Tuesday, 6 November 2018

Questions (4, 5, 6)

Mary Lou McDonald

Question:

4. Deputy Mary Lou McDonald asked the Taoiseach if he will report on the work of the economic division of his Department. [40783/18]

View answer

Brendan Howlin

Question:

5. Deputy Brendan Howlin asked the Taoiseach if he will report on the economic division of his Department. [43432/18]

View answer

Richard Boyd Barrett

Question:

6. Deputy Richard Boyd Barrett asked the Taoiseach if he will report on the economic division of his Department. [45635/18]

View answer

Oral answers (19 contributions) (Question to Taoiseach)

I propose to take Questions Nos. 4 to 6, inclusive, together.

The economic division in my Department assists me and the Government in developing and implementing policy to deliver sustainable and regionally balanced economic growth and quality jobs and to promote effective planning and delivery of infrastructural developments, including housing. The Cabinet committees and associated senior officials' groups, backed by the division, help to deliver policies in these areas. Cabinet committee A deals with issues relating to the economy, the labour market, competitiveness, productivity, rural development, the digital economy and pensions. Cabinet committee D works to ensure a co-ordinated approach to the delivery and ongoing development of policy in the areas of infrastructure investment and delivery, housing and climate action, and provides political oversight with respect to Project Ireland 2040.

The economic division also monitors implementation of the Action Plan for Jobs, leads Ireland's participation in the annual European semester process and prepares the annual national risk assessment, which provides an opportunity to identify and consider potential economic risks and challenges on a structured basis. The 2018 report was published in July and the national risk assessment for 2019 will commence shortly.

The division is responsible for liaison with the Central Statistics Office and is also leading the preparation of the future jobs initiative in partnership with Department of Business, Enterprise and Innovation. This is the Government's new economic initiative to ensure we are well placed to meet future challenges. Future jobs will drive our development as a resilient, innovative and globally connected economy capable of coping with technological and other transformational changes ahead. It is aimed at enhancing productivity, labour market participation, innovation, skills and talent, and the low-carbon economy, and will be launched in early 2019.

A unit within the economic division works with the Minister of State with responsibility for data protection to ensure a whole-of-government approach to data protection and broader digital issues. In this regard, the unit provides the secretariat to the interdepartmental committee on data issues and to the Government data forum. The division is leading, in collaboration with other relevant Departments, the development of a new overarching national digital strategy to enable Ireland to maximise the societal and economic benefits from digitalisation. The division also provides me with briefing and speech material on economic and related policy issues.

I ask Members to stick to the allocated time or we will not get through the business before us.

The proposal for an EU digital sales tax was raised earlier by the leader of the Green Party and, in response, the Taoiseach gave a critique of the model that is proposed. Does he have a concern in respect of this tax in the context of overall Irish tax sovereignty?

On the issue of jobs and job plans, it is very obvious that throughout this island, North and South, there are very severe skills shortages in many sectors. There is also a very big concern around the availability of labour and staff, not least because of the very hostile and negative messages that have been sent out by Brexit which are being felt very much north of the Border. Yesterday I met 21 leaders of Northern Irish business from every sector and the message was the same. I know that their concerns are echoed south of the Border. Will the Taoiseach report on any ongoing work on those issues?

One of the greatest risks facing us in terms of our revenue sources is, as the Taoiseach acknowledged, our overdependence on corporation tax from multinationals. A small number of companies are producing a very significant chunk of the corporation tax collected, which also represents an increasingly large chunk of the overall tax take. Has the economic division looked at this issue? Do we know why, in the past two years in particular, the Department of Finance has been so inaccurate in its forecasting of the income stream from corporation tax?

On the digital tax issue, there may be no OECD solution and many individual countries are planning unilaterally to introduce such a tax. The UK announced in the previous budget the introduction of a 2% digital services tax. Spain and Italy are pursuing their own measure and France and Germany have proposed a levy from 2020. This is a tax on the turnover of multinationals. It is coming down the tracks and will either be introduced by agreement across the OECD, which it is hoped will be the case, or it will be done unilaterally. What is the thinking of the economic division on that matter?

The Taoiseach said that Cabinet committee D deals with housing, among other things. As well as being a social and humanitarian emergency, housing is increasingly becoming a very serious economic threat to this country. Vast numbers of our citizens, working people and others, simply cannot afford to put a roof over their heads. I spent last Saturday at the national assembly of the National Housing and Homeless Coalition, one of the pillar groups that organised the Raise the Roof demonstration outside the Dáil on 3 October. The assembly agreed that another demonstration will be held on 1 December to commemorate the death of Jonathan Corrie, who died not far from the front gates of Leinster House. There was real anger at the meeting that despite the passing of a Dáil motion and an enormous public protest, the Government has failed spectacularly to change its policies or to take the radical emergency measures necessary to deal with the housing crisis.

One point that was underlined at the meeting, on which I would like the Taoiseach to comment, explains much of the delays, problems and the escalating crisis. People railed against the fact that in council after council, Fine Gael, Fianna Fáil and, in some cases, Labour Party councillors are voting for the disposal of public land for private sector development. In Kilcarbery the proposal is that 70% of land will be for private housing. In Dún Laoghaire, similar proposals are being made for public sites. Councils are selling off public land, which should be used for public housing, to the private sector. That is why we have a housing emergency. The Government's policy insists on privatising public land.

The Taoiseach explained that the economic division has a central role in the oversight of infrastructural development and supports the relevant Cabinet sub-committees. A number of weeks ago, the Taoiseach announced that broadband provision will be a personal crusade. I do not understand why it has not been thus all along and has only now become a personal crusade, after the Deputy Naughten affair. Why did the Cabinet committee on infrastructure only meet once in the first ten months of this year? The Taoiseach insists that he likes to have full discussions at Cabinet. He has said that he considers Cabinet committees to be ideal fora for detailed discussions and in-depth examination of issues, drawing on papers circulated in advance, with an ability to question closely those managing issues day to day. It is clear, however, that the delivery in critical policy areas such as broadband, housing and health has been very poor. The Taoiseach has accepted that targets have not been achieved. That suggests a very hands-off approach, where there is no real central driving force behind issues that the Government has identified as priorities.

For example, the Government has hinted and leaked to the effect that the cost of the national broadband plan will be multiples of the original estimate. Did this news just suddenly appear yesterday or in recent weeks? Were officials within the relevant Department and Ministers not aware of this all along? This issue is now a personal crusade for the Taoiseach but how has the fact that it will cost multiples of what was originally envisaged only emerged in the past month? Does the Taoiseach plan to make any changes to the way in which he and various Departments oversee policy areas in Cabinet committees in respect of key areas such as broadband?

On the digital tax issue, the Government certainly is concerned about it in the context of our sovereignty. Our view is that tax is a national competence and we would not like a digital tax to lead to other proposals such as a common consolidated corporate tax base, CCCTB, which we do not support. That said, ours is not an absolutist position.

EU tax harmonisation is in place already, for example the VAT directive is EU law underpinning how VAT works across the European Union. We have no difficulty with that. We are annoyed sometimes by the inflexibility that arises but it makes sense to have a VAT directive in the Single Market and customs are harmonised across the European Union. The vast majority of customs revenue goes straight to the European budget. It is not an absolutist position but we have a concern about anything that may threaten Ireland's tax sovereignty. There are no proposals for a national digital service tax of our own.

We recognise corporation tax is vulnerable. There has been an increase in the amount of tax paid by corporations to the Irish Exchequer in recent years. We do not know for sure why that is. Part of it is down to the fact that those companies are making a lot more profit, or are accounting for more of their profits in Ireland, and there have been changes to laws around intellectual property and there have been changes in accounting standards and practices in the US that seem to have had a particular impact on the increase in this year's tax receipts.

We are being prudent about it. We have established the rainy day fund and corporation profit tax receipts are being earmarked to go into that rainy day fund. It does not make sense and is bad policy to make long-term spending commitments on tax receipts that might be temporary windfalls. That mistake was made in the past, particularly with stamp duty. This Government is not going to repeat that mistake. That is one of the reasons for the establishment of the rainy day fund and the earmarking of corporation profit tax receipts as the revenue that will go into that fund. The Government has budgeted prudently for next year. The budget projections for next year project that the amount of money in corporation profit tax will be less than this year. If there is a surprise, it will be an upside surprise, rather than a downside surprise and I think that is prudent by the Minister for Finance.

It is my strong view that the way out of the housing crisis and solution to the housing shortage is primarily about supply. It is not just about supply, but is very much about supply. There will be 20,000 new houses and apartments built this year, more than any other year this decade. That will go up to 25,000 next year and hopefully 30,000 or 35,000 the year after. We will get to the position whereby the number of new homes being built exceeds demand and we will start to see a real change when that happens. There are over 100,000 new homes already on architects' desks for design currently and that shows what is potentially coming through in terms of additional supply.

I had the pleasure to be in Stormanstown, Dublin 9, yesterday to open a new housing development of 42 units with 150 people moving in there. That was done as a partnership involving Dublin City Council and a housing trust. Some people say that does not count because it was not a direct build by Dublin City Council. The people moving in there do not think that. They are pleased to be moving into those new homes with secure tenancies and are not concerned about the model that was used.

I disagree with Deputy Boyd Barrett. The problem with a lot of councils is Sinn Féin and others on the left wing voting down housing projects and proposals. That is being done in Dublin City Council, South Dublin County Council and other areas. There is a real ideology there that the only type of housing that should be built is social housing and the only way social housing should be built is through direct build by local authorities. I disagree with that.

That is not true.

At the moment we are facing a crisis and an emergency and there needs to be as many houses built as possible as quickly as possible, by any mechanism. Those ideological ideas and constraints, if implemented, would restrict housing supply and reverse the progress that has been made in the past couple of years.

Can I get an answer about broadband?

Can the Taoiseach say anything about broadband?

What was the question about broadband?

The Taoiseach knows damn well what the question was. When did he find out about it becoming a multiple of the cost?

I would have to look up my diary. It was a couple of weeks ago.

That is ideologically driven.

Contractors have to submit a price before one knows what it is.

The Taoiseach is not being up-front or transparent with people.

The Deputy knows well that if I were to divulge a price in a contract negotiation that I would be accused of something else.