Richard Boyd Barrett
Question:1. Deputy Richard Boyd Barrett asked the Taoiseach to report on his Department’s new publication entitled Government Response to Ireland’s Competitiveness Challenge 2023. [53909/23]
View answerTuesday, 23 January 2024
Questions (1, 2, 3, 4, 5, 6, 7)
Paul Murphy
Question:2. Deputy Paul Murphy asked the Taoiseach to report on his Department’s new publication entitled Government Response to Ireland’s Competitiveness Challenge 2023. [53912/23]
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Robert Troy
Question:3. Deputy Robert Troy asked the Taoiseach if he will report on the Government’s response to the annual recommendations of the National Competitiveness and Productivity Council, which was published by his Department on 29 November 2023. [54689/23]
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Aindrias Moynihan
Question:4. Deputy Aindrias Moynihan asked the Taoiseach if he will report on the Government’s response to the annual recommendations of the National Competitiveness and Productivity Council, which was published by his Department on 29 November 2023. [54692/23]
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Mick Barry
Question:5. Deputy Mick Barry asked the Taoiseach to report on his Department’s new publication entitled Government Response to Ireland’s Competitiveness Challenge 2023. [55232/23]
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Cian O'Callaghan
Question:6. Deputy Cian O'Callaghan asked the Taoiseach to report on his Department’s new publication entitled Government Response to Ireland’s Competitiveness Challenge 2023. [55337/23]
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Peadar Tóibín
Question:7. Deputy Peadar Tóibín asked the Taoiseach to report on his Department’s new publication entitled Government Response to Ireland’s Competitiveness Challenge 2023. [55422/23]
View answerOral answers (14 contributions)
I propose to take Questions Nos 1 to 7, inclusive, together.
The National Competitiveness and Productivity Council published its annual competitiveness challenge report in September 2023. The council's report outlined 19 priority recommendations across a broad range of areas for Government consideration. These include enabling stronger productivity growth through research, development and innovation; reducing the cost of doing business in Ireland; accelerating progress on the usage and generation of energy in line with our climate targets; and significantly improving planning, development and the delivery of infrastructure.
On 29 November last year, the Government published a comprehensive formal response to the council's recommendations. This is the fourth year in which a formal response was issued by the Government to the competitiveness challenge report. This response was co-ordinated by my Department, drawing together material from all relevant Departments. In its response, the Government welcomed the advice and views of the council and agreed on the importance and relevance of its recommendations to Ireland's continuing competitiveness. The response outlines specific actions underway across different Departments in answer to each of the recommendations of the council. These include, for example, a national industrial strategy for offshore wind to be published in the first half of the year; more efficiency and certainty in the planning system through the enactment of the Planning and Development Bill 2023; the provision of additional resources to An Bord Pleanála and local authorities; greater use of modern methods of construction, MMC, in the construction of housing; an updated Pathways to Work strategy to be published shortly reflecting current labour market challenges; and stronger pathways from schools into further education and training and apprenticeships. These are just a few examples of actions the Government is taking to ensure continued improvements in the competitiveness and productivity of the Irish economy in the years ahead.
There are several contributors, so they have up to one minute. I call Deputy Boyd Barrett.
Contrary to mainstream economic theory, all wealth in our society is generated by workers. It is very obvious now that we are chronically short of the skills and workers we need in a whole range of areas, including construction, the health service, teaching, bus drivers and hospitality; you name it.
Of course, the reason we are short is that it is unaffordable for tens of thousands of people who are qualified in the professions and trades to live here because housing is completely unaffordable. This has been confirmed again today by the Society of Chartered Surveyors Ireland, SCSI, highlighting the affordability gap for ordinary workers. As a result, tens of thousands of skilled workers, people who are leaving college or who have qualified in the trades, are leaving the country when we desperately need them. What is the Taoiseach going to do to make housing affordable? Does he agree with our proposal that, under the Planning and Development Bill 2023, a minimum of 50% of all new housing should be designated as being social or affordable?
At the weekend, it was reported that the Government is considering the introduction of an Internet tax, that is, a tax of €10 to €15 which will apply to everybody's broadband bills, to replace the TV licence fee. At a rate of €15, that would mean €180 for practically every household in the country. Broadband is not some luxury; it is a necessity. Such a tax would be extremely unjust and regressive. The poorest household in the country would be forced to pay the same as the richest. There have been some murmurs in the media since then suggesting that the Government is not going to do this. Will the Taoiseach give us a guarantee that the Government will not attempt to introduce an Internet tax? Will he go further and promise to get rid of the regressive tax currently in place, namely, the TV licence fee, which approximately 50% of the population is currently boycotting? Instead of the licence fee, we need a big tech tax on social media giants to fund proper public service broadcasting.
I will ask the Taoiseach about competitiveness and the great struggle many small local businesses right across the country are experiencing in that regard. I refer particularly to businesses in the hospitality sector that provide many younger people with their first jobs, that sponsor community events and that employ a great many people. These are often family run enterprises. I am talking about cafes, pubs, shops and restaurants, many of which are under phenomenal pressure and having to close their doors. This is about more than the warehousing of taxes, increased wages and the changes to VAT. A perfect storm of a range of different issues is coming together and putting these businesses under pressure. Many of the LEOs do not have direction on the increased cost of business grant that was to be available and have not made it available. Will the Taoiseach give us an outline of how we are going to meet those challenges for those businesses?
The Minister of State, Deputy Neale Richmond, met the employers' organisation Nursing Homes Ireland earlier this month and agreed to its request to defer increases to minimum pay rates for healthcare assistants and home care workers from outside of the European Economic Area who hold work permits. This concession to employers was made despite nursing homes being increasingly owned by real estate investment trusts and operated by separate companies which are increasingly financed, at least in part, by means of private equity, according to the ESRI. The Minister of State did not meet with the representative body for the healthcare assistants, Migrant Nurses Ireland, despite its request for a meeting. He has now agreed to such a meeting this Thursday but this is after the announcement of the deferral. Non-EEA healthcare assistants, many of whom come from India, perform vital and stressful work in our nursing homes. They are isolated because their pay rates do not meet the threshold needed to bring their families with them. The Minister of State's decision to defer the pay increase is a concession to the owners, many of whom are very wealthy, and an insult to these workers, all of whom are low paid. How on earth can the Taoiseach justify that?
Time and again, the National Competitiveness and Productivity Council has warned that the lack of affordable housing is a key risk to the economy. It is absolutely infuriating for individuals and families who work hard to save up to buy homes to see vulture funds swooping in to snatch them up. In Belcamp Manor in Balgriffin, 85% of the housing estate has been bought by the investment arm of Deutsche Bank, an €800 billion fund. Mouthwatering rents of €3,175 are now being sought for these homes. The Minister with responsibility for housing, Deputy Darragh O'Brien, has conceded that the 10% stamp duty on bulk purchases is not working and is going to be reviewed. Why is the Government not supporting the proposal from the Social Democrats for a 100% rate of stamp duty on bulk purchases in order to effectively ban investment funds from buying up homes? What level is the Government going to set stamp duty on bulk purchases at?
There is an alarming increase in the number of small businesses being forced to close. The owners of these businesses, who have invested blood, sweat and tears to make them function, are being hammered with massive costs. In fact, we have a two-tier economy. We have a very strong foreign direct investment sector but a comparatively weak indigenous business sector. The businesses to which I refer are being hit by rip-off Ireland, which is made worse by the cost-of-living crisis. Many of them, especially restaurants, were hammered during Covid. In addition, the Government's policy on migrant accommodation relies too heavily on the hospitality sector. I ask the Taoiseach to consider what I believe to be the solution, which is to split the hospitality sector. In that sector, there are extremely large hotels that are making very big profits. These could be separated from small cafes, restaurants and other businesses, which would comprise a different sector that would be subject to a different VAT rate of 9%. Will the Taoiseach consider that proposal?
The Taoiseach spoke about the many new pathways to education that provide people with necessary skill sets. While there are substantial deficits as regards the numbers we want trained in the traditional trades, there are also nouveau apprenticeships relating to cybersecurity, robotics and so on. There is great work being done in my constituency by Drogheda Institute of Further Education, Ó Fiaich Institute of Further Education and the Advanced Manufacturing Training Centre of Excellence. We want to see more of that. We know how necessary and important the big tech sector is and that we need to deal with the issues connected to the Digital Services Bill, but what is the State's policy on utilising artificial intelligence and addressing the dangers relating to it? How can we develop the courses and training that will be necessary to get the best of that world and to deal with any issues that arise and dangers that exist?
I thank the Deputies for their questions. Deputy Boyd Barrett is quite right to say that wealth is generated by workers, but there are different forms of workers and different forms of wealth. A lot of wealth is generated by innovation and creating new things. We need to always bear that in mind. There is a lot of research showing that 75% of all new global growth in recent decades has been driven by innovation, new inventions and entrepreneurship, that is, not by people doing the same things, but by people doing new things.
On the issue of skilled people leaving the country, Deputy Boyd Barrett is absolutely correct; there are skilled people leaving the country for lots of different reasons. There are way more skilled people coming into the country every year. There is net migration of skilled people into Ireland and that has been the case for a very long time. As I pointed out earlier, even if it is narrowed down to just Irish citizens, 80,000 left in the past three years but 90,000 returned. Notwithstanding the high cost of housing and the high cost of living, skilled people are pouring into this country because of the jobs that are available and more Irish citizens are returning to the country than are leaving. These are just the facts.
On what we can do to make housing more affordable, increasing incomes is a big part. It is the ratio of incomes to house prices that matters the most. The help-to-buy scheme helps great numbers of people to get their deposit for their first home. The derelict properties grants help a lot too. It is good to see dereliction now falling. The first home scheme makes a big difference in closing the affordability gap. There is also the construction of much more social housing because social housing benefits everyone, not just those who are taken off the housing list as a result of getting homes. It also helps to bring down the cost of housing generally and makes more places available to rent.
I took a look at the SCSI report that is being reported on today. Unfortunately, I believe its findings have been misreported. I can understand why people misunderstood it. The SCSI specifically states that the first home scheme is not included in its calculations.
That would close the affordability gap. Indeed, it would eliminate it in many cases. It only applies to three-bedroom new semi-detached homes. Most people do not buy three-bedroom new semi-detached homes. Most people buy homes that are not new and most first-time buyers tend to buy two-bedroom, rather than three-bedroom, properties. As is often the case with these reports, it has been incorrectly reported by elements of the media and then incorrectly quoted by politicians, which is regrettable but happens very regularly.
As regards Deputy Murphy's comments, we are not planning to introduce an Internet tax. That was one option of many considered by the working group. The disadvantages were clear. It would not just be a 1% or 2% levy, but would have to be €10 or €15 a month, which would be too high, and there would be huge difficulties in applying exemptions, which we currently apply to people on very low incomes and to pensioners, for example. It did not jump out of the report as a good option. Rather, it jumped out of the report as a not-very-good option, but it is always important to consider all options.
As regards Deputy Moynihan's comments, as I acknowledged earlier, the cost of doing business is very high and it is rising, particularly for the hospitality sector and very labour-intensive sectors, such as retail, for example. We are seeing many cafés and restaurants closing. There are many of them opening, too, and a lot that are very difficult to get into, have a lot of business and are very busy. We are not seeing any evidence yet of employment levels falling in the hospitality sector but we need to monitor and watch out for that very closely. As I have said before, there is no point putting up people's wages if the net result is they lose their job or have their hours cut. We are not seeing much evidence of that yet.
In terms of businesses struggling, help is on the way. A quarter of a million euro will be injected into small businesses between now and the end of March to help them with their costs. The tax warehousing scheme remains in place, but tax cannot be withheld forever. Businesses do have to pay their taxes. Members should bear in mind that some of that tax is PAYE, money that people earned a year or two ago that has not yet been paid to Revenue. In addition, we are seeing energy costs falling, which is encouraging.
As regards VAT rates, for most of the past 30 years the VAT rate for hospitality has been between 12.5% and 13.5%. On a temporary basis, it was reduced to 9% after the financial crash and during Covid. In the run-up to the budget, we considered separating accommodation from food service. That is technically possible. It would take time to implement but the cost, unfortunately, ran into hundreds of millions of euro and, for that reason, a decision was made not to proceed with it.
As regards Belcamp Manor, just like Deputy O'Callaghan and everybody else in the House, I do not like to see investment funds buying up family homes. We changed the law in 2021 to prevent that from happening. This particular permission was granted in 2019, two years before the law changed. Stamp duty is currently 10%. Clearly that did not deter the investment fund in this case from buying these homes. Sinn Féin is saying it should be 17% and the Social Democrats are saying 100%. That is not the way you do tax policy. We need to examine this properly-----
Just ban them.
-----work out what the effective amount would be and make sure we are very careful about any unintended consequences, which often happen in tax policy.
Artificial intelligence is a really important topic to which we need to give a lot of consideration. It was the main topic of discussion in Davos last week. It is a powerful technology with potentially enormous benefits for society and the economy, but one that has some risks too. My only regret is that it is described as artificial intelligence. That gives people the impression it is something it is not. It is not anything approaching human intelligence. These are machines that can do calculations very fast.
What about the question on healthcare assistance?
I will ask the Minister of State, Deputy Richmond, to revert to the Deputy on that issue.