Remarks by Brendan Howlin TD on Budget 2019

10 October 2018

Yesterday, what we heard from Minister Paschal Donohoe was a budget without a purpose.
We heard a weak, spiritless and conservative budget.

There was no vision.

And there should have been one.

Budget 2019 is not like recent budgets.
This was the first budget since 2007 where the Government genuinely had real scope to bring about positive social change.

The recovery of the economy,
for which so many people suffered and worked hard,
has paid off with higher employment and healthy public finances,
giving this Government a huge opportunity to answer the vital question about our future:
Where next?

We need new ideas for the economy because we are running out of time for Corporation Tax to attract foreign direct investment.
Both the OECD BEPS process, and the European Union’s push for common standards, will reduce the unique advantage of the Irish tax system.
And many countries have simply reduced their own Corporate Tax rates, which reduces the relative attractiveness of Ireland for investment.

In Budget 2019, we should have heard leadership on the future of our society.

The Government could have earmarked €5 billion from the Irish Strategic Investment Fund to build 25,000 affordable homes.
That would have signalled to everyone that this will be a country that helps ordinary people to meet the cost of living.
But this Government has just signalled more of the same… a little extra money for the same failed housing policies:
Tax breaks for landlords and subsidies for private developers,
With much Council housing to be leased from private owners, not built.

The Government could have introduced a balanced package of measures to tackle climate change,
On a week where major reports reiterated the urgency and seriousness of the global temperature rises.
That would have demonstrated that we are going to catch up on our emissions targets and develop innovative, green technologies.
But this Government fudged it, by presenting merely secondary measures that fail to address the core issue,
which is that we need to use strong policies – like carbon tax – to re-direct economic activity into a wholly new direction, if our way of life is to be sustainable.

The Government could have introduced a plan to transform child care and pre-school education, or to finally implement the SláinteCare health system reforms.
That would have shown that this will be a country where no one is left behind and where every child and every patient is given the best possible assistance from quality public services.
But this Government has just allocated small pots of money for specific projects.
A little here, and a little there.
But no vision.

There was nothing to give people confidence that public services are on a pathway towards the higher standards we can see in many other countries across Northern Europe.

From a Labour Party perspective, we are very clear about what any Budget should do.

The Budget should help people.
It should help those who have kept faith with Government through the hard times and who rely on Government to be honest when resources are available and to give them a fair benefit from those resources.

There was a time when the Budget was a genuine national endeavour.
In the past, Budgets were about honestly showing the people what they have collectively contributed,
and explaining what we can achieve together by combining our resources to build schools, to fund hospitals and to provide income support to those who need our assistance.

Budgets used to be about including everyone as citizens of this country.
But this Government has made it clear that many people are being left to fend for themselves in a market economy where predatory landlords and vulture funds are ruining lives.

The Budget should help people to help themselves,
by giving them a secure base:
affordable homes,
affordable childcare,
and a safety net in the form of health services, welfare payments and disability supports, when they are needed.

The duty of the State is to provide people with a floor… a solid foundation that allows them to move forward with confidence, to make choices for themselves and to feel empowered to deal with the challenges that we all face in life.

The Budget is funded from public money.
And we are all taxpayers.
Those on the lowest incomes pay as great a proportion of their incomes in indirect taxes as those on higher incomes pay on direct and indirect taxes combined.
Yet, this Government has taken up a narrative… supported by Fianna Fáil… that people paying direct income taxes are somehow more unfairly treated compared to those paying mostly indirect taxes.
The facts do not bear this out.

The Budget,
funded by all citizens,
should provide universal benefits for all citizens.

The purpose of the Budget should be to bring about a more equal society,
not (as this Government has done) to reinforce the existing economic inequality that is increasingly visible in the form of houses and lifestyles.

The Budget should give us a unity of purpose,
not (as this Government has done) sending everyone to online calculators to work out what the individual benefit will be for them personally, regardless of the consequences for others.

A mature Budget process…
such as we see in other jurisdictions like Denmark and the Netherlands…
should have provided us with a picture of what kind of country the Government aspires to.
Where was that aspiration? That sense of direction?

Imagine if in ten years time,
we had an ecologically-sound economy,
and zero carbon emissions from our cities, like Copenhagen will achieve by 2025.

Imagine strong supports for traditional culture and the contemporary arts,
and true social inclusion that would allow every citizens to feel at peace with everyone else, and to feel their life was dignified,
not jealous or angry or afraid, which are visible signs of a breakdown in social cohesion and shared purpose.

Labour’s vision is to return the conversation to what we can do together, as a single people.
And what good can be achieved collectively.

The best of our people are more concerned with what they can do to assist others,
Asking nothing in return.
The best of us seek ways to improve other people’s lives, and how to make the world as a whole into a better place.

That is what the Budget should be.
The job of the Government is to provide people with a vision of a better future.

But maybe I am being unfair.
Maybe the Government have in fact been quite honest in laying out their vision.

Fine Gael will tell us that they are rewarding achievement.
That’s why those on higher incomes, or those with high level of family wealth, have been rewarded by cuts to income tax that only benefit the top 20% or cuts to inheritance tax that only benefit the top 10%.

Fine Gael will tell us that they are supporting ambition.
They are promoting an economic system based on individualism, where the strong will do better than the weak.

They have done little to change an unequal playing field for the many people who are born into material disadvantage or who have disabilities.

Fine Gael will tell us that they are empowering people to be successful.
But their vision of ‘opportunity’ for all is really just a way of fostering competition between our own people.

Fine Gael’s vision is about rewarding social status and the existing structures of social power.
That’s why the budget includes measures that are carefully crafted to reduce income and wealth inequality by not one cent.
Fine Gael seem to be quietly satisfied with the way things are.
People in big houses, seeking to pay less tax,
People in small flats, struggling to pay rising rents,
And nearly 10,000 people who are homeless, including 3,700 children.

Fine Gael has demonstrated that they are expert in at least one of the arts of Government.
Fine Gael present themselves as the new ‘centre’ party.
This is the new ‘look’ that they are after.
But their vision of the ‘centre’ is one that preserves the existing divides in society.

Fine Gael’s communication advisors have been trying to find the right ‘spin’ on this lacklustre budget.
They’ve tried calling it a budget for children and families.
It isn’t.
A budget for children and families would have included measures to benefit all of the children of this country with universal services for all, not meagre, targeted measures.

Fine Gael have tried calling it a budget for housing and health care.
It isn’t.
If resourcing healthcare really was a priority, after eight years of Fine Gael Health Ministers, we would have a handle on both inputs and outcomes.

Budget 2019 was the test of this Government’s claim to be the new ‘centre’ of Irish politics.
The image consultants who devised that particular communication strategy will have to go back to the drawing board.
Because when we look at who will benefit from Budget 2019, it is not the people at the centre of Irish society.

The median age of our people is 37. Half of people are older, and half younger.
So if we consider that 37-year-olds are at the middle of Irish society, what is their experience? What is one of their major concerns?

Climate change.

Younger generations get it.
This Government got it wrong by not raising carbon tax, and by failing to prioritise climate action.
They are passing the cost on to the next generation.

By failing to heed the latest urgent reports on the need for drastic action, this Government has failed on the greatest issue facing humanity.
And since Fianna Fáil’s spokesperson made a point of attacking Fine Gael on climate change, let them share the blame too.
Fianna Fáil have made it clear that their Confidence and Supply deal with Fine Gael has resulted in a series of tax cuts and spending measures that Fianna Fáil wanted.
But that obviously didn’t include climate action.
Fianna Fáil decided to use up their influence for other priorities.

Our 37-year olds were aged 26 when the economy collapsed.

Some had several years of work under their belts by then,
Others were just finishing studies or starting off in their first professional job.
Very few of them were home-owners in 2008.

And relatively few of them have become home owners since then either,
due to the barely-controlled rise of rapacious rents that have absorbed so much of their incomes,
while some of our citizens in their 40s and 50s are hell-bent on recouping their losses from the economic collapse, regardless of how that affects the chances of the next generation.
Policies and practices that have driven house prices up again have locked a generation out of the security of home ownership.

For 37-year olds, the ‘rainy day fund’ makes no sense.
A ‘rainy day fund’ may sound prudent but taking €1.5 billion from the Strategic Fund is just a change on paper, not new money.
And where will it now be invested? Will it be liquid?
Taking €500 million out of tax money for this fund fails to see that it’s raining heavily now.

37-year olds have often started young families,
Or they are holding off… waiting for a family home…
And they do not see the likelihood of gaining access to an affordable home now, when they need it.

Those who are renting only see their rent going up… far faster than their incomes.
Even those on good money feel insecure about their tenancies…
And therefore feel insecure about starting a family.

The depth of insecurity created by our dysfunctional housing system is causing deep and lasting damage to the cohesion of our society.

Our 37-year olds are well educated.
And they are not going to fall for ‘weasel words’ from the Minister yesterday,
That more houses will be built next year than in any year of the last decade.
A decade of economic ruin and painful recovery.

The miserable €300 million over three years for a so-called affordable housing scheme is highly suspect.
Up to 6000 households will benefit.
But how will they be chosen?
And will this involve giving up public land for private profit?
This is not anything like a sustainable or adequate solution to the housing crisis.

The scale is totally wrong.
Tens of thousands of affordable homes and Council houses are needed, and only the State can provide them.

State building of homes requires much greater levels of investment.
Labour would not have created a ‘rainy day fund’ but would invest €16 billion to build 80,000 homes in five years.
We’d dedicate €5 billion from the Ireland Strategic Investment Fund, €3 billion from tax revenue over five years and create an investment vehicle (a National Housing Development Bank) that would permit pension funds, Credit Unions and the European Investment Bank to invest in housing.
Labour’s investment would be economically sustainable.
We would rent homes to all comers, providing local government with a revenue stream that will eventually recover the whole cost and permit the building of further affordable and social homes for future generations.

The €17 billion investment in health is necessary.
But the Government has failed to provide accountability for the €17 billion spend.
Fianna Fáil has increased privatisation in the health system by pushing the ‘treatment purchase fund’, which sends public money to private hospitals rather than a sensible system, as was done successfully in the past by me as Minister of Health, of offering a pool of money to our public hospitals, for them to bid to increase the volume of tests and procedures they carry out using existing staff, and on a not-for-profit basis.

I do welcome some measures in Budget 2019.

The €5 weekly increase to social protection payments is welcome.
But it is only about 2.5% increase when the cost of living in recent years has risen faster.
More could have been done to lower living costs through public spending that would eliminate certain costs,
for example €40 million would have provided schoolbooks at primary and secondary level free-of-charge for all our children.
The 3.5% increase for the Gardaí is welcome.
And should be focused on community policing.
But at the same time, it is inadequate.
We have gone through an extensive justice reform programme to bring about a transformed Garda Síochána.
We must not fail to fully implement these reforms for want of sufficient investment at the last hour.

Extra funding for Children and Youth Affairs sounds good in theory.
But it mostly seems to be targeted spending rather than the development of a much needed universal system of childcare and pre-school education that would benefit all families.

A higher Minimum Wage is necessary, given the rise of living costs.
But the new Minimum Wage of €9.80 is still €2.10 short of a Living Wage that would permit a basic, even frugal, Minimum Essential Standard of Living.

The VAT reduction on electronic media to the same 9% newspaper rate is probably a fair reflection of technology change in the news industry and will support local newspapers and journalism.

The increase to foreign aid is also welcome, but we need to discuss how to ensure this money is most effectively spent.
We seem to have exhausted our institutional capacity to spend the money directly, through Irish Aid, and increasingly we are giving money to UN agencies to disperse.
As we move towards meeting our commitment to greater foreign aid, we need to put in place the necessary institutions so that we can direct that money ourselves through Irish Aid programmes and to find niche areas where we can lead, as we did on the issue of global hunger in the past.

An extra €55m has been committed to mental health, but there is a lack of concrete information on what practical changes this will deliver.
On World Mental Health Day, we should recognise that many people in Ireland experience anxiety and difficulty with their living situation, in precarious work, and precarious homes. This budget offers too little to address the social and economic factors that worsen mental ill health conditions.

And while the best Brexit strategy is still to push for no Brexit, preparation for Brexit should mean strengthening of the economy and its resilience through infrastructure investment.
Not creating a ‘rainy day fund’ to bail out the banks again.

The Government’s approach to taxation is quite simply wrong.
Tax is not a ‘burden’.
It is the way decent societies collectively pay for hospitals, schools, childcare and indeed enterprise supports to benefit all of us.

The decision to spend nearly €300 million on tax cuts was a mistake.
The USC and Income Tax changes do not really benefit of those who are most squeezed:
Renters, carers and those facing impossibly expensive childcare.

Rather than giving workers back some small change,
The same resources could have made major changes where they were most needed.
The €284 million spent on the USC and income tax cuts could have provided free schools books at primary and secondary level (for €40 million), placed a defibrillator in all 3,960 schools (€6 million), continued the Area Based Childhood programme in deprived areas (€10.5 million), added capacity to the over-stretched school transport scheme (€2 million), reduced the student contribution at third level by €1000 (€67 million), added €100 to the carer’s support grant (€11.8 million), ensured all public servants were paid at least a Living Wage (€39.3 million), restored the Trade Union tax relief (€26.7 million) and provided free GP care for all children under 18 (€80.6 million).

The Government chose not to do any of these things.

Instead, those on the Minimum Wage will gain just 15 cents a week from the USC changes.
Those on a Living Wage of €24,500 will gain 39 cents a week.
Those on €70,500 will gain €5.47/week, which is still only the price of a sandwich.
The Taoiseach promised a budget for middle income families, but delivered one for high earners.

Similarly, very few people will benefit from the tax-free inheritance of €310,000.
There was no need to raise it by another €10,000 when our people have so many other priorities.

As with all budgets, it’s what is not said that is a big part of the story.
This budget was the first in a decade that offered a chance to lead in a new direction.
But the Government offered no vision and little hope of changed policies on housing, climate change or public services.

‘Stability’ is the Government’s new code word for ‘conservative’.

But the housing system is unstable.
And the Health Service is unstable.
And the cost of living is simply unsustainable for most families and individuals.

I believe that those people who are securely housed would be willing to use the available money to help others, and to fix the problems facing society,
instead of getting a few euro a week for a cup of coffee or a sandwich.

And people are not looking for handouts, but simply to be able to afford a home, to afford childcare and to afford the other costs of living that would allow them to have a basic decent lifestyle.

As a society we can afford these things.
We can afford to build affordable homes for all.
We can afford to develop a truly fair, single-tier health service, by implementing the SláinteCare reforms.
We can provide quality public services that provide everyone with a secure foundation to their lives in these turbulent global times,
and allow them to make important decisions for themselves, to start families and to move forward with their lives.
We can take action on climate.
As individuals, people often feel helpless by a problem that is so much bigger than what any one person can take on.
Government needs to provide leadership.
We need to act collectively to have any hope of avoiding the dire scenarios that scientists have repeatedly confirmed are a threat to future generations here and everywhere else.

Most people want a more equal society.
They want social justice and fairness.
And we can achieve this,
if we work collectively.

The Government and its supporters have rejected that path.

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