Tuesday, 17 September 2019

Questions (1, 2, 3, 4, 5)

Joan Burton


1. Deputy Joan Burton asked the Taoiseach the number of times Cabinet committee A, economy, has met to date in 2019. [27940/19]

View answer

Brendan Howlin


2. Deputy Brendan Howlin asked the Taoiseach the number of times Cabinet committee A, economy, has met to date in 2019. [28111/19]

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Mary Lou McDonald


3. Deputy Mary Lou McDonald asked the Taoiseach the Cabinet committee at which agricultural issues are discussed; and when it last met. [37278/19]

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Richard Boyd Barrett


4. Deputy Richard Boyd Barrett asked the Taoiseach when the Cabinet committee on the economy will next meet. [37385/19]

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Micheál Martin


5. Deputy Micheál Martin asked the Taoiseach the Cabinet committee that discusses agricultural matters; and when it last met. [37692/19]

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Oral answers (16 contributions) (Question to Taoiseach)

I propose to take Questions Nos. 1 to 5, inclusive, together.

The Cabinet committee on the economy met on Wednesday, 4 September. It had been scheduled to have a meeting on Monday, 1 July, but that had to be postponed because of an extended European Council meeting. The next meeting is not yet scheduled but will most likely happen next month.

The Cabinet committee on the economy is responsible for all issues relating to the economy, including one of the Government's key strategies, Future Jobs Ireland, which was officially launched earlier this year. Progress is being monitored by my Department. Implementation is progressing and the first six-monthly report was published in July. Development of Future Jobs Ireland 2020 is now under way.

Issues relevant to the agriculture sector were discussed at a number of Cabinet committees, including the Cabinet committee on the economy, which covers rural affairs, the Cabinet committee on foreign and European affairs, which covers Brexit, and the Cabinet committee on the environment, which covers issues relating to the environment, including the implementation of the climate action plan. Issues relating to the economy and to agriculture are, of course, regularly discussed at full Cabinet meetings, at which all formal decisions are made, including this week and last week.

I welcome the Taoiseach back.

I thank the Deputy.

Last week's report by the Irish Fiscal Advisory Council, IFAC, is one of the strongest savagings I have seen by the council of any Government since the council came into being. It cited, in particular, the total disaster in terms of budget management, particularly in respect of health, as with projects such as the national children's hospital, and of housing. One point the Minister for Finance made last week was that there would be no income tax cuts this year - in other words, no increase in allowances or credits - at a time when wages are expected to rise by 3%. I have it directly from the chairman of IFAC that this will result in an additional €600 million for the Government. This is because workers will be earning more but not getting any tax reductions in terms of PAYE.

Can the Taoiseach state what the situation will be for the hundreds of thousands of people affected, particularly pensioners, carers, those on long-term disability benefit, lone parents and others who rely on social welfare, social protection and retirement income? Will the Taoiseach tell us whether the indications of the Minister for Finance to the effect that there may be no improvements in social protection payments and retirement payments are true? There is to be an extra €600 million, coming in the main from PAYE workers, who would like to see people such as pensioners protected in the budget. This is also a really important point for the rural economy because we now have very large numbers of pensioners and young children. Inevitably, therefore, our costs are high as a country. Is the Government really talking about no social welfare increases? I welcome that the Minister for Finance seemed to confirm the Christmas bonus is unaffected, but that money is already in place for this year. Can the Taoiseach really say to the pensioners and carers that there will be no room in the budget for them?

This week, the European Union's second highest court will hear the Government appeal over the €14.3 billion in Apple tax. I accept it is necessary to assert our tax sovereignty and demonstrate the impartiality of our own Revenue Commissioners. What is occurring, however, does outline that Ireland has become completely overdependent on multinationals for tax income. We are now in a position in which just 100 companies pay almost three quarters of the corporation tax collected. It is even questionable how much of this foreign direct investment actually benefits the real economy. The IMF has published some data on that. Like Fianna Fáil during the boom, the Government has used undependable corporation tax receipts to plug holes in the financial mismanagement of recent times. I refer to the over-expenditure we know about. In light of so many international economic uncertainties, does the Taoiseach agree it is now vital that we refocus our business and economic model on indigenous industries? Has the Taoiseach thoughts on this? How does he plan to ensure the indigenous economy is nurtured and grown so we can actually break away from overdependency on foreign direct investment, which represents a model that will probably not be sustained into the future?

I want to return to the issue of the open letter of the Minister for Agriculture, Food and the Marine, which was issued on social media and addressed to farmers at picket lines across the country. I do not believe the Minister's intervention was helpful. It does not represent the kind of leadership required at this very sensitive point in this dispute. Those who are on the picket lines are women and men whose families in many cases have farmed for generations. The Minister's essential message, which is to shape up or ship out, was really quite disgraceful. Having delayed intervening in this dispute, which is a decade in the making, it really does not make any sense for the Government to further polarise the positions. No farmer wants to be on the picket line. They have a product to sell. Without sales, they have no income. Small farmers are no different from any other small business or micro-business; they need a minimum income. Our island is one of small indigenous businesses and micro-businesses. Small businesses are the beating heart of our economy. This includes our small farmers, our family farmers. As I acknowledged earlier, progress was made during the discussions but the very root of the dispute has not been addressed. Even within the restrictions of competition law, the matter of baseline price will need to be addressed and advanced. This is not a new issue. It is an issue that is resolvable.

I ask the Taoiseach to consider supporting Sinn Féin's legislation to establish a beef market observatory to ensure full price transparency through the beef supply chain. This would provide a long-term solution to the very deep-rooted mistrust among small farmers of the processors. It is not controversial. It is deliverable even in the short time left under the confidence and supply agreement of the Fianna Fáil–Fine Gael Government. We need to get workers back to work and into the factories, and we need to get farmers back farming. This is a serious business that requires serious leadership. Social media do not represent an appropriate space for the Minister to conduct discussions, give advice or engage in negotiations. I hope he will reflect on that. I hope the Taoiseach will finally agree with me that now is the time for a new round of talks. There is no point in criticising farmers on the picket lines and lamenting the laying off of thousands of workers; we need to sit down and sort this out rationally and constructively. The core issue is baseline price. If we are not talking about that and if the Government is not prepared to resolve this, it is not serious about arriving at a solution.

In recent weeks, there has been a series of leaks and anonymous briefings concerning the Government's approach to a range of economic issues, most of which are related to Brexit. People are calling the budget a no-deal Brexit budget. In reality, it is not. Brexit is providing good cover for a situation that is problematic in the sense that IFAC and the independent Parliamentary Budget Office and others have all signalled they are worried about the sustainability of our finances because of the corporation tax issue.

Some recent articles, including a number published last weekend, were quite revealing in the context of the uncertainty surrounding these tax receipts. We could do with more detailed briefing on the source of the increase over the past two or three years, on its sustainability or fragility and on whether it is subject to all of the transfers that go on within multinationals regarding where intellectual property is booked, etc. This is a complex issue but, nonetheless, the Oireachtas requires some sense of what will happen over the next five years in respect of that revenue stream because - regardless of how one looks at the matter - it has been embedded into the base of expenditure in recent years. Lower interest rates than were thought likely three or four years ago have offset half of the potential interest that was, in 2015, forecast to accrue in 2018. On the other hand, there has been a substantial increase in corporation tax receipts over and above what was forecast.

Will the Taoiseach confirm that his promise of a tax cut, which he announced at his party's Ard-Fheis and then promoted with a social media campaign, has been abandoned for this year? On the previous occasion on which this issue was raised with the Taoiseach, he confirmed his commitment to cuts next year and, in light of reasonable forecasts at the time in respect of 2020, attacked us for suggesting that such cuts were not affordable. Did the Minister for Finance talk to the Taoiseach before briefing to the effect that his tax cuts were unaffordable?

I was also struck by comments made by the Minister for Health during a rare media appearance. The Minister was asked about the core management of and budget relating to the health service on Sean O'Rourke's radio programme. He stated that he is aware of the likely final spending figure for health this year - he actually said that - but he then essentially indicated that he is not willing to tell the public. Again, we are being denied basic information about the public finances and the amount of money available for critical public services. It appears that the actual figure for health expenditure in 2019 will not be available when the budget is introduced. We need more transparency on that because, as Mr. Tony O'Brien has stated, health expenditure has become a dark art. This is somewhat farcical in light of the disconnect between the demands or instructions given to the health service by Government and the funding being provided, particularly regarding demographic issues in respect of the elderly and all of the extra demands that come with a population that is ageing and living longer.

On agriculture, we welcome the deal. There should be an opportunity to debate the agreement, which has come about belatedly. The Government was asleep at the wheel for far too long in the context of the beef sector and beef farmers. On the beef industry, many of the basic issues - such as the 30-month age restriction, four-movement rule, weight restrictions on cattle and the 70-day residency provision - could have been tackled much earlier, as could the establishment of a task force and dealing with other matters that are now encompassed within the agreement. In the overall interest of farmers, workers and all involved generally, space should be given to enable the deal to be taken on board.

I thank the Deputies very much for their questions. I will speak first on the most recent report of IFAC. It is essential that Government take on board the advice of IFAC. The Opposition should also do so. Among the recommendations and findings the council put to us is a concern about the surge in corporation profit tax. We were only taking in approximately €3 billion a few years ago. That figure has risen to €10 billion. Some of that money may be unsustainable. I will come to that a little later. The council also expressed concern about in-year increases in spending, particularly in the area of health. We are doing our best to work with the new CEO and board of the HSE to rein in such spending this year in order that any overrun will be much lower than in previous years. When we talk about reining in health spending, it is important to explain what that means. It means only spending €1 billion more this year than last year. It means keeping the increase in spending to between 5% and 6%. That is what we are trying to do. It is often represented as cutbacks, but that is not what is happening at all.

The council also recommended that we run a bigger budget surplus. As we all know, that would mean higher taxes, less spending, or a combination of the two. The Government does not agree with that recommendation. We believe that our projected surplus for this year, which is approximately 0.3% or 0.4% of GDP, strikes the right balance between what is needed in extra spending on infrastructure and public services and the goal of running a surplus. Ireland is one of the few countries in the western world that is running a surplus. I am not sure which parties in the House are advocating higher taxes, less spending, or both, so I am not sure if any party agrees with that particular recommendation from IFAC.

The chairman of IFAC expressed an interest in reviewing the fiscal plans of Opposition parties, which is something similar councils in other countries do. That is a very good idea. I welcome confirmation from the leaders of the Opposition parties that they would like to have their budgetary plans examined-----

Will we be given the same resources to prepare them as the Government?

-----by IFAC so that we can get an opinion from it on those plans.

The Taoiseach should not politicise IFAC.

It is done in Britain, for example, so I do not see why it could not be done here.

Enormous resources are given to the Opposition there.

Deputy Burton made a very good point about the non-indexation of income tax. Every year an extra €600 million comes in as a consequence of not indexing rates and bands. A tax package of €600 million a year would be entirely reasonable and far from reckless if this was a normal budget. This is not a normal budget, however, it is being developed on the basis of planning for the possibility of no Brexit deal being reached. The latter will mean higher unemployment and, unfortunately, money will have to be found to pay the increased costs that will arise. It will mean growth and income growth moderating, which will unfortunately wipe out the €600 million very quickly. We need to focus the resources we have on saving jobs and businesses and making sure that as many people as possible get through the worst of a no-deal Brexit.

There will be a tax package in the budget but, as the Minister for Finance has stated, it will be minimal. There will also be a social welfare package in the budget but, as the Minister for Finance has indicated, it will be modest and focused on those most in need. The Minister for Finance and I jointly made the decision, with the approval of Cabinet thereafter, that the budget should be developed on the basis of no deal and that we would not be able to proceed with the kind of tax package or welfare package that we were able to deliver in previous years. We made that decision jointly, just as we made a decision on Fine Gael's tax policy jointly. Notwithstanding the efforts to suggest the contrary-----

It clearly was not grounded in reality.

-----there is not a cigarette paper between myself and the Minister for Finance when it comes to our economic policy, nor is there a cigarette paper between myself and Deputy Coveney when it comes to Brexit. In demonstrating that €600 million a year arises from non-indexation, Deputy Burton demonstrated exactly why a tax package of approximately €600 million is entirely reasonable and deliverable in a normal year.