Leaders' Questions

Now that the latest Exchequer returns and the second quarter economic data have been published, we are entering a period of intense political negotiation around the budget, which will be announced in 12 days' time. Fianna Fáil fully accepts the imperative to continue to reduce the budget deficit until we get to the point at which the Minister for Finance of the day is able to stand up in this House and announce a balanced budget.

People welcome any evidence that there is an improvement in the economy, but the Tánaiste would be the first to admit that they are not seeing any evidence of that yet in their daily lives or in their pockets. The truth is they will not see that evidence for some time to come, because any recovery in the economy will be gradual and budgets will be tight for a number of years yet in this country. We believe it is possible to achieve our deficit target in the forthcoming budget while also protecting vital areas such as education and mental health and disability services. This will not be easy, but it can be done. It is about minimising the inevitable damage inflicted on an economy when more money is taken out of it, while at the same time protecting the essential public services on which people rely. Above all else, the budget must be fair. Unlike the last two budgets, its impact must be progressive in nature.

As the Tánaiste knows, the ESRI independently verified that the last two budgets disproportionately affected those on low and middle incomes. Those people cannot afford a repeat of that in 12 days' time. The Minister for Finance has now confirmed that the budget adjustment will be somewhat less than the anticipated €3.1 billion.

Any chance of a question instead of a lecture?

Please allow the Deputy to continue without interruption.

I welcome this. Now, it is about getting the budget right in terms of the adjustment figure and, perhaps more importantly, in terms of the detailed budgetary measures that will be contained therein.

In various interviews, the Tánaiste has stated his view quite strongly that the adjustment should be no greater than is necessary to achieve a deficit target of 5.1%; in other words, that no more be taken out than is absolutely necessary. Is that still the Tánaiste's view?

I acknowledge that Deputy Michael McGrath has agreed the economy is recovering. I also acknowledge that many people have yet to experience that in their lives. We are seeing an increase in employment - 3,000 additional jobs per month. We have seen a drop in the live register figures this week and the level of unemployment is at its lowest level since 2009, down to 13.3% from a high of 15.1%. We are also seeing improvements in areas such as construction. Over the course of the past year, there has been an 11% increase in construction activity. More significantly, we are seeing an increase in the number of planning applications, which were up approximately 37% last year. All of this indicates an improvement.

In regard to the budget, the Exchequer returns show that Ireland is now on track to meet its targets in 2013, with tax receipts on profile and expenditure under control in the year to the end of September. This highlights again the consistent improvement in the management of Ireland's public finances by the Government. The Exchequer deficit at the end of September 2013 stood at €7.142 billion, which is €4 billion lower than the same period last year. The tax base is growing and we have just under €26.9 billion in taxes collected this year, up €768 million on the same period last year - an increase of almost 3%. More significantly, income tax receipts were up by €400 million last year. Given that there was no increase in income tax last year, this reflects the overall increase in the number of people now at work in the economy. VAT is up by €80 million, reflecting an increase in retail activity.

On the broad budget issues, I have said from the beginning of public discussion that I believed it was possible for us to meet our target this year through a budget adjustment of less than €3.1 billion, which was the figure being advocated by many commentators. The Minister for Finance confirmed yesterday that it should be possible to meet our targets this year through an adjustment of less than €3.1 billion. Deputy Michael McGrath is correct in saying that budget discussions are at an intensive stage. Obviously, they will not be completed until closer to the budget and at that stage we will have a final figure for the adjustment.

If one parses what the Tánaiste has just said, that is a change in his position. He has not just been saying all along that the adjustment can be less than €3.1 billion. What he has been saying, repeatedly and clearly, is that the adjustment should be no more than is absolutely necessary to achieve the deficit target we are required to achieve. That is what he has been saying. I still do not know what that figure is. It could be €2.5 billion or €2.7 billion. The Tánaiste has not just been saying it should be less than €3.1 billion. Will the Tánaiste advise whether it is still his position that the adjustment should be whatever is required to achieve the deficit target and no more? It is important that he confirm that.

The fundamental point I want to make in regard to the composition of the budget is that it must pass the basic test of fairness.

In my view, the two most recent budgets have not passed this test. One will never have consensus on what is fair, but the best measures are whether the impact of the budget is progressive and the burden of its measures is carried by those who are most able to carry it. This was not the case in the two most recent budgets. Is the Tánaiste's position still to have an adjustment of no more than is required to achieve the figure of 5.1%? Will the budget pass the basic test of fairness which the two most recent budgets did not?

One thing that is certain about the budget is that whatever is in it the Deputy and his party, and the Opposition generally, will oppose it. That is pretty certain and let us start with it. We are entering-----

The Tánaiste was pretty good at it himself.

Of course, it is politics.

Therefore, the Tánaiste agrees with the Minister, Deputy Pat Rabbitte.

It is what the Opposition is there for.

There is no need for the chorus.

We are now entering political discourse on the budget, which is fair enough. Deputy Michael McGrath will not tempt me to tell him the budget figures in advance of the Minister for Finance and the Minister for Public Expenditure and Reform making their statements to the House.

I did not ask the Tánaiste to do so. I asked him whether his position had changed.

The position has not changed. We are on track to exit the bailout programme this year. We know we have a deficit reduction target to meet. We also know we are seeing recovery taking place in the economy and we can all look at the figures which support this. We must ensure this recovery is not put at risk, that we continue to meet our targets and that the budget meets them, continues to support employment, is directed at getting people back to work and is fair. I reject entirely the Deputy's assertion that the two most recent budgets were not fair. There were measures-----

Talk to the ESRI.

It was independently assessed.

It is factual. The Tánaiste is ignoring the evidence.

As we are over time, please let the Tánaiste finish.

It is a bit rich coming from Fianna Fáil, when it signed up to an agreement at the end of 2010-----

-----which prescribed what would be in the budgets for the subsequent three years.

That is not true.

It is true. Go back and revisit it. The utter hypocrisy-----

Is the Tánaiste saying the recovery is based on those decisions?

Will the Deputy please try to restrain himself?

This is total hypocrisy on the part of Fianna Fáil. It signed up to an agreement in 2010 which prescribed what would be in the budget.

Are we responsible for the recovery?

We had to change this. Now that we have succeeded in getting us to a point where we are exiting the bailout programme and seeing the economy recovering-----

Will the economy rocket?

-----it is as if Fianna Fáil wants to wipe history clean and pretend it never had a hand, act or part in the mess we inherited in the first place.

Is the Tánaiste thanking us for the recovery?

This morning we heard first-hand stories of families struggling to pay their gas and electricity bills. According to the Society of St. Vincent de Paul, the average cost of energy bills has increased by €500 per year. Working families and those out of work are simply unable to meet the spiralling costs of gas and electricity. When one hears their stories, they are heartbreaking. In my constituency I have met young mothers who have gone without gas or electricity. I have spoken to fathers hit by wage cuts and tax hikes who have seen their arrears spiral out of control. Many of these families were forced to make a choice between feeding their children or paying their energy bills. The arrears mounted up and the sleepless nights increased. What has been the response of the Government to this? A Labour Party Minister cut the smokeless fuel supplement, increasing costs for people living in cities. A Labour Party Minister cut the fuel allowance payment period by six weeks, wrenching €120 out of the pockets of families struggling to pay their fuel bills. A Labour Party Minister sat back and did nothing as the regulator hiked up gas and electricity costs; as a result, the arrears mount and the sleepless nights increase. Given the Tánaiste's commitment to fairness, as expressed this morning, will he tell these struggling families how he will help them to meet their gas and electricity bills in budget 2014?

I agree that energy costs and the price of fuel have been increasing. As a country, we are on the receiving end of the internationally set price of fuel. We are at the end of a very long pipeline from Russia.

I have looked at the report from the Society of St. Vincent de Paul and welcome it. In particular, I want to look at where the society focuses attention on what can be done to ease the burden on hard-pressed families in paying their fuel bills. The statement issued by the society states that with some basic investment some homes could become warmer, healthier and cheaper to run. I agree with this. It acknowledges that 250,000 homes have acquired retrofitting measures such as attic and cavity wall insulation, draught proofing and low energy lighting, but it points out that more needs to be done in retrofitting. I agree with this. That is why the Government has concentrated its focus on finding a long-term solution to the high cost of energy which people must bear.

The Government has prioritised scarce resources in the retrofitting of homes through the warmer homes scheme and local authorities. The warmer homes scheme recently retrofitted its 100,000th house and this year the Government's stimulus package included €50 million specifically for retrofitting local authority homes. Also this year the Government committed €18 million to the scheme which will support the delivery of energy efficiency measures to approximately 10,000 homes, resulting in energy savings worth approximately €1.8 million. This is part of the Government's overall affordable energy strategy which we launched in 2011 shortly after the Government was formed because we identified back then that the issues of energy efficiency and energy costs had to be dealt with on a sustainable basis in the period ahead.

The Deputy mentioned low income households specifically. It is fair to state every household in the country is affected by high energy costs and the price of fuel. Last year we decided to focus the affordable energy strategy on households identified as being in poverty, particularly households spending more than 20% of disposable income on energy. I appreciate that I am over time, but I have a list of the changes we have made in this regard and I am quite happy to go into them in much greater detail for the Deputy in the second part of my reply.

When one looks at the figures and the achievement articulated by the Tánaiste with regard to retrofitting, I will be kind and call them modest, but the scale to which the scheme has been rolled out is certainly underwhelming. The Tánaiste must remember that his party promised a €40 million allocation specifically aimed at those suffering fuel poverty. I accept that high energy costs affect everybody and every household, but there is an identifiable group of people who cannot meet their energy bills. Their energy supply is cut off, even after resorting to the use of meters.

The Tánaiste mentioned the Society of St. Vincent de Paul. Between 2008 and 2011, just to give a sense of the scale involved, the level of the Society of St. Vincent de Paul's assistance to families for fuel increased from €3.8 million to €10.4 million. That is the trend in what the organisation is dealing with.

A question, please.

I want to know from the Tánaiste specifically what he will do in this budget for people experiencing fuel poverty - those families who cannot pay their bills. What will he do about the fuel allowance and the smokeless fuel support payment? People hear the rhetoric about the "bigger picture" that the Tánaiste delivers that we are on the receiving end of global forces, but that is of no comfort to those whose homes are cold. What does he have in mind and what will he line up? Will he give comfort by saying he will not be as mean-spirited as he was in the last budget, particularly in respect of the fuel allowance?

First, the Deputy has said we undertook to commit €40 million to address the issue of fuel poverty and fuel prices. Last year we committed more than that figure - €50 million - for the retrofitting of local authority homes-----

They are two distinct things.

Let me answer the question. As I said, we have committed €50 million for local authority homes alone and there is also €18 million for the improvement of the warmer homes scheme. This is not a short-term problem. The issue of high fuel prices is not one that can or should be dealt with on a short-term basis. We all know from experience that the price of fuel goes up and down again. Unfortunately, in recent years it has been going up, largely because oil and gas are scarce resources, they are in places that are hard to get to, they must come a long way to get here and we are subject to international pricing. The best way to address this in the long term is to carry out the retrofitting programme that we have set out and to concentrate it in the first instance on families on lower incomes. That is what gets down the cost of heating homes-----

For those who cannot meet their bills, the fuel allowance-----

Please, Deputy.

That is what gets down the cost of heating a home and fuel. We are committed to doing this. Only last week I had a lengthy discussion with the Minister, Deputy Pat Rabbitte, about the plans he had to encourage more people to take up the retrofitting scheme and about the grants and various forms of assistance available through his Department and Sustainable Energy Ireland. We are going to drive this to see to it that more homes are retrofitted and have a greater degree of energy efficiency which has the benefit of bringing down the cost of heating a home and of energy for households. That is the route to be taken.

What about the fuel allowance?

By the way, that is what the Society of St. Vincent de Paul states is the best way of dealing with the problem. It is contained in its report. I welcome the report it has presented. It is timely and that is what it states, that getting more people into the retrofit scheme is the way for us to go.

What about the fuel allowance?

On Tuesday the financial services firm Grant Thornton issued a report which analysed the last five austerity budgets and looked at the impact these budgets had had on Irish families. Among the findings are that Irish families are now paying, on average, double the amount in tax that they paid in 2008; that when Government cuts are taken into account such as, for example, cuts to child benefit, they are down, on average, €6,000 in disposable income. That is before property tax for a full year and before price inflation, for example, the rise of €500 in annual energy costs, an issue we have just been discussing, are taken into account. Not only do Irish families have a lot less money because of increased prices, that money is not going as far.

What is particularly damning is what the report states about the distributional effects, or who is being asked to carry the heaviest burden. What Grant Thornton has found is that a family with an income of €80,000 has seen its tax burden rise by about 50%, but it has also found that a family with an income of half that amount, €40,000, has seen its tax burden rise not by 50% but by 125%. This, Grant Thornton suggests, was due largely to the changes to the universal social charge that were introduced in 2011. A tax partner at Grant Thornton said: "...it’s clear low to middle-income earners have paid a heavier price in terms of the percentage increase in taxes they pay." We have independent expert opinion that the first two budgets of Fine Gael and the Labour Party have, unfortunately, increased the level of inequality in this country.

A question, please.

This was not inevitable; it was a choice which, as I believe the Tánaiste will agree, was bad for everybody. It hammers those who have the least and slows the full economic recovery of the country.

With the Government's third austerity budget just 12 days away, I ask the Tánaiste the following two questions. Will he commit that he will give Members of Dáil Éireann when the budget is introduced, or, at the very least, before we are asked to vote on it, an impact assessment of the proposals in terms of the socioeconomic indicators and who will be asked to carry the heaviest burden? If that analysis shows that the proposals being put to Dáil Éireann ask those who have the least to bear the heaviest burden, will he withdraw the Labour Party's support for the budget?

Most people in this country do not need a report from Grant Thornton or anybody else to tell them we have had an economic crisis. In 2008 the economy crashed, effectively. The people from whom we inherited the Government put the taxpayer on the hazard for the entire banking system when they introduced a blanket guarantee. The consequence was that the country and its taxpayers were made responsible for the debts of the banks. The property bubble that had been at the centre of the previous Government's economic strategy burst and we ended up in a situation at the end of 2010 where the country's financial position was so bad there was nobody in the international money markets who would lend money to this country.

Families and households do not need a report from Grant Thornton or anybody else to tell them how difficult it has been for families for the past five years. It has been difficult for them. People have lost jobs and businesses; they have seen their incomes shrink and, in some cases, their children having to emigrate. The job of work the Government took on was that we rescue the country from that economic disaster and turn it around. We are succeeding in doing so. The figures now available to us show that, compared to what we had prior to the election of the Government, when 250,000 jobs had been lost in the previous three years, we are now creating 3,000 jobs per month. In the course of this week we have seen the number of unemployed persons on the live register at its lowest rate since 2009. We are beginning to see retail activity improving. We are beginning to see recovery. What we have to do is to stay the course, get the country to recover and ensure additional jobs are created, that we drive on with recovery and that we get the public finances in order in order we will not find ourselves in the kind of situation we were in at the end of 2010.

Deputy Stephen Donnelly knows very well that I am not going to talk to him this morning about a budget that is not going to be announced until 15 October. However, I can tell him this, the budget on 15 October will be part of the Government's strategy to continue the job of recovery we have undertaken. It will contribute to it and be balanced and fair.

I was told never to expect an answer to any question I put during Leaders' Questions - so far, so good.

Read on, Deputy. Do not bother asking a question.

In response to Deputy Michael McGrath, the Tánaiste described last year's budget as being fair.

These are statements from the Deputy.

I will make the decisions on that one, thank you very much.

We do not need a report from Grant Thornton to tell us we have had an economic collapse. However, that report directly contradicts what the Tánaiste said to Deputy Michael McGrath about last year's budget being fair. In fact, it states very clearly that those with the least have been asked to contribute the most.

I asked the Tánaiste two questions. First, will the Government, when it brings forward the budget, provide all Members of the Dáil with an analysis examining the distributional effects of the proposals, thus assisting us in deciding how we will vote? Second, if this analysis shows that the distributional effects are such that those who have the least are being asked to contribute the most, will the Tánaiste withhold the Labour Party's support for the budget? I am sometimes described - wrongly, in my opinion - as a right-wing neoliberal-----

We are not getting into that just now. This is Leaders' Questions.

(Interruptions).

There is a question to consider here. If the crazy right-wing neoliberal is seeking assurances on equality from the leader of the Labour Party and is not getting them, something has gone wrong.

(Interruptions).

The Deputy is Shane Ross junior.

Members must allow the Tánaiste to respond without interruption.

Deputy Donnelly cited figures he claims point to increases in taxes on families. This Government has not increased income tax since coming to office.

What about the universal social charge?

The Deputy expressed views in regard to those people who are most vulnerable in our society. This Government, perhaps to the surprise of the Deputy and many others, has not reduced the basic rates of social welfare payments. We have taken more than 300,000 of the lowest-paid workers outside the scope of the USC, to which the Deputy referred. In addition, the Government has restored the minimum wage and the joint labour committee system for the determination of pay and conditions for lower-paid employees.

Will the Government provide an analysis of its budget proposals?

Of course we will. The Deputy is here long enough to know that at budget time, in addition to the Budget Statement issued by the Minister for Finance and the Minister for Public Expenditure and Reform, Members receive a wad of documentation outlining the impact of budget measures on families at different levels of income.

There will be scope for Deputy Donnelly to write lots of articles.

To be fair to Deputy Donnelly, I was of the view when he first came into this House that he was a right-wing neoliberal.

The longer he is here, however, the more I am coming reluctantly to the conclusion that he is just an opportunist.

(Interruptions).

In that case we can expect the Deputy to apply soon to join the Labour Party.