Labour finance spokesperson reacts to Budget 2024

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RTE does too many repeats. And so does this government.

There is truth in the hackneyed description of this as a Late Late Show Budget, with one for pretty much everyone in the audience.

It is worse still. It’s a Reeling in The Years budget. A lazy re-run of all that was wrong with Budget 2023.

Tax cuts that favour the better off. Again.

Failure to properly fund the public services to a level this rich Republic should expect. Again.

A wad of once-off payments, but no permanent change. Once they’re gone, they’re gone.

A Budget that, again, will be found to be regressive, once lump sum payments melt away like snow on a ditch.

Like the Late Late Show, we’ve changed the faces, but the formula is the same no matter who’s fronting the gig. Fianna Fail or Fine Gael. It just doesn’t matter.

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In my almost 14 years here, I have rarely seen such frustration among the general public.

This is the first time since 2010 a FF Finance Minister has delivered a Budget.

And what do you do? Give a brain-dead tax break to landlords. Same old FF.

Having fixed the economy, 2016 to 2020 was the chance to fix our society.

To build homes. To invest in public childcare. To get to grips with the climate catastrophe. To get our health service right. To start the work of tackling the divisive inequality gaps. To build the foundations for a better more sustainable future.

Wasted years for which we are still paying the price.

Fast forward to 2023.

Under FF and FG we are a country of contradictions.

Rich and poor at the same time.

Saving almost €7b in bank accounts last spring when two out of every five of us can’t lay our hands on €1,000 to meet an out of the blue bill.

Over 20% officially on low pay when Irish corporate profits break records.

Yet, we cannot get the basics of a grown-up country right.

As someone who is proud of our country, and prouder still of the great country we can be, it gives me no pleasure whatsoever to say that.

If ever a country donned the proverbial fur coat (and you know the rest of the old colloquialism), it’s Ireland.

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Just read the piece in last Monday week’s FT. It took a look behind that coat. It asks;

• How can such a rich country have, and I quote, have “transport, health, education, and water services under increasing strain”?
• Why can the two-thirds of young people imprisoned in the purgatory of their childhood bedroom not afford to rent or realistically but their own home?
• Why are one in ten Irish on health waiting lists for more than 18 months, when the official target is three?

Thankfully nobody told them how much it costs a working family to get the kind of childcare the Danes and the Swedes, citizens of other rich countries, rightly take for granted. Now, that would be embarrassing.

We are, as IBEC’s Ferghal O’Brien said to the FT, nouveau riche. “What is the point,” he said, “of us being a wealthy country if we don’t have the things we need the most – physical infrastructure, social and public services.”

IBEC got it in one. And the ICTU agree.

But, tax cuts. The perennial FG answer to a question absolutely nobody is asking.

• I can’t get an assessment for my child. You know what, how about a shiny tax cut instead.
• I’m twelve years on a housing waiting list. I know, but here’s a fiver a week. Good luck.
• I could really do with more affordable childcare. I suppose you could, but here’s a tenner back on your USC. Now jog on.

Performative tax cuts when we need performing public services.

Every euro in tax that’s cut, if not replaced by taxes elsewhere is one euro less for the social wage.

For schools, hospitals, childcare, community safety.

As fiscally ignorant as it is socially damaging.

Throughout our party’s long history, Labour was never short of vision. It was resources we were short of.

Today, and on the evidence of this botched budget, while we have the money, this government is woefully short of vision.

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ONCE-OFFS

€2.3 billion in once-off measures is no small sum of money. It is a lot of money, but spread so thinly that nobody will be happy.

Yet such a wall of money on lump sum payments is no cause for backslapping on the backbenches.

Their necessity should be worn as a badge of shame by this conservative coalition.

Why are these interventions needed? Because;

• Under your watch, the real value of workers’ wages has dropped
• On your watch, living standards have fallen like a stone and for the first time since 2013
• Under FF, yes, FF, the spending power of the pension has been effectively cut three budgets in a row. Where is Willie O’Dea when FF needs him?!
• Over 20% of workers are still on low pay, and
• Deprivation rates were up 4 points when you crafted last year’s Budget, one you had to follow up with a mini-budget in February.

You wouldn’t need to spend so much if you got things right last year.

Those who are most in need are still paying the price for below inflation social welfare increases last year and no increases in child benefit, the living alone allowance or child benefit last year either.

Another so-called once-off package needed because you’re too ideologically blinkered to make the structural changes needed to make our economy work better. To make it fairer.

And here we have the return of our friend the energy credit. The very definition of an untargeted payment. Popular, yes, but populist too.

A questionable use of public money if ever there was one.

Let’s put this in some context.

You spent €1.2billion this year handing out €600 of free money to me and hundreds of thousands of others who did not and do not need it.

€1.2 billion is €100million less than you plan to spend on increases to all welfare schemes next year.

It is multiples of what this government plans to spend on combating child poverty.

This beggars belief.

Labour’s €3billion package of cost of living measures targets the money where we know it is needed most.

• An October, and not just a Christmas bonus for those who need it most
• €15 a month immediately on the pension, carers and other payments
• Our €9 per month climate public transport ticket to relieve pressure on commuters, on students, and to help our climate
• A doubling of the rent credit to €1,000 now.
• An emergency €90million empty homes fund to bring homes back into use for our young people and the almost 13,000 living in homelessness

Money to where it is needed the most, and now.

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BUDGET TESTS

On every single top-line economic and fiscal measurement, Ireland is doing well.

Income tax is up. VAT is up. Employment is up. Corporation tax speaks for itself.

We have a surplus. Even when we strip away any so-called windfall CT gains next year, we will still report a surplus.

The envy of Europe on revenue. The poor relation on economic equality and childcare, health and housing.

For too many this budget won’t change a thing.

Politics is about choices. And the choices made in this budget, at a time of plenty, do not pass the tests of social solidarity and of fairness.

• Will it make the permanent changes needed to lift families and children out of poverty? No. It won’t.
• Will it truly reward work by using our taxes the way workers want them used – to fund the care system that’s the mark of a progressive society? It doesn’t.
• Will it deliver the step-change on housing our young people and the future competitiveness of our economy so desperately needs? That’s a big fat no too.

Labour’s €11billion costed package maps out an Ireland that works for all.

• Not just an Ireland that works if you earn over €70,000 a year.
• Not just an Ireland that works if you own your own home.
• Not just an Ireland that works if the cost of living crisis is something you’ve only heard about on the news.

On work. On care. On Housing. On climate. We need an Ireland that works for all.

On work and incomes

Ireland’s low pay problem is chronic. One in five are officially low paid.

Our welfare system must do too much heavy lifting to keep our working poor out of poverty. There is no dignity in that.

That’s why in Labour’s view the National Minimum Wage must go up €2 an hour to €13.30 and not by €1.40. We need to move more quickly to a real Living Wage, not the rebranded, watered down version government has in mind.

In our costed alternative budget Labour has ringfenced €1.3billion for a new public service pay agreement. Talks have yet to commence but this allows for in the region of a cumulative 5% increase for our nurses, HCAs, teachers, SNA, Guards, council workers and civil servants.

Government’s allocation, and SF’s should concern public sector workers. It is nowhere near enough to make a meaningful difference for those who deliver the services in our hospitals, schools and in every community across the country.

The truth is, when we take inflation into account, public sector pay is at 2012 levels, and the rate of pay increases are well below those in the private sector.

And the Justice Minister has yet again shown to have no deftness of touch when it comes to Garda pay. At a time when a record 114 Gardai have hung up their boots, when communities are in crisis, you stick a few euros on to the training allowance. A hail mary pass, hoping it will all work out. How was this worked out? It doesn’t make sense.

€305, up from €184. It’s less than the current rate of the NMW and an insult to a new recruit.

The Taoiseach himself has admitted new recruits are often older than former intakes and are leaving jobs to join the Guards. Some will have families and financial commitments.  At this rate, they won’t be queuing up to join or stay in training.

Something much more radical needs to be done. For a small €15million a year, as proposed by Labour, 900 new recruits could be put on the starting salary for a Garda of €35,000 across their training period. If the Minister is serious about making AGS an attractive proposition for the right kind of people, this is what she needs to do, and she needs to do it now.

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We get a real sense of this government’s priorities when we look at the welfare package.

It is incredible that the tax cut and the 2024 welfare package are the same size.

Just look at this. If you’re a single person on €75,000 who owns your own home, you’re up over €2,000 already already, thanks for MIR and income tax and USC changes.

A pensioner in a Council house? It’s about €700. Who needs a break more? This government has picked a side.

When welfare rates need to be increases by €27.50 a week, you give €12.

This is not a figure Labour has plucked out of the air.

When are we going to look at our welfare system through the lens of income adequacy?

Society has a settled view that core welfare payments must be set at 34% of average income. FF believed the same in 2007. You have moved away from that principle.

This year’s budget leaves those who are on small-fixed incomes still gasping for air.

It’s why Labour is clear. We need to index our social welfare and personal tax systems.

It would be the mark of a mature democracy if this was just done automatically every year, rather than use the summer months filing the papers with speculation and spin ahead of the Budget being finalised. Now that would be a game changer.

The Social Protection Minister knows only too well that there is an extra cost involved in living with a disability.

We need to see a new cost of disability payment, as Labour has called for, starting at €20 a week in this Budget.

That’s the kind of reform we need for people with disabilities who need more help to live with dignity, not the Tory inspired racket you looked set to propose a few weeks ago.

I am pleased to see that the process of pay-related benefits has commenced, at last. Labour has proposed this again in our costed alternative budget.

Too late for the people I represent in Tara Mines. A welcome development, but paid for by workers themselves through PRSI increases.

In fact, the Tara Mines job losses may have been avoided if government took Labour’s advice and set up a German style short time work scheme with seed funding of €400m.

So, when will this government bite the bullet and admit what even employer groups are saying on social insurance?

If we want to fund improved benefits, they have to be funded, and funded by bringing employers’ PRSI gradually up to EU norms.

This is the responsible thing to do, for the workers of today and the pensioners of the future.

Setting up a dedicated wealth fund to help with ageing costs should not mean we pretend that ageing costs are covered. They’re not.

There has never been a better time to start adjusting PRSI. Full employment. A red-hot economy at capacity. A precarious and unbalanced tax system. This government needs to get a move on and stop avoiding unpopular decisions.

You are proposing a back of the envelope scheme to help small businesses shoulder extra costs. The motivation is understood, bit it has all the hallmarks of a sop, a bribe to businesses. How it is designed and applied is crucially important.

Labour has no difficulty with support schemes for viable enterprises going through a difficult time. There must be social, labour and quality job and collective bargaining conditions attached. And it will cost double what you say it will, unless you decide not to fill the €250m hole left for the funding of local Councils.

But must be limited to firms of a certain size and legal structure. The scandalous paying out of dividends to shareholders by some companies who were on the EWSS is a scandal you cannot be allowed to repeat when it comes to this scheme.

WHERE IS THE CHILD POVERTY PLAN?

I must admit my heart danced a little last December when the Taoiseach pledged to tackle child poverty head-on.

I should have been more wary. This government has not passed the first test.

We needed a children’s budget to end child poverty. Instead we got a budget for landlords, some homeowners and higher earners.

In 2022, 188,602 children lived in households that were below the poverty line and 247,574 children were living in households experiencing deprivation.

Child poverty is a national scandal. It must be ended, but it won’t be ended by this government.

Labour has proposed a series of measures including making a good start by increasing the QCP to €15 for children over 12 and €10 for the under 12s.

While poverty is not only about money, it is always about money.

This is the very least that ought to have been done on our way to developing a second-tier of targeted child benefit that could have the potential to chart a new course for our children.

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ON CARE

Nowhere does this Budget disappoint more than when it comes to childcare.

It promised little and has delivered less.

The Minister has only just managed to persuade his FF and FG colleagues that childcare fees should come down by the promised 25%. This is an eleventh hour job to spare the blushes.

Nowhere does this Budget disappoint more than when it comes to childcare.

It promised little and has delivered less.

It won’t come into effect until next September next year. So for children who started creche in 2019 or 2020 their parents will have only seen one reduction during their time in early years.

The situation is stark for parents, for children and for skilled professionals in the sector.

The picture painted by the results of a survey undertaken by my colleague Senator Marie Sherlock in Dublin Central is revealing, and in my experience bang on the money.

Nearly half of parents cutting back on working hours to make childcare arrangements work.

21% said one parent had to give up work.

Severe shortage of places for babies under one.

Services that are barely affordable if they are available at all.

Small and agile services closing.

A picture any of us in urban Ireland will recognise.

When are we going to wake up and decide to revolutionise how we do quality early years in Ireland?

The course we are on is manifestly not the right one.

We need a system built on equality for children, affordability for parents and fairness for professionals.

It’s why Labour says we need to get a start on our vision of a universal public childcare system with 5,000 places at a cost of €65million in 2024, a cap of €200 a month on fees and an increased investment of €142m in core funding as a glide path to fair pay for professionals.

A minimum of €92 million was the cost that the SIPTU big start campaign costed was needed to improve pay and conditions by at least €2 an hour. A further €50m then would be needed to recognise length of service and qualifications.

This government and the last have been criminally ill-prepared for the crisis in care that’s developing.

The census laid this bare.

Between 2016 and 2022, the number of people providing regular unpaid care increased by over 50 per cent, from 195,263 people in 2016 to 299,128 in 2022.

We still have too many people who care full time for a loved one who’s work is not adequately recognised by the State.

Let’s change that and make sure that, at least everyone in receipt of the respite grant gets the carers allowance in recognition of their invaluable work.

It’s time for the lip service to end.

ON HOUSING

Our Party leader was not wrong when she said housing is the civil rights issue of our time.

But this tired government doesn’t see housing as an issue of rights.

For you, housing is a commodity. A house is an asset to transact.

When the eye-catching budget interventions on housing are tax reliefs for landlords and mortgage interest relief, what’s left of your credibility is gone.

Housing for All is a busted flush. In the lifetime of your signature plan, all we have got to thank you for is a 50% rise in homelessness, record rents and record house prices.

4,000 homeless kids and you swear blind your grand plan is working.

Your plan is failing, and today’s Budget tells me all you’re going to do is fail better.

Your limp anaemic vacant homes tax is set so low you have had to review it before you even start sending out the bills. You announced it a year ago and the rubber still hasn’t hit the road.

Your hands-off approach to vacancy and dereliction is disgrace. It is state-sponsored vandalism and the victims are first-time buyers and communities across the country.

We have anything between 25,000, 70,000 or 170,000 homes lying idle in the Ireland of 2023.

You cannot even properly measure the scale of the problem! You don’t seem to care.

If you can afford to leave a home vacant for years or a building you own derelict and abandoned, your pocket should be squeezed until the pips squeak.

That’s why Labour says, slap a levy of 1% of value or €2,000 on the owners of vacant homes. Get it moving or the Council will put a CPO on it.

Government has sneered at Labour’s plans for a million homes over ten years.

50,000 nee builds and 50,000 vacancies, empty Council homes and derelict would-be dwellings turned around to meet the needs of our growing population and our economic needs.

That’s the level of ambition we need. It’s the level of ambition Fianna Fail, true to what they like us to think their values were back in their halcyon days, would do.

Yes, there are capacity issues, and if you were serious about it you would stop paying apprentices below the NMW, give the Housing Agency the job of looking after construction skills and widen the skills construction eligibility categories on the critical skills list until we rebuild our skills base.

This could all be done at the stroke of a pen, if the political will is there.

In the meantime, those who can manage to find a place to rent need the rent credit to be upped to €1,000 and they need to be protected from no-fault evictions and to see a three-year rent freeze as provided for in Labour’s Renter’s Rights Bill.

But there is simply no substitution for supply. And public supply at that.

Government’s overall Capital Plan is in trouble.

Th Irish Fiscal Advisory Council said earlier this year that the National Development Plan – because of inflation and demographics – is underfunded by 25%.

Overall, government plans add only €250m to capital spending across all heads next year. This is unconscionable and will mean fewer housing than government’s own meagre targets.

This won’t even keep pace with inflation.

An economic analysis we commissioned shows that at least another €1billion needs to be invested by the State in housing delivery next year.

Government should follow Labour’s lead and add the €1.6billion we have proposed in our alternative budget for social and affordable construction in 2024. Half of that – €860m funded by excess corporation tax – would build just under 3,000 new public homes on public land, adding to your unambitious total of €9,300.

As interest rates bite and lines of credit to developers become tighter, the case for more direct State intervention in house building is getting stronger by the day.

There is a game of smoke and mirrors going on with cost rental and affordable homes. Reliable figures are hard to come by and that’s the way government likes it.

It is shocking that only 101 affordable purchase homes were delivered in the first half of this year, and a mere 22 cost rental units.

There you go. Failing better. Again.

Would it not be better to take our advice. Phase out Help to Buy and the shared equity scheme – the former a gift to the bank balance of builders – and use some of the savings to deliver 4,000 cost rental affordable homes in 2024.

THE ROLE OF THE STATE

Labour is ambitious for Ireland. And we are responsible too.

Economic analysis commissioned by the Labour party argued while windfall tax receipts should not be used to fund permanent tax cuts or increases in spending, creating a sovereign wealth fund to address future ageing costs is unlikely to effectively reduce net ageing costs. A national infrastructure fund would be of greater benefit, as secure funding would help prevent the previous boom-bust pattern of public investment.

The proposed infrastructure, climate and nature fund in theory meets the criteria I have outlined, but the conditionality that will be attached to drawdown will be crucial to how it can provide future counter cyclical support and act as an automatic stabiliser for state investment. Will it be used to drive state led investment and delivery of offshore wind or will we leave that most critical strategic objective entirely to the private sector? Clearly it is a good thing if one fifth can be drawn down if needed to meet climate targets but we need to see more detail.

Will it be available to build social and affordable homes? Labour wants to establish a new state construction company and use these future savings to finance the long-term investment programme in housing construction, retrofitting and renovation.

Our economic and fiscal analysis shows that increasing spending by up to €2.3billion above the levels set out in the Summer Economic Statement, and in a targeted way would not add to inflationary pressures. Government spending plans do not keep pace with inflation.

In real terms, that means real time cuts to public services that are already stretched.

Private sector investment is likely to cool so there is space and there will be the need for the State to step in and bolster domestic demand.

Everyone worth listening to – including employer bodies – tell us the State is too small and our infrastructure too limited to service the economy we have, let alone our ambitions for the future.

It’s why Labour proposes to allocate an additional €2.3billion to address chronic capital investment deficits and bring that spend to an EU norm of 5.1% of GNI* in 2024.

TAX

We welcome the retention of the Bank Levy. We want it at €500million, why have you set it so low at a time when banks look set to record profits of €5billion.

Things need to be paid for. And we need to have a serious debate about tax.

This House still has not had a formal debate about the year-old Commission on Taxation & Welfare Report.

The tax base urgently needs to be broadened. Every day we are warned about the vulnerability of the corporate tax base, yet in the same breath, we see tax cuts disproportionately benefiting the better off.

It should not be the job of a Party in opposition to tell you this.

We collect seven percentage points less of revenue than the average of six of our peer countries. It is especially true when it comes to social contributions.

It should not be up to an opposition party to point out to government that revenue needs to be hiked by 1-2% of GNI* to sustain our levels of public service provision.

The warnings are there.

Government will tell us today that the very fact that we are putting excess corporation tax raised into a savings fund and a separate capital and climate fund is an exercise in prudence.

Frankly, no medals should be handed to anyone for taking this sensible step.

What we need to do too is to take the responsible step of taxing non-productive passive wealth more, moving away from a focus on taxes on work to capital.

It’s not radical. It’s realistic and it is fair.

We cannot pretend that spending can be increased at the same time as cutting taxes, and that things will work out any differently than the last time.

We have a chance now to learn from the ruinous mistakes of the past.

Savings and investment funds, aside, Labour is right to wonder.