Donohoe misleading public on up to €2.2 billion available for new measures in Budget 2019

Labour Finance spokesperson Joan Burton has highlighted that there is actually up to €2.2 billion available in the fiscal space for new measures in Budget 2019 before any new revenue raising or saving measures, and that the Minister for Finance is misleading the public debate. A further €2.6 billion has already been committed. The Minister also needs to clarify if a 2:1 ratio continues to apply to Budget measures.

Deputy Burton said:

“The Summer Economic Statement shows that there is actually up to €2.2 billion of fiscal space available for new measures in next year’s Budget but political decisions made by the Minister and Fine Gael is limiting this to €800 million.

“The Minister for Finance has decided to commit half a billion to a Rainy Day Fund, and leave a further €900 million unspent.

“These are policy decisions the Minister is making that are also deliberately misleading the public debate. The Irish people who have made huge sacrifices over the last decade to correct the public finances deserve to know the full facts. With €2.6 billion already committed to meeting the costs of policy decisions made last year, we don’t know if the 2:1 ratio Fine Gael and Fianna Fáil have agreed for budget measures will encompass the extra capital spending this includes or if it will just apply to the €800 million the Minister is proposing to allocate in October.

“In the midst of a housing crisis and huge capacity issues in our health system with over 700,000 on waiting lists, the Summer Economic Statement as structured is ignoring the capacity problems within our health service that the Slaintecare report shows needs urgent strategic investment.

“Front-loading investment into public housing would go much further in protecting our society and economy, reducing reliance on the private rented sector, and providing security to families across Ireland.

“The Minister has used concerns about corporation tax to justify a rainy day fund but if there is fluctuation in the money coming in, then we need to take action to make our tax base more secure. Measures to do that could include implementing an effective minimum effective rate of Corporation Tax. We could also look at the overall composition of tax revenue to see whether it would be resilient if there was a sudden economic downturn, as could be caused by a disorderly Brexit.

“Ireland already has a rainy day fund in the form of the Ireland Strategic Investment Fund and significant share holdings in the banks that provide a buffer for future shocks. The fiscal strategy the Government is pursuing is an effort to avoid a repeat of past mistakes but instead is failing to address the crises Ireland is facing today.”