Unemployed young people will receive an increase of €2.70 in the jobseeker's allowance, not the €5 by which the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, stated it would rise, not the €226 extra per week Ministers will receive and not the €104 extra per week Deputies will receive. The Minister did not make any reference to the €2.70 increase because he was ashamed of it, as he should be. It encapsulates the unfair, right-wing budget of inequality before us. Not only did the Government decide not to undo the discrimination against young unemployed people, but it decided to double down on it by making the gap with other payments even greater. Young unemployed people are expected to live on €102.70 per week while Ministers live on almost €2,000 per week.
The Minister for Social Protection, Deputy Leo Varadkar, revealed himself yesterday as the nasty Minister that he is when he gave an explanation for the €2.70 increase. He stated that if young people were to receive €188 per week, it would be bad for them. Numerous homeless charities argue that this same reason is a driving factor in youth homelessness. Poverty and homelessness are bad for young people but the Government decided young people deserve to be discriminated against and they will not even receive the €5 increase being provided to other groups. Young people face an unemployment rate that has increased to 16%. One in five of them is not in training, education or employment and more than 30,000 of them are emigrating every year, with the number of young emigrants higher last year compared to the preceding year. This is not their fault but the fault of the bankers and bondholders and the parties that represent their interests and the economic system of capitalism that crashed. As a result, the burden was placed on working people of all ages who were driven into poverty and low paid jobs or driven out of the country. The Government now seeks to blame young people, discriminate against and ideologically demonise them and present them as being responsible for their fate.
Young people will ask what is wrong with them that the Government hates them so much, does not treat them with respect and fails to offer them a future. In addition to being discriminated against in the social welfare system, many are on the minimum wage. One in eight workers aged under 30 years is on the minimum wage and this group accounts for almost 40% of all those on the minimum wage. What did people on the minimum wage get today? They got an extra 10 cents per hour, which means the lucky ones on a 39 hour week will receive an extra €3.90 per week. The large number of people on zero-hours contracts who work perhaps 15 or 20 hours per week will receive much less than that and certainly much less than the fiver that has been advertised.
Among the many features of the budget is that it is anti-young person. It does not offer any future for young people, does not provide investment in jobs for young people and makes no attempt to deal with spiralling rents facing young people. Others, including pensioners, people with disabilities and those on a low or medium wage, got less than a fiver or an amount dressed up and delayed in a way that made it look like a fiver. What we have, dressed up in the language of fairness, is a budget written by Fine Gael, Fianna Fáil and right-wing Independents.
It is written with the advice of Ireland's own Donald Trump, Michael O'Leary, and contains exactly the type of measures one would expect from that source. What we have is a very right-wing budget. It is a budget that will reinforce the vast inequalities that exist in our society. It is a free market budget, a builders budget, a landlords budget and a big business budget. We oppose this budget. We oppose the pay rises for Deputies, Ministers, the Taoiseach and the Tánaiste. We represent working people and it is a principle for us that we will only take an average worker's wage precisely so we do not become completely out of touch with the people we represent, like so many in here.
James Connolly wrote about ruling by fooling, and he described it as a great British art. It is clearly an art the Government is trying to mimic but, unfortunately, it is one that it has not mastered. It would like the idea that this is a late, late budget and that there is something for everyone in the audience. However, what it is really trying to do, as with the loaves and fishes but with 4 million people instead of 4,000 and with no ability to conduct miracles, is to take a tiny amount of money from the fiscal space which it will allocate to ordinary people, as opposed to the tax breaks for corporations and higher earners, and then try to dress it up. Therefore, what is a €4 increase for pensioners over the course of next year becomes a €5 increase. While cigarettes go up tonight, people will wait until March to get the fiver that is the only thing this budget is delivering for people. It is reminiscent of Del Boy and Rodney's "tax in the post" in the window of their van. The fiver is in the post and it is coming sometime next year, together with many other things in this budget. It is a trick and people will not be fooled. They will see it for what it is. They will think they might get a fiver in a few months' time if they are lucky but they know that, even before they get the fiver, it will be eaten up by rents that are soaring, by increased medical insurance, by increased car insurance and by the cost of living crisis that results from the neoliberal economic policies that have been pursued and that are reinforced in this budget.
There are meagre increases for low paid people, those on social welfare, pensioners and people with disabilities but let us look at the other side of that. There is a whole series of tax cuts for the wealthy and for big business. IBEC, which represents big businesses in this country, obviously undertook pre-budget lobbying and had a pre-budget statement and a wish list. Its wish list, unlike the wish list for young unemployed people, those on the minimum wage and other workers, has largely been ticked off. IBEC wanted capital gains tax on sales of businesses cut from 20% to 10% - tick, the Minister, Deputy Noonan, delivers. It is a race to the bottom-style cut to compete with Britain in the context of Brexit. The cut to inheritance tax is a cut that will only reinforce inequality. A small number of people will benefit and it will reinforce the inequality that exists in our society. There is the extension of the special assignee relief programme, a tax break for corporate executives working in Ireland. The Minister, Deputy Noonan, tells us there will be a tax cut for share options - another IBEC demand - but with no details of costings yet, and a reduction in DIRT by 2% a year over the next four years, with a cost this year of €9 million and a similar cost over the following years.
There are also changes in incomes that have taken place as a result of the tax changes. These, again, are regressive measures. A single person earning €12,000 a year gets €3 a week and a person earning €20,000 to €25,000 a year gets €2 a week, whereas a couple on €90,000 a year will get €855 over the course of the year. Employees on €70,000 plus will be getting up to three and half times as much as those who are on the median wage while the biggest benefits go to the single, self-employed person on €70,000 plus, who is getting €14 extra, which is seven times as much as a single person earning €20,000 to €25,000.
There is the absence of anything in terms of providing for people with disabilities. The Government throws them an extra fiver but takes no account of the extra cost facing people as a result of the disability, which can be over €200 for many people. When funding for people with disabilities has been cut by €159 million from 2008 to 2015, it is very unlikely that this cut will be undone to any significant to degree, given the level of increase in health spending.
Let us take a look at the kind of society we live in and then have a think about the impact this budget will have. Obviously, they know now they should not have said it, although they thought it, but Fine Gael told us we should keep the recovery going, although many workers felt then, as they do now, that there was no recovery. What matters for people is their living standards - good jobs, decent wages, affordable basic living costs in housing and child care, and disposable incomes that allow people to feel they are living as opposed to just scraping by and just existing. In those terms, the recovery is a mirage. Irish living standards are the fourth lowest in the EU 15 at 12.5% below the average. Disposable incomes are 10% lower than before the crash. There is a huge cost of living crisis, which comes because Ireland is a low wage economy, with the third highest rate of low pay in the OECD, and this is combined with completely underfunded, devastated public services that result in soaring costs for housing, child care and insurance. Therefore, even those who get the meagre €5 know it will be more than taken away by rising costs.
Years of austerity and regressive budgets have served their purpose. They have deepened inequality to a point where the richest 10% of the population in Ireland controls 54% of the net wealth, leaving just 5% for the bottom 50%. They have also driven - as is their purpose, in my opinion - a transfer of wealth and a shift from wages to profits. Workers' wages still remain lower than in 2008 in weekly terms or in hourly terms, but they have also fallen as a percentage of GDP from 53% in 2008 to a projected 40% next year. What happened to corporate profits? They went from €35 billion in 2009 to €51 billion in 2014 and then to €75 billion in 2015. The recovery is certainly working very well for some and is working the way it is meant to in terms of austerity policies and neoliberal policies driving a shift of wealth.
What is contained in the budget is more of that same right-wing economic policy. It is a very right-wing budget. It is a very free market approach, even when it is attempting, or pretending to attempt, to deal with the problems that face people. In every possible area, there is a further drive towards marketisation and liberalisation. In housing, child care, education and transport, it is an explicitly neoliberal, free market approach which will reinforce those inequalities of the system and make the cost of living crisis worse for people. At the same time, it will make some people, the kind of people who support and who are represented by Fine Gael, a lot richer.
Take the case of child care. We know this is a crisis facing many families. Effectively, it is a second mortgage for people. The average Irish family pays 34% of its household income on child care compared to just 3% in Austria and 6% in Sweden. Parents need to earn €30,000 a year just to fund the cost of child care for two children. The consequence is that many women are forced out of the workplace and 84% of stay-at-home mothers want to work but are trapped by child care costs. It also contributes to pay inequality, with women aged 25 to 44 with children earning 31% less than men.
What is the Government's answer, and apparently the centrepiece of the budget? The Government's answer is to outsource the State's responsibility for child care through subsidising private child care to the tune of €120 million. It will make a small difference for some parents, although, over time, as prices rise, that will be eroded. It will swell the profits of the big providers, which are made off the backs of a low paid, 99% female workforce, who get an average hourly wage of some €10. That sort of outsourcing by the public sector already costs the State over €11 billion a year. Fundamentally, that approach will reinforce inequality and reinforce the notion of a shrunken public sector that does not provide basic public services to the people it is supposed to. It is a neoliberal approach.
The socialist alternative, outlined in our budget statement, is quite simply to develop a State-run, publicly owned, national child care system free at the point of use.
We outlined how €2 billion could be invested in the child care sector in the first year, employing over 50,000 child care workers and acquiring child care facilities across the country. That would make a real difference to people's living standards and lower costs. However, it is ruled out because of the neoliberal blinkers of the Government.
Let us consider the question of housing. It is so blatant that this is a budget for builders and landlords. Contrast the extra money for landlords with the amount to be invested in building social housing. The total capital investment in local authority builds and others, including under Part V, is €307 million. Another €100 million is being provided for the housing assistance payment scheme, which is money for private landlords. Mortgage relief is to be increased for landlords. A transfer of wealth is taking place as opposed to building the homes people need. Central to this is the notion of the so-called help-to-buy scheme. The Minister, Deputy Michael Noonan, gave away that the scheme was rooted in an extremely right-wing Thatcherite view of how the economy worked. Incredibly, he argued that in all markets supply increased to meet demand and that the help-to-buy scheme woould increase the demand for newly built homes by assisting first-time buyers to put a deposit together. He said he expected the building industry to meet this additional demand by increasing the supply of new affordable homes. It is an article of free market faith that supply increases to meet demand. Is there a problem with the demand for housing in this society? That is nonsense. People are screaming for houses, including first-time buyers, those in mortgage distress, those facing unaffordable, soaring rents and those facing homelessness. They all face a crisis and are desperate for a solution. What the Minister is actually saying is that if we pump in more money which will ultimately be transferred to the developers, prices may go up further and thereby incentivise more builders to get involved. It is not a solution for first-time buyers or anybody else. It is another transfer from the public purse to the private profiteers. Developers will pocket the €20,000 per house, leaving first-time buyers and everybody else no better off. The answer is, of course, for the State to intervene directly to solve the housing crisis.
The Government's whole plan involves a plethora of grants and tax breaks for developers, landlords and other housing speculators who are profiting from the crisis. We explained in our statement how €4.5 billion could be invested to provide 50,000 new public homes next year. I refer to directly building 20,000 public homes at cost price as part of a major public housing programme to build 100,000 homes in the next five years and to acquiring 30,000 vacant homes for public housing. It is a case of providing them in a real public housing system to make them available to all, whether renting or buying, based on a system of differential rents and mortgages, ranging from 10% to 25% of income.
There is another tax relief for landlords. Incredibly, the Minister, Deputy Michael Noonan, is saying it is to stop landlords from exiting the market. That is quite incredible when they are already making massive profits. The 5% increase in relief will not make any difference to those in long-term arrears. That money would be better spent in having State-owned banks such as AIB write down buy-to-let arrears and take properties into public ownership for public housing. Instead, the banks and the State stand by while thousands of buy-to-let tenants stand to be evicted. The extra relief will act to encourage landlords to take buy-to-lets and increase competition for a limited supply of housing and drive up prices even further. That is the market solution to the housing crisis and it is a disaster.
Let us consider the question of education. I do not believe anybody has picked up on this point yet. The Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, made an interesting reference to initiating a consultation process on the design and operation of an Exchequer-employer investment mechanism to operate from 2018 onwards. That is in the context of the Cassells report and the crisis in funding the third level education sector. "Exchequer–employer investment mechanism" is a nice term for the further corporatisation of the education system. It means big business being given an input into the shaping of the third level education system, or a greater input than it already has in reality. In other areas of education nothing is being done to address the pupil–teacher ratio.
On the question of transport, there are to be three new major public private partnerships, as well as another handout to major construction firms that will likely see a further expansion of rip-off, regressive tolling.
On health care, instead of building a national health service that could be achieved and that would get rid of the two-tier health service, there is a drive towards the National Treatment Purchase Fund ending up in private hospitals as opposed to making the necessary investment.
In every single respect, this is a big business and a free-market budget. It is even more than that, however; it is a budget made for an Apple republic. It is made for a country the establishment of which, as in Panama and the Cayman Islands, has a developmental strategy built on so-called tax competition. In reality, it is operating as a tax haven. The Minister for Finance, Deputy Michael Noonan, claims that "our corporate tax regime meets the highest standards in tax transparency." It does not and nobody believes it does. To quote Professor Philip Alston, the UN special rapporteur on extreme poverty and human rights, "Nobody believes Ireland is not a tax haven." The cost of this tax avoidance, or Ireland's operation as a tax haven as part of a global chain of tax evasion practices, is massive on a global scale. Some $200 billion is stolen from poor, developing countries and workers around the world, including in Ireland. The only winners of such a strategy of tax competition are the big businesses that benefit from it and a small number of accountants and lawyers who make their money from it, including in this country.
Let us consider what the Minister is doing about this. There are token clampdowns on tax avoidance. Consider the figure the Minister has given on the section 110 loophole. He says a sum of €50 million could be raised. More than €1 billion in tax is avoided under section 110, yet the Minister says €50 million could be raised. This is because he actually does not plan to close the loopholes. Consider the extra amount to be raised in addressing offshore tax evasion; it is only €30 million. That is a drop in the ocean considering Ireland's role as a tax haven. Getting €50 million extra from hiring 50 extra Revenue Commissioners staff is also a drop in the ocean.
An incredible figure was released a few weeks ago. The Comptroller and Auditor General states in his report that 40% of people or companies randomly audited by the Revenue Commissioners had not paid sufficient tax, with an average payment due of €18,500 each. If we invested more in the resources of the Revenue Commissioners and tackled existing tax avoidance and evasion, as in the case in question, more money could be raised.
A scary truth from the point of view of the Government is that Apple is only the tip of the iceberg. More cases will be taken by the European Commission. Some 70% of corporations in Ireland do not pay any corporation tax. Google paid corporation tax at a rate of 0.14% between 2005 and 2011. Starbucks paid a grand total of €45, not €45 million or €45,000. Vulture funds feasting on the carcases of the property crash paid €250 in tax on assets worth billions of euro. Despite this, the Government is doing nothing.
As Deputy Richard Boyd Barrett mentioned, the double Irish tax scam will remain open until 2020. The knowledge development box, the replacement for the double Irish, will cost the public €550 million this year. Section 110 and the other loopholes will cost €1 billion. The only thing the Minister has announced is a review, a one-man commission review of Ireland's tax haven status, with the explicit condition that one cannot touch the corporation tax rate of 12.5%. He has asked Mr. Seamus Coffey to do this. Mr. Coffey is a well known economist and I am sure the Minister is aware of his views on these issues. He has been quite forthright in expressing them. For example, he said, "What the Commission have done in the case of Apple goes against all principles of taxation". This was in an article entitled, "Why tax campaigners should be aghast at the Apple ruling". He said the €2.3 billion rise in corporation tax receipts was real and not a distortion. He stated, "There is no doubt that a 26.3 per cent real GDP growth is bizarre but it was not farcical, false or based on fairy tales." We now understand why the Minister has chosen him. He has a particular view, which is that Ireland is not a tax haven and has nothing to answer for. That is fine from the point of view of the Minister.
The Minister stated previously and repeated today that the corporation tax rate "never has been and never will be up for discussion." Therefore, young people's dole, payments for people with a disability, the arts budget and everything else are up discussion and debate but corporation tax is above democracy. One cannot decide to ask the corporations that are making massively increased profits to pay taxes. I have news for the Minister and the rest of the Government: we do not accept that it is untouchable. All loopholes, including the double Irish, the knowledge development box and section 110, should be closed immediately.
In addition, the Anti-Austerity Alliance argues that the rate of corporation tax for big business should be doubled to 25% on profits in excess of €800,000, linked to a strategy of public investment and the shifting and transforming of the economy from a corporate tax haven to a socialist green economy.
The fiscal space has served its purpose. The purpose of the fiscal space is not to ensure that we have sustainable growth. The purpose of the fiscal space is political convenience and a trick of misdirection in asking people not to worry about or discuss the big cake of €230 billion worth of output over here, not to talk about the €75 billion worth of corporate profits over there, but instead to talk about the €1.2 billion or €1.3 billion in the budget, which is crumbs. That is how it is possible to construct a pre-budget debate in which the highlight is a discussion about whether pensioners or people with disabilities or carers deserve a €5 increase. That is an encapsulation of the fiscal space: neo-liberal economics in action, the artificial creation of scarcity, the pitting of people against each other to fight over who gets what. We reject that scarcity, we reject that fiscal space and we break out of the straitjacket of what it means. The truth is that the EU Commission ruling on Apple and the fantastical 26% growth figures shine a light on the real nature of the Irish economy as being a fiscal paradise for the multinationals and the rich while failing to deliver for working people.
The starting point of a real alternative, and the starting point of the AAA-PBP and the AAA budget statements, is to break out of the straitjacket of the fiscal space and reject the notion and the strategy of Ireland as a corporate tax haven, which has resulted in a weak domestic private sector and a basket case economy in which growth figures bear no relation to the reality of the economy or people's lives. We need a rupture from that developmental model and from the capitalist system. The Apple tax scandal demonstrates very clearly to people, some of whom are watching this debate, that the obstacle to resolving the massive social crises that face people is not a lack of resources or wealth, which are plentiful, but rather political decisions, rules and, fundamentally, the capitalist free market system which claims that the profits of the 1% should come first. The centrepiece of our statement of strategy is a break with that model. Deputy Michael Noonan still talks about foreign direct investment, FDI, as being the seed potatoes of economic development, 60 years after this strategy was originally introduced. Also in our budget statement are calls to reject Ireland's operation as a tax haven, scrap the loopholes and increase corporation tax rates, raising at least €4 billion.
We do not accept that the question of debt has just gone off the public agenda except in the case of the Government looking for an even better pat on the head from the EU Commission and the rest of the troika and saying we will pay even more of the debt down. In a situation in which the State spends €1 in every €10 raised in tax on the servicing of a debt that largely arises from the banking crisis and is not ours, that must be part of the debate. We therefore put forward a strategy of debt repudiation which would save, on a conservative estimate, at least €3.22 billion. We put forward the need to scrap austerity taxes for working people, scrap the water charges and refund those who paid, scrap the property tax and the USC and in their place put forward a series of other taxation measures. These include the introduction of a new millionaire's tax, that is, a tax of 2% on net assets exceeding €1 million, which would raise almost €3 billion; a landlord's tax on non-family homes, which would raise €450 million; and a high income social charge and new rates of marginal tax on high levels of income to replace the USC and raise €2.33 billion.
In addition, we point to the almost €9 billion available in NAMA and the Ireland Strategic Investment Fund. There are funds that are, incredibly, not allowed to be spent because of the expenditure benchmark fiscal rule. These funds are there but cannot be spent. That rule, like the fiscal space and all the other fiscal rules, must be broken and those funds used to fund major capital programmes in housing, renewable energy, water, health and child care.
As I outlined earlier, we put forward an ambitious plan to build or acquire 50,000 homes. Instead of treating our two-tier health service as an inevitability, we advocate spending an additional €3 billion on health in 2017 as part of the development of a national health service this country. This would fund an additional 1,000 acute beds, 5,000 additional health care workers, the abolition of prescription charges and the allocation of an additional €200 million to mental health services alongside other measures. As mentioned, we call for the development of a national child care scheme in addition to more than €1 billion in funding for education, providing genuinely free education at all levels: free schoolbooks, an end to all voluntary contributions and an end to third level fees.
In addition, we budgeted to have full pay equality in the public sector, that is, to do away with a situation in which so-called "new entrants" are discriminated against and provide for an immediate restoration of pay to 2008 levels.
We argue for massive public investment. There is huge underinvestment in this economy by both the public and private sectors. We argue for €3 billion in direct State funding to create 50,000 jobs in renewable energy, water infrastructure, forestry and green agri-food.
The central point is that the problem is not one of resources: the problem is how those resources are owned and controlled. A left government with socialist policies, through taxation but also through public ownership of the banking system and the key sectors of the economy, would enable a paradigm shift in the economy based on renewable energy and sustainable growth: a socialist green economy.