left to the priorities announced by Fine Gael during August.
As Deputy O’Dea has pointed out, the cumulative impact of these increases and the ones we secured last year do help. €10 a week for pensioners, for example, is a step-change versus where the situation would be if past policy had continued. At €343 million, the social protection provisions are in fact the largest single element of the Budget – something very different from what the Taoiseach announced as his priority.
We remain concerned that the government has no apparent interest in issues concerning poverty. It is not addressing poverty traps and it is more interested in finding ways to label people rather than help them.
In this respect the marginal increases in community development programmes shows a continued reluctance to take a long-term approach. As we demonstrated in the past, significant progress can be achieved in breaking intimidating inter-generational cycles of poverty and exclusion.
But this requires a whole-of-government approach to working with communities. If you see these communities as passive recipients of government communications then obviously you’re not going to take the required action.
This Budget was designed to say as little as possible on housing in order not to spoil the Taoiseach and Minister Murphy’s big launch in the coming weeks. However the basic thrust of policy is clear from the overall allocations.
As Focus Ireland and others have pointed out, there is no increase in the targets for social housing to be built. While the scale of the problem has got worse in the last year the building commitments have not.
This is a concern, but in reality the continued failure of the government to deliver on housing promises means that it will be tough for them to hit even these old targets.
The delivery gap between ministerial announcements and what is actually built is at the root of a worsening situation. They’ve even underspent the allocation for helping families avoid homelessness by 11%.
We expect that the House will hold a full debate on housing in the context of the government’s forthcoming publicity campaign and this will be an opportunity to go into this in more depth.
The chaos which developed in the health sector during the Reilly/Varadkar years has continued to get worse. For the first time in decades Ireland doesn’t even have a government strategy for its health services.
We will have to wait for the publication of service plans before we can properly assess the significance of what has been allocated.
What we do know is that the Treatment Purchase Fund will, at our insistence, be expanded significantly and will help many people on waiting lists. The closing down of the Fund’s primary work by Fine Gael was an enormous error which directly caused immense damage.
It tells a lot that the only substantive initiative in acute services mentioned by the government is one it strongly opposed.
It is important to make the point that the Taoiseach and Minister Harris have a adopted a policy of implying that endemic staff failures are at the core of why supplementaries are needed and targets are missed.
Every time their failures are noticed they try to shift the blame by writing a stiff letter to the HSE demanding that something to be done.
The fact is that before Fine Gael got hold of it the HSE had a record of delivering its service plans and staying within agreed budgets even in very tough times. This has changed because of the approach of the Minister’s Office to demanding that more be promised than is funded and that priorities keep changing.
The failure to deliver all promised mental health funding has become a serious issue and one which the government has been warned about. The €35 million extra we secured for next year is less than is needed but is probably at the maximum of what can be spent.
In relation to Prescription Charges, the House will remember that Fine Gael actually announced their impending abolition and then proceeded to massively increase them. They have been a cause of real hardship and the reduction which we secured is an important step.
Resources for education are a priority in the confidence and supply agreement.
We have insisted on reducing the primary pupil-teacher ratio because of research over many years which shows the damage which can be caused by large classes, especially to children from disadvantaged communities. We also continue to believe that given teachers the opportunity to spend more time focused on the needs of individual students is essential.
Obviously the announcement yesterday was over-spun by both the Minister and the Taoiseach. 545 of the extra teachers are demand-driven due to demographic changes.
The additional special needs teachers and assistants are badly needed.
While the commitment which we secured to restore a dedicated guidance and counselling service in second-level schools has not yet been fully implemented, the 100 extra posts next year will make a difference, again especially in schools serving disadvantaged communities.
As Deputy Byrne has outlined, we certainly do not welcome the continued reluctant to significantly invest in the DEIS programme. A series of initiatives such as DEIS which we implemented were central in securing the lowest ever level of early school-leaving and other essential educational objectives. Labour’s cuts were always a disgrace. Unfortunately for this government, new communications campaigns are over three times greater a priority for extra funding than disadvantaged schools.
Former Minister Shatter has recently been on a vindication tour of the media where he has looked at the evidence and decided that not only has he no case to answer, he was one of our greatest Ministers for Justice.
Thankfully, amongst his policies which are now being reversed is an approach to policing which saw Gardaí withdrawn from vulnerable communities throughout the country. The expansion of Garda recruitment in the confidence and supply agreement will have a big impact.
Agriculture & Rural Communities
Fianna Fáil welcomes the fact that there was some progress in the core priorities in the Confidence & Supply arrangement on Agriculture. The increased ANC funding for Farmers in Budget 2018 is a small step in the right direction.
It’s important that the details of the criteria and rollout of the loan programmes announced in the Budget are made known without delay. It is disappointing however that there has been no movement on income tax averaging measures as proposed by farming organisations or increased suckler cow supports.
The ultimate budget litmus test for Budget 2018 will be ensuring that the payment packages promised are actually delivered on time as the delays up to now have caused hardship for farmers who so desperately rely on them.
Overall, this is a modest and over-hyped budget. It does not contain major initiatives which will fundamentally alter the direction of economic or social policy. As we have now come to expect from this government, the bigger the publicity campaign the smaller the substance.
The Budget does in general conform to the agreement reached last year. In particular it does not enable the major shift of policy rightwards trailed repeatedly by the new leader of Fine Gael.
It is a budget we have issues with, but it includes important measures and is more progressive than any budget introduced during the Fine Gael/Labour coalition.
The biggest problem remains a government made up of people who lack any obvious interest in delivering on commitments as opposed to simply talking about delivery.
Crises in vital areas such as health and housing can only be addressed if the excuses stop, if the endless spin is put to the side and we start seeing delivery.