Priority Questions

Brexit Issues

Michael McGrath


61. Deputy Michael McGrath asked the Minister for Finance his assessment of the likely impact on the economy of a no-deal hard Brexit in March 2019; and if he will make a statement on the matter. [31236/18]

The purpose of this question is to establish the current view of the Minister and the Department of Finance on what the implications would be for Ireland in the event of a no-deal hard Brexit, which is something none of us wants to see. We are conscious of the efforts the Government is making to avoid that with our EU partners but it is a distinct possibility. We are now eight and a half months away from the end of March 2019 and I believe we need to have the up-to-date assessment from the Department of what that would mean for Ireland.

A no-deal hard Brexit would arise if the EU-UK negotiations fail to reach an agreement within the Article 50 two-year timeline. This would involve the UK exiting the EU with no successor agreement in place and without a transition period to avoid a cliff edge in March 2019.

In the short term, a no-deal hard Brexit would have a material and real impact on Ireland, which would be asymmetric relative to the rest of the EU. In other words, it would have the largest effect here in Ireland. The shock would likely lead to market volatility, further sterling depreciation and disruption to trade with the UK. This would have negative impacts for consumer spending, investment and competitiveness with potential spillovers to the labour market and public finances. Sectors with strong export ties to the UK such as agrifood, manufacturing and tourism would be especially exposed, in particular at the regional level.

With regard to the impact, my Department’s published research shows the potential impact of a hard Brexit is significant. Joint research with the Economic and Social Research Institute, ESRI, shows that the overall macroeconomic impact would result in the level of gross domestic product being almost 4% below what it otherwise would have been in a no-Brexit scenario after ten years. The level of employment in Ireland would be 2% lower with the unemployment rate nearly 2% higher.

As well as the significant discontinuity and additional costs for businesses arising from the abrupt imposition of tariffs, there would be customs procedures and other non-tariff barriers. Indeed recent reports by the Organisation for Economic Co-operation and Development, OECD, and Copenhagen Economics show that a significant divergence in regulatory standards between the UK and EU would lead to additional economic impacts.

All the existing research assumes no policy changes, which is a necessary, but unrealistic assumption. The best way to deal with the risk of a no-deal hard Brexit is to build up our budgetary capacity and to continue to implement the right domestic policies.

I thank the Minister for his reply and it is a fairly stark scenario that is set out in the event of a no-deal hard Brexit materialising, which none of us want to see. We do need, however, to be aware of what the likely consequences are. When the Minister states the rate of employment would be 2% below what it otherwise would be, with the rate of unemployment being 2% higher, I understand we are talking about figures in the region of 40,000 jobs. This is consistent with what the Department set out at the beginning of last year, that is, there would be 40,000 fewer people employed. The Minister might confirm if that is the Department's current estimate, if that remains the position and that economic output would be approximately 4% less over a ten-year period.

Can the Minister clarify, in respect of his comment about customs and other non-tariff barriers, what we are talking about with regard to this issue and what work has been done by the Department and by the Revenue Commissioners to prepare for that scenario which none of us want to see?

On the Deputy's additional questions, the job figures the Deputy has associated with the change in levels of employment and unemployment are correct and are in line with what my Department stated a number of months ago.

Second, in respect of the Deputy's question about regulatory alignment, the Copenhagen papers articulated clearly that an effect that will be at least as big as the effect of tariffs on our terms of trade could be a shift in the regulatory rule book for trade between the UK and the European Union. The impact of that on our economic growth and on our jobs at this time is difficult to quantify because it is difficult to forecast what, if any, change could occur. As the Deputy has said, all this points to the UK, the EU and Ireland doing all we can inside the framework of the task force on the UK to come up with a positive trading relationship in the future. It is a trading relationship that would be different from what it is now but we are all conscious of the risks that are inherent in a disorderly or hard Brexit.

I thank the Minister and ask him to set out, in respect of the possibility of the UK leaving the customs union and the fact that World Trade Organization, WTO, terms of trade would then apply, what steps are being taken by way of preparation by his Department and the Revenue Commissioners for that possible scenario, which none of us wants to see.

We are all very conscious of the impact a hard Brexit would have on certain sectors of the Irish economy. The impact would be most acute in many respects across the regions, particularly where agrifood is such an important part of the local domestic economy. We are all working towards avoiding the cliff-edge scenario. It remains unlikely. The President of the Commission was here saying it was a possibility. The Taoiseach has openly talked about it. We need to confront what could become the reality even though none of us wants to see it. Will the Minister address the issue of the preparations being made in respect of customs, World Trade Organisation terms of trade, and what that would mean in practice?

As the Deputy said, the focus of the task force of the Irish and British Governments at the moment is to try to come up with a framework within which trade can continue in the future. In order to protect ourselves from an additional risk of a disorderly Brexit, we are doing three things. The first is to have our national finances in as strong a position as possible in the event of a further exceptional shock in the future, which is why I place great value in a rainy-day fund and in trying to have our books as broadly balanced as possible.

Number two is about the influence we can have in our own economy. It is the reason we are increasing capital investment in schools, colleges, public transport and our road network, to build up the resilience and competitiveness of our economy in the future.

Third, sector by sector we are putting measures in place to support the sectors as they move through areas of risk. I point to the loan funds we have in place now for SMEs and the agrifood sector, one of which is enabled by support from the European Investment Bank.

Housing Provision

Pearse Doherty


62. Deputy Pearse Doherty asked the Minister for Finance his views on whether the shortage of housing supply and continued significant increases in residential property prices and rents represents a major domestic risk to the economy. [31483/18]

In the view of an tAire, is the shortage of housing supply, and the significant increase in property prices including rental prices, a major domestic risk to the Irish economy? If he believes that is the case, what steps will he take in this year's budget to deal with the major risk that has been identified by many outside authorities, namely the housing crisis?

The Department of Finance continues to monitor developments in the construction and housing sectors with a view to identifying potential macroeconomic risks. The biggest such risk is a continuation of the present situation, in which supply falls significantly short of demand, estimated to be in the region of 30,000 units per annum given our current demographic projections. Yes, I see the current situation where there is a significant shortfall versus supply. If it were to continue in the future it would be a risk which is why we are taking steps to address it. The reason for this is such a shortage would increase affordability pressures, would affect our competitiveness and would harm our ability to create and retain jobs, in addition to the significant social pressure and the huge damage it would cause to our society. Due to the seriousness of the issue, housing supply is specifically listed as a domestic macroeconomic risk in the stability programme update. As such, it is accorded the highest priority within my Department and in government more generally.

In response to this challenge, and in addition to the measures implemented under Rebuilding Ireland, Budget 2018 contained a number of initiatives aimed at increasing supply. Home Building Finance Ireland, HBFI, will boost the supply of debt funding to residential development. Budget 2018 also included an increase in the vacant site levy in the second and subsequent years of vacancy. In addition to all this, total expenditure on housing, both current and capital, has more than doubled in the period 2016-18 from just over €800 million to over €1.8 billion, which is an increase of 125%.

The Minister is talking about supply. Demand is approximately 30,000. Others estimate it as 40,000. We know the output is in the region of 16,000, so it is about 50% of what is needed. The European Commission in its report will talk about the supply responses being insufficient. It talks about this as the major risk to the Irish economy. While there may be other potential risks, this is a huge risk at this time. It was echoed by Mr. Mario Draghi yesterday to my colleague Mr. Matt Carthy, MEP, in the European Parliament that there is a serious danger to the Irish economy because of the housing issue.

While some of the initiatives the Minister outlined are welcome, some of them will not have the desired effect. For example, the site levy is not enough. What we need to do is ensure there is additional capital to build the houses. Given that we know this is a major economic risk to Ireland, why is the Minister still not prepared to use the €1.4 billion which is available in this budget to construct the houses, meet the demand, ensure there is no wage pressure on businesses, to make sure those in emergency accommodation have a roof over their heads and to deal with the major macroeconomic risks identified by the Commission, the Department of Finance, the ECB and many other economists?

My Department and I have already identified we acknowledge that on a macroeconomic level, and from the point of view of our society, this is a major risk, and I laid that out in my answer to the Deputy. Second, as I acknowledged in my answer, we can see signs of progress being made. In particular, from a planning permission point of view, we have seen 24,531 new homes granted planning permission in the 12 months up to March of this year. This is up 37% on the 12 months to the end of the first quarter. In the first quarter of 2018 alone, planning permission was granted for 8,400 homes, which is an increase of more than 81%, and a 178% increase in planning permission for higher density homes. We can see signs of change in supply in the housing market. In relation to the €1.4 billion, as the Deputy knows well, we would have to borrow more to do what he outlined. I have heard the Deputy on many occasions warn of the dangers of pro-cyclical economic policies but that is what he is advocating now.

The fiscal rules prevent us from pro-cyclical economic policies. That is what they were designed for. What I am saying is under those rules, the prudent thing to do is to use the €1.4 billion available to the Government to build the houses that should have been built under Fianna Fáil and Fine Gael but were not. It left us with a massive social crisis where there are 10,000 people in emergency accommodation, 4,000 of whom are children. There are nearly 100,000 on the housing waiting list. There are pressures on businesses because their workers cannot afford to live in the capital city and its environs. All of that poses serious risk to the stability of our economy in the future.

The Minister mentioned trends in planning permission, which are welcome, but there is a response needed from the State also. The State built fewer than 5,000 social houses last year, and zero affordable houses or cost-rental houses, yet the Minister plans in this year's budget to do very little about it while acknowledging all the risks. What we need is a doubling of capital investment to meet the challenge that is out there. That is what is required in this budget. That is the prudent thing to do recognising all the risks, not just the social consequences of the Government's policies but also the macroeconomic risks, which everybody says are housing supply and housing price inflation at this time.

It is not just about supply. Rents are 22% above peak at this time. The Commission tells us clearly the rent pressure zones have failed. A response is needed which is not a head-in-the-sand approach as has happened from Government until now.

The Deputy is pointing to the very fiscal rules to prevent a form of economic behaviour happening. I remember the Deputy campaigning against those fiscal rules at the time of the referendum on the fiscal compact treaty. I remember him again and again warning of the risks of policies that could overheat the economy. What the Deputy is doing now is making use of the fiscal rules he campaigned against, and saying we should borrow more at a time when all the authorities he quoted say we should borrow less.

We are not putting our heads in the sand. I have outlined the additional actions that have been taken. Next year, capital investment in our economy will be going up by €1.5 billion. The largest two beneficiaries of that investment are transport, which in turn is to facilitate the release of more land, and housing. We can see from the first quarter of this year changes in the number of homes that have been built and in the number of planning permissions given. We have 168 actions under Rebuilding Ireland and myself and the Minister, Deputy Eoghan Murphy, will continue to look at measures that can deal with what I acknowledge to be an economic risk and something on which we must make progress from the point of view of our society.

Do I have another supplementary?

The Deputy has had two.

It was worth a try.

Economic Competitiveness

Michael McGrath


63. Deputy Michael McGrath asked the Minister for Finance the steps he plans to take to ensure Ireland protects its competitiveness and to mitigate the risk of overheating pressures in the economy; and if he will make a statement on the matter. [31237/18]

The purpose of this question is to tease out how the Minister can square the circle. We need to build tens of thousands more homes but we also need to address the risk of overheating in the economy and the need to retain competitiveness, which is a key issue. We do not want to see a return to the rip-off Ireland which the Minister's party heralded many years ago during the Celtic tiger. Key labour shortages are emerging alongside rising costs. We need to build the homes but the issue that keeps coming up is capacity. How will the Minister manage that?

Ireland’s economic recovery has been underpinned by a significant improvement in competitiveness. The latest figures from the Central Bank show that Ireland’s harmonised competitiveness indicator, a widely used measure of competitiveness in Europe, has improved by approximately 19% between its peak in 2008 and February 2018. The restoration of Irish competitiveness since 2008 has been hard won through improvements in productivity and wage and price moderation. It is important that Ireland’s competitiveness position is preserved and continues to facilitate growth.

Regarding domestic risks to competitiveness, overheating and housing supply pressures are of particular concern. The housing sector can adversely impact on competitiveness through, for example, restricting the ability of people to move, while the change in asset prices there has a knock-on effect on other pressures in our economy. This is why the Government introduced a number of initiatives in budget 2018, in addition to the measures implemented in Rebuilding Ireland, to tackle the underlying problem of a supply shortage.

While the economy is in good shape at the moment, capacity constraints are emerging which could lead to overheating. The most recent unemployment data show that we are fast approaching full employment, and in this context we need to take care with the management of our economy. It is therefore crucial that we continue to prudently manage the public finances to avoid pro-cyclical policies. The fiscal rules are currently unhelpful in this regard. A full and literal application of these rules would involve the adoption of policies that would mean more borrowing, which is not appropriate for us now.

As set out in the 2018 Summer Economic Statement, budgetary policy will be framed on the basis of what is right for the economy to ensure continued, steady improvements in Irish employment and living standards.

The gains we made in competitiveness were necessary and enforced. It was an enormous correction in the economy. The signs are there now when we look at the rising costs businesses and workers are facing. These include energy costs, the cost of insurance, which we have addressed in this House many times, transport costs, childcare costs and the gender pay gap, which also needs to be addressed from a policy perspective. Capacity issues are evident in the economy. This is a point in the cycle where we need to ramp up the delivery of investment and the delivery of the homes that people require. How is the Minister going to ensure that the economy remains competitive and that we deliver the investment required to build the homes that are needed, while ensuring that he avoids the overheating pressures that are beginning to simmer? Those pressures are evident; one can see them again around the place.

I am struck that the focus of analysis and debate has evolved over the past 18 months. Deputies Michael McGrath, Paul Murphy and Pearse Doherty were then arguing that the level of capital investment in our economy was far too low. Deputy Doherty would still argue that it needs to be higher and we need to borrow more to do it. This year we have increased capital investment by €800 million and we have a further €1.5 billion planned for next year.

To answer the Deputy's question regarding how I plan to help the economy walk the tightrope he is talking about, there are three things the Government will be able to do and is doing. From a procurement point of view, it can make sure that as we are making agreements in respect of key projects, we do so at prices that are affordable to the State while being mindful of the signalling effect they have on the rest of the economy. We can ensure that we stand by the Public Service Stability Agreement 2018-2022 and do not do anything through that agreement or elsewhere that could stimulate a degree of wage growth that might ultimately be counterproductive. Finally, we can look at particular sectors to continue to address issues within them to do with developing pricing pressure. My colleague, the Minister of State, Deputy D'Arcy, is at the forefront of doing that in the insurance sector, for example.

One of the key messages I want to convey is the need to keep a firm eye on costs. Costs are rising in the economy and rising costs will make us and our businesses less competitive. That is emerging as a key issue. In respect of the labour market, shortages are emerging. In our constituency work, we are all seeing more enquiries about employment permits, critical visas and so on. There is a need to ramp up the delivery of apprenticeships, not just across the traditional trades but across different sectors, including financial services, where some exist. We need to ensure we are delivering the supply of labour in the areas where it is needed across the economy.

The pressures are emerging. We are listening to businesses and hearing the issues they are encountering. They mention capacity regularly as well as labour shortages and they highlight rising costs. It is a difficult circle to square but it has do be done. Those issues must be addressed while at the same time achieving the level of investment that the economy needs.

Those same businesses in different parts of our economy were previously calling for the need for further capital investment. That capital investment is under way. We have to take great care in dealing with the issue to which the Deputy refers. I am conscious of the fact that the last time our economy was at this point, we saw large degrees of underemployment or unemployment in other parts of Europe, particularly in central and eastern Europe. As we look across the eurozone now, we find that many of the economies from which people would have travelled in the past are themselves doing well and are experiencing wage growth and either low unemployment or rising employment levels. The net effect is that the ability and willingness of people to travel to Ireland could be different from what was the case in the past.

I have outlined what I am going to do to strike the balance to which the Deputy refers. The most recently published World Economic Forum competitiveness report shows that currently the Irish economy is the 24th most competitive within the survey, a decline of one place against the previous year. We continue to be one of the most competitive economies within the eurozone. That said, the risks the Deputy has described are there. I accept them and have looked to articulate what I am trying to do to manage them.

Tax Avoidance

Paul Murphy


64. Deputy Paul Murphy asked the Minister for Finance his views on a recent study (details supplied) which has concluded that Ireland is the world's largest tax haven; the measures he will take to close tax loopholes and stop aggressive tax planning in view of the fact this is one of many studies with similar findings; and if he will make a statement on the matter. [31054/18]

I ask the Minister to recognise the writing on the wall and to accept the reality that Ireland is a major corporate conduit tax haven. I ask him to accept the points made in the paper, "The Missing Profits of Nations", which outlines that Ireland had the greatest amount of corporate profits shifted through it in the world - some $106 billion in 2015, which was more than all the countries of the Caribbean combined. I hope the Minister will agree that this is not only utterly immoral in driving inequality around the world but also utterly unsustainable as an economic model.

I am aware of the paper to which the Deputy refers. My officials and I have been considering it. First, I reject any assertion that Ireland is a tax haven. The report to which the Deputy refers does not provide a definition of "tax haven" and appears to assert that Ireland and many others countries are tax havens without providing any rationale for the assertion. In the report, the authors appear to use the terms "low-tax countries" and "tax havens" interchangeably. The inference that Ireland is a tax haven simply because of its longstanding 12.5% corporate tax rate is totally out of line with the long-established position that a low corporate tax rate applied to a wide tax base is good economic policy for attracting investment and supporting economic growth. The central analysis of the paper looks at links between the level of profit booked and the level of wages paid in a country. This creates the totally misleading impression that corporate profits are, or should be, linked directly to wage levels. In reality, corporate profits are linked to the outputs of investment in all income-generating activities such as investment in research and development, intangible assets, capital intensive machinery and investment in staff. A small country with high levels of high value-adding foreign direct investment relative to the size of the domestic economy will, of course, appear like an outlier in this type of analysis.

Nevertheless, I am cognisant of the problem of aggressive tax planning by large multinational companies and recognise the need for effective solutions. That is why Ireland is involved and participating fully in the OECD's base erosion and profit shifting, BEPS, process. Yesterday, the Government approved a memorandum on the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. The convention provides a mechanism by which to implement the recommendations of the OECD.

Diarmaid Ferriter put it well in The Irish Times when he said that if the Department of Finance were to be believed, there must be an awful lot of eejits slaving away on academic research projects relating to tax. The approach of the Department and the Government is simply to deny report after report based on facts which illustrate Ireland's role as a corporate tax haven. Let us deal with the central proposition of the paper, which is the point about the ratio of profits to wages. The report found that US companies in Ireland declared $8 of profit for every $1 spent on wages here. That is 16 times the average rate among non-tax havens and 16 times the average among Irish companies in Ireland. To put it simply, what explains the extraordinarily high levels of productivity of workers in the multinational sector in Ireland compared with workers in the indigenous sector? Is it not the case that the only explanation for this relates to the shifting of intangible assets, etc., and the use of Ireland as a conduit tax haven?

The explanation for that is the fact that we are either the first or second most globalised country and that the workers to whom the Deputy refers in those companies are part of global supply chains. As the Deputy pointed out, we have a high share of intellectual property investment in our country. One of the reasons for that is the focus we have had on ensuring that companies make long-term commitments to Ireland. We believe long-term commitment is facilitated and strengthened if it involves the location of manufacturing, intellectual property and a high number of jobs within our country. That has led to long-term relationships between Ireland and many large multinational companies, which has been at the core of the economic transformation we have experienced. Amid the Deputy's criticism, will he comment on the fact that we have 735 companies located in Dublin, attracted here by IDA Ireland, which employ 88,000 people? I ask the Deputy to look at the Grange Castle Business Park near his own constituency and the companies located there which employ people as a consequence of the policies to attract investment to Ireland of which the Deputy is so critical.

Butter would not melt in the Minister's mouth. These companies are simply super-productive and it is all down to the workers. That is not true and the Minister knows it. I am defensive of those workers who work in multinational corporations. I am defensive of their terms and conditions and I am defensive of their ability to be productive, but I do not buy the idea that they are 16 times more productive than workers in indigenous companies. What that statistic reveals is the extent of corporate profit shifting being carried on through intellectual property and intangible assets. Google paid corporate tax at a rate of 0.14% between 2005 and 2011, Starbucks paid €45 in tax in 2015 and Apple Sales International paid tax at a rate of 0.005% in 2014. Ireland is a driving factor of inequality around the world which means that 82% of the wealth generated internationally last year went to the richest 1%. A key factor in that is corporate tax rates going, on average, from 49% in 1984 to 24% in 2018. It is not sustainable in the context of Trump or Brexit and a different model is needed.

I do not comment on the tax affairs of any particular company, nor will I do so now. I did not say, although I could have made the case, that companies locate here due to the quality and number of our workers. While I could credibly have made that argument, all I asked the Deputy to acknowledge was the fact that the investment strategies of which he is so critical have led to the employment of tens of thousands of people, particularly in Dublin. I asked the Deputy to acknowledge that, in Dublin alone, over 88,000 people are employed in the companies attracted by policies pursued here.

The recent article by John FitzGerald in respect of this matter is very interesting. While that article looked at issues around profit sharing and the movement of profit across the world, the Deputy underestimates in his analysis the effect of American corporate tax changes on the global tax playing field. They will have a significant effect because they will change the incentives available to companies regarding where they locate profits and how they repatriate them. As those changes happen, Ireland will continue to be competitive. Much of the engagement I have had over the last number of weeks points to that. However, those US policies mean the global tax environment is being changed. As to sustainability, this is why I gained Cabinet agreement yesterday to a number of further changes in our corporate tax code as part of the OECD process to deal with global issues and concerns.

Budget Measures

Joan Collins


65. Deputy Joan Collins asked the Minister for Finance his views on whether the priorities for budget 2019 are increased spending on public services and increases in basic social welfare payments as opposed to cuts in income tax; and if he will make a statement on the matter. [30939/18]

I take issue with the Minister regarding the fact that my original priority question, which sought to ask about funding for the Sláintecare report, was delegated to the Minister for Health. It is a very cheap sleight of hand to avoid answering the question. The Minister for Health is not responsible for drawing up the budget; it is the responsibility of the Minister for Finance. That is why I had to put this question as a third question in respect of public services over tax cuts.

The way in which questions are assigned is not a matter for me, it is a matter for the Office of the Ceann Comhairle. During my time on questions, which comes around every second week in the House, I answer as many questions as are put to me, including supplementary questions.

To answer the question the Ceann Comhairle's office allowed to be tabled, sound public finances are essential to support sustainable economic growth. I have outlined my views on the budgetary parameters for this in the summer economic statement. As I have emphasised on a number of occasions, the changes we make on expenditure and taxation should be gradual. While it is a very demanding thing to deliver, I am committed to doing it. If one looks at recent changes in our economy, one can see that we have provided for increases in public expenditure, with a particular focus on health, housing, education and social protection. In recent budgets, in particular, we have seen increases in the weekly social welfare rates.

The Government is committed to reducing excessive tax rates for middle income earners while also maintaining a broad tax base. We will, however, do this gradually. I made this point at other fora recently. Those who would criticise a gradualist approach to doing this must outline what is the alternative. Are they suggesting that any given budget would make no difference to tax rates? If that is the case, we will have a tax code that gradually falls out of line with changes in people's incomes which in turn would create a long-term problem. Those who suggest that I should do more are advocating the big-bang approach to taxation that was pursued in the past. Look how that turned out. In response to calls that have been made I will in the next budget outline a longer timeframe in respect of economic forecasts in order to give all Members confidence regarding the longer-term choices I seek make.

In the past four budgets, more than €3 billion in tax cuts were given away, mostly to those who are already well off and to businesses and corporations. Deputies' wages, for example, have risen and we are now better off by €5,000. Some 50% of workers on medium incomes - and those who earn less - are only better off to the tune of €707. The average increase for most workers was €5.

Like our health services, the public services are the sectors that soak up people's wages. It would be much better if the Government concentrated on actually funding the implementation of the Sláintecare report, in respect of which €600 million will be required each year. The extra funding for the out of pocket costs and for changes in the way the health service works would benefit poorer and average workers much more than giving them a €5 increase. This should be looked at when prioritising where the money goes.

I do not know what the Deputy's response would be if I was to introduce a budget that had no tax changes at all for any worker in the State. I am, however, certain of the reaction of many other Deputies. They would condemn me for introducing, at a time of economic stability in the country, the first budget that did nothing at all in the context of workers' take-home pay. Deputy Joan Collins may have a different view. Perhaps she might outline it shortly.

The Deputy referred to the allocation of resources in the health service. We have allocated more than €15 billion to the health service for this year. In publications earlier this year, I indicated that we are seeing difficulties for the HSE delivering its plans, even within the existing framework. We have made additional resources available to the Department of Health. The Minister for Health, Deputy Harris, and I are committed to bringing in an implementation plan for Sláintecare and we are working on that.

If the Minister was earning the average industrial wage and he received a €5 increase in his weekly wage, what does he think would be the impact of that increase in the context of, for example, paying utility bills? What impact does a €5 increase have on a person who is in receipt of a pension and whose rent increases, even if that individual is a local authority tenant? The increase does not have an impact. Most people accept the idea that they would prefer to see money going into public services - such as the health service - where it matters.

The Government has not grasped the import of Sláintecare. The Minister stated that the Government has agreed to it. Members of the Minister's party were on the Sláintecare committee that agreed the final report. The report was to be implemented last year so we are one year behind. It requires €3 billion - €600 million each year - for implementation and €2.8 billion over ten years in ring-fenced funding to pay for the expanded entitlements to which the report refers. Implementing the report would make a big difference. If people saw the Government implementing the ten-year plan, they would agree that this is where the money should go. They would see that they could access the care and hospital services for the benefit of their health and that of their children. That would make a difference.

I will deal with each of the points made by the Deputy. She referred to the impact of, for example, tax changes on citizens who are on very low levels of income. What she did not acknowledge, however, is that - in all cases - if a person is on a low level of income, he or she is already paying a very low rate of income tax.

They are not getting paid that.

If we make any change in this regard, it would mean that the effects will be gradual, as I have already outlined, and if we were to make any bigger changes, we would then face the scenario where this group would not be paying any tax. We have already been down the path of seeing how quickly our tax base can narrow. Figures were published by the Revenue Commissioners earlier this month which show the care I need to take in ensuring that our tax base does not narrow too much, in order to sustain growth in spending and public services.

I shall now turn to investment in public services and in Sláintecare. In the past two budgets, the ratio of tax changes to public expenditure changes has been 2:1. The vast majority of additional resources have gone into investment in more public services. We are committed to Sláintecare but, as outlined in the summer economic statement, the total amount of resources available - once we pay for more investment in houses and in public transport, which I know the Deputy also wants - is €800 million. In the second half of the year, we will have to make choices regarding how we respond back to array of different demands.