Wednesday, 22 May 2019

Questions (12, 13, 14, 15, 16)

Mary Lou McDonald


12. Deputy Mary Lou McDonald asked the Taoiseach when Cabinet committee A on the economy last met; and when it is scheduled to meet again. [18734/19]

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Michael Moynihan


13. Deputy Michael Moynihan asked the Taoiseach if rural issues are allocated to Cabinet committee A on the economy; and when it last met. [20553/19]

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Richard Boyd Barrett


14. Deputy Richard Boyd Barrett asked the Taoiseach when the Cabinet committee on the economy will next meet. [21770/19]

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Brendan Howlin


15. Deputy Brendan Howlin asked the Taoiseach when Cabinet committee A on the economy last met. [21782/19]

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Brendan Howlin


16. Deputy Brendan Howlin asked the Taoiseach when Cabinet committee A on the economy last met. [21850/19]

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Oral answers (7 contributions) (Question to Taoiseach)

I propose to take Questions Nos. 12 to 16, inclusive, together.

Cabinet committee A covers issues relating to the economy.

This includes rural issues under the action plan on rural development, covering the period 2017 to 2019.

The Department of Rural and Community Development has commenced work on the next phase of rural development policy from 2020 onwards. It will seek to strengthen rural economies and rural communities, particularly in light of the emerging issues such as Brexit, climate adaptation and new technologies. The Minister for Rural and Community Development, Deputy Michael Ring, is keen to ensure the best possible engagement with rural communities in the development of the new policy and has asked his officials to organise a series of consultation events with stakeholders in May and June.

Cabinet committee A covers issues relating to jobs, the labour market, competitiveness, productivity, the digital economy and pensions. Of particular relevance, the committee has overseen the development of Future Jobs Ireland, which was launched in March. It will oversee the implementation of this initiative.

As with all policy areas, rural issues are regularly discussed at full Government meetings, including two weeks ago. It is at these meetings that all formal decisions are made. The most recent meeting of Cabinet committee A took place on 12 November.

Cabinet committee A concerns the economy. In this instance, it is all about Brexit. Has the Taoiseach talked to Prime Minister May in the past week or so about the recent options she has suggested she will put to the parliament in Westminster? What does she hope to achieve from that? What other measures might she be considering that may help Ireland and its economy in the event of Brexit?

The Taoiseach has resumed the policy, last seen in the run-up to the 2016 general election, of commenting regularly on how everything is brilliant in society and how the Government is responsible for everything positive. Whenever anyone raises any concerns, he goes straight into his hyper-partisan model of behaviour, the type of model that has reduced Westminster politics to its current sorry state. In a difficult situation, the Taoiseach only ever played the man and never the ball. We saw this again yesterday with what I would term his frankly pathetic refusal to address Deputy Michael McGrath's point about the implications of dramatic over-expenditure on a range of projects.

It is only a couple of months since Fine Gael's messaging priority was to announce in the Dáil that it would expose every promise by the Opposition and demand full fiscal information. Now, we are in the position in which the Government has adopted a kitchen-sink strategy to campaigning, whereby allocations of billions of euros are being announced and Ministers are refusing at point blank to explain where the money is coming from. The Taoiseach has even gone so far as to involve our European Commissioner in the unprecedented breaking of the tradition of the Commission refusing to make funding announcements during campaigns. There was plenty of time before the campaigns. We have been lobbying hard on behalf of the suckler cow herd and beef farmers.

When will we see the exact list of projects re-profiled due to the major over-expenditure on the children's hospital and the broad fiscal impact of the broadband decision? As the Taoiseach will be aware, the Secretary General of the Department of Public Expenditure and Reform listed a range of projects, including schools and primary care units, that would have to be delayed or cancelled if the full cost of broadband had to be paid and if the €345 million for the children's hospital was to be found. Is it still the Taoiseach's position that the Brexit-related hit on the public finances, the additional funding for the hospital and the broadband plan, and the overruns in the health service will all be managed without anybody noticing?

If this House has any purpose at all - I suspect the public sometimes wonders whether it does - it is to see crises coming down the line and act to prevent them. This month in 2013, at a meeting of the finance committee, I suggested to representatives of the Irish Fiscal Advisory Council and the Government that the moves to bring large global property investors into Ireland pursued by the then Minister for Finance, Deputy Michael Noonan, would very likely lead to the return of the boom–bust cycle in property and to more property bubbles. The council and the Minister dismissed this as very unlikely at the time. Yesterday, the OECD, which is not a left-wing think tank, confirmed that bringing in those investors has recreated the conditions for the property bubble that we warned about six years ago at that meeting. What does the Taoiseach think about that warning? Does he believe the Government might put up its hands and say it may have made a mistake and that inviting the investors in may not have been the best idea, that the investors may not have assisted in having a sustainable housing sector, and that they may be, as the OECD is suggesting, contributing to the housing crisis and the unaffordability of housing, which is now an economic problem? It is not just a social crisis; it is now an economic problem and an existential threat to our economy in terms of our not being able to house our workers. We do not have anywhere to house the additional workers we need. A large number of people, never mind those rotting on housing lists and those whose incomes are just above the threshold under which they must be to get on a housing list, are totally lost. Their rents are more than the repayments on an extremely high mortgage, and getting a mortgage is completely impossible. As the OECD pointed out, the only way out of this is credit, which would be dangerous. We are in a complete cul-de-sac. The only way that cul-de-sac can be unblocked is if the State intervenes heavily in the housing sector to provide not-for-profit housing that individuals can afford.

I hope it is now evident to everyone that the economy is performing very well again this year. We know this from the labour force survey figures released by the CSO yesterday. It shows there has been a net increase in employment of 81,000 in the past year. There are now 2.3 million people working, more than ever before. The unemployment rate has fallen below 5%, representing a 14-year low. Long-term unemployment has fallen below 2%, to 1.7%. These figures are much better than we expected. Employment is now growing at twice the rate it was this time last year. That is an extraordinary economic performance, notwithstanding the risks and headwinds we are sailing into. It shows an economy that is doing well and that is being well managed. There is no better test of a Government's economic competence than employment rates, incomes and living standards. These are all very much going in the right direction.

The improved economic figures will have an impact on the public finances. We are confident that we will, once again, record a budget surplus this year. We will, once again, be able to reduce our national debt this year and we will be able to make the first deposits to the rainy day fund, provided that the economic performance is sustained and that Brexit does not blow us off course. That is an enormous uncertainty, even still.

It is intended that, in the middle of June, the Minister for Finance, Deputy Paschal Donohoe, will make the Summer Economic Statement. That is an annual statement that has been made to the House probably for five or six years. It will set out the revised numbers and projections for growth, revenue and expenditure. It will also set out the surplus.

On my meetings with the UK Prime Minister, Mrs. May, I last spoke to her in Paris last Wednesday. She gave me a rough outline of the announcement she made yesterday in terms of a new plan to secure ratification of the withdrawal agreement. It is likely that I will meet her again in Brussels next Tuesday, when Heads of State and Heads of Government are due to meet again to discuss the outcome of the European elections. I am not sure whether she will attend but, if she is, I will certainly make sure to speak to her once again.

The OECD's economic outlook, published yesterday, highlighted in a section on Ireland the risk of a boom–bust cycle developing if it is associated with a surge in credit growth. We know that the previous boom–bust phenomenon was largely credit driven. People were investing and spending money they did not have or earn. It was money that was borrowed. That is what we need to guard against very much in the period ahead.

At present, there is no evidence of inappropriate or excessive credit growth in Ireland. On the contrary, net mortgage growth to households grew at a modest 1.4% in the year to December 2018 but we do need to guard against the risk of a return to excessive and easy credit. I note that many who predict another crash are the same individuals who call for more credit, borrowing and debt. That should be borne in mind.

I am not calling for more credit.

The macroprudential rules are specifically designed to reduce the likelihood of a boom-bust cycle re-emerging. The report, in particular, warned of the increased vulnerabilities of the Irish commercial property sector, given the increase in foreign investment. The Department of Finance is very much aware of this issue and monitors it closely. Indeed, it was one of the reasons we increased stamp duty in the budget two years ago in order to slow growth in the commercial property sector and to encourage growth in the residential property sector and in civil and public infrastructure, and that has happened. It should also be recognised that there are advantages in accessing foreign as opposed to domestic bank funding, most notably, the reduced risk to our own domestic banking sector. The OECD outlook noted that growth in Ireland is expected to remain robust, notwithstanding several risks, including Brexit and those related to the construction sector, which I mentioned earlier.

Written Answers are published on the Oireachtas website.