I welcome the Minister to the House. We are debating the Finance Bill at a very challenging and, indeed, dangerous time for our country and our citizens. Even since we debated budget 2022, a few short weeks ago, the situation regarding Covid-19 has worsened considerably. We are far from out of the woods yet and we must proceed with caution and care. The role that the institutions of the State, Government and, indeed, all sides of this House, have played to meet the unprecedented challenge presented by a pandemic, that nobody could have anticipated, has been quite extraordinary, as the Minister outlined at the outset of this contribution.
We have all acted with solidarity and we have done the right thing by our country, but we, in the Labour Party, differ with Government in respect of how we should proceed on the kind of Ireland that should emerge from the pandemic. Ahead of budget 2021 last year, my party advised the Government to do whatever it took to save jobs, businesses and lives and to protect the health of our citizens. The international fiscal and monetary conditions have allowed for money to be borrowed to cushion the blow of the pandemic. This was the right thing to do. We will continue, as is Government policy, to do so as a State, but only for capital investment purposes from 2023.
As we know, Ireland is still playing catch-up on Government spending on housing, health and climate. There is no danger whatsoever to the public finances or to investor confidence in Ireland from running a modest deficit to allow for capital investment in the building blocks for a fairer future. We differ from Government on how much should be borrowed and for what purpose. We have a different philosophy and different political views. That is as it should be. This House is where these debates should happen. Our alternative budget proposals explained why we would choose, for example, to borrow a further €2.1 billion next year on top of Government commitments to front-load capital investment in priority areas. It is really important to remember that before the pandemic hit, general Government expenditure was low compared to the countries with which we often like to compare ourselves. Strong growth of 5.25% of modified domestic demand estimated for 2022 will grow our economy, create jobs, help reduce our debt and allow us to invest more taxes raised to address the gaps in our social infrastructure.
However, there is more to do and we ought to do things differently into the future. I think we should note again in this House the stark pre-budget warning from the Irish Fiscal Advisory Council.
It is just not sustainable that the Government would borrow heavily, spend more on permanent expenditure increases and cut taxes all at the same time over the next period. There are options to raise additional revenues instead of borrowing as heavily as we are doing at present. Yet the Government again chose to allow swathes of non-productive passive wealth in Ireland to go virtually untouched by Revenue in the Finance Bill. Frankly, spending €500 million on tax cuts at this sensitive time in our recovery is wrong-headed and ill advised. The entire €1.5 billion available to fund new commitments in the budget would and could be more productively spent making childcare affordable, clearing HSE waiting lists and providing for better public transport. This would be of real benefit to working people. Put tax cuts, new permanent spending and borrowing together with a rapidly growing economy and it is a recipe for trouble ahead.
We have called for what we describe as a new deal for the people. For my party this means a fair chance and opportunity for all. It means a determined focus on work, care, climate and housing. It means investment in the things that make our lives better and more secure and not ideologically driven tax cuts at the expense of building universal services such as a national public childcare service and a single-tier health service. It also means an informed conversation on how we pay for the health services, education system and the housing system we should demand to see in a decent society and productive economy. This is the type of pandemic dividend the people are entitled to expect and not just a new public holiday and a once-off cash payment for workers who have given their all. Last month's budget and the Finance Bill do not deliver the step change we need to deliver this new deal for a fairer Ireland. They failed to set out a transformative vision. They spend a lot of money tinkering around the edges. It is a business as usual budget. It is telling, and I suspect it is a welcome fact, at least from the Minister's point of view, that never has a budget disappeared off the front pages as quickly as this one did.
Yesterday's Exchequer figures were quite extraordinary. The situation reported yesterday in terms of tax receipts was not even anticipated as recently as budget day. Corporation tax is well ahead of profile at €1 billion higher than expected. Overall tax revenues are running significantly ahead of what was originally profiled. This is, of course, very welcome news indeed for our society and economy. Big firms are performing well, more people are at work and the country is moving in the right direction in this regard. There will be a natural tendency for the Government to pat itself on the back and say things are great. The Minister is a man with the humility to know that all is not well for far too many. He has a chance in the Bill to put it right. Spurs fans have to be humble.
We have seen a dual economy emerge, with locally traded services taking a hammering in the past two years. Housing continues to go beyond the reach of too many hard-working people. The scourge of low pay is all around us and very much in evidence. Now we have a paralysing cost of living crisis with a budget and Finance Bill that do not go far enough to help households meet the rising costs of heating their homes this winter. This is where immediate action is needed.
I will now turn to some of the provisions in the Bill before us. Where we stand on the question of tax should be a defining question of politics. My party is clear and has been consistent in recent years in particular. Now is not the time for tax cuts. The best and most socially democratic way to benefit all of us and all of society is to use most of the €520 million designated for tax cuts to invest in, for example, publicly funded childcare. This is a developmental, social and economic benefit worth much more than the €5 or €8 a week that those on modest incomes can expect from such a measure. Outside of the small changes for a full-time worker on the national minimum wage these cuts do not make economic sense, especially when set against an economy that is set to grow very strongly. This is why I conclude again that such cuts are ideological in nature. There is no economic case for them. I implore the Minister to reflect again on this strategy and heed the advice of the Irish Fiscal Advisory Council. Tax cuts should be ditched in favour of providing the things we all need and that would bring the most benefit to the most people. No working person comes to my office or stops me on the street to demand an extra €5 a week. What they do want is affordable childcare, a home for themselves and affordable education for their families. These should be our priorities.
I will make some points on sections 3, 4, 5 and 8 in chapter 1. The arrangements for reclaiming expenses under the working from home relief system are quite cumbersome. Will the Minister consider making moves to make it simpler? In light of the energy bills crisis and the fact the en masse return to the office is unlikely to occur before next spring, will the Minister make arrangements to backdate the 30% figure to cover this year? This can be done on an administrative basis with Revenue and is a question of political will. It can be done and I would like the Minister to give consideration to it. It would represent a real gesture to those working from home who have to deal with rising fuel costs in the here and now and not next year.
The adjustment of the tax treatment of the pandemic placement grant for student nurses is welcome of itself. However, what the nurses wanted to see is the McHugh report and not choreographed leaks on the day they gathered to demonstrate at these gates yesterday. That was cynical and I ask the Government to engage immediately with nursing and health unions on the substantive issue of student nurses' pay and the McHugh review.
Section 5 extends the help to buy scheme. In the current climate there is simply no argument for a scheme such as this. It has shown itself to be used disproportionately by would-be homeowners who already have a deposit. It is not just I who is wary of the scheme. So is the Department of Public Expenditure and Reform and so are many respected think tanks and experts. The Minister knows their views. The scheme serves to inflate house prices further. We will again make the case for it to be scrapped. It has no place in the system at this time.
I note the measures in section 8 with reference to the tax treatment of international flight crew. The Minister knows from engagement with the Irish Air Line Pilots Association, IALPA, in his previous role as Minister with responsibility for transport of the phenomenon of bogus self-employment and the questionable use of intermediary structures to mask the reality of the employment relationship of countless pilots. Swathes of these companies, and I use the term "companies" advisedly, are registered and managed from Ireland. Revenue recently told IALPA it does not have the power to look through these operations. It should be empowered to look through these operations. I plan to engage with the Minister on this on Committee Stage. Bogus self-employment is insidious. As the Minister knows, it denies workers their rights and entitlements. It also deprives the State of significant social insurance moneys and tax, especially PRSI. It needs to be tackled once and for all but there seems to be a continued marked reluctance to do so despite a number of carefully crafted and considered Private Members' Bills that have come before the Houses in recent years.
Chapter 5 covers the area of corporation tax. It would be useful if on Committee Stage or in his wrap-up on Second Stage the Minister were to indicate whether any measure provided for in the Bill, and the measures arise mostly from EU directives, will in any way address,for example, the behaviour of Abbott pharmaceutical-rated companies, which we discussed recently in the House, which are, quite lawfully, as it happens, taking advantage of double malt type arrangements to minimise their corporation tax liabilities. I welcome that Ireland has signed up to both pillars of the OECD corporation tax reform agenda. I predict Ireland will continue to benefit significantly under the new planned 15% rate. All of this being said, there are, of course, potential risks and a lot of unknowns. These risks should encourage the Government, as I said on budget day and as I have said repeatedly, to look afresh at our national industrial strategy. In doing so we should identify what it is we plan to do in future uniquely well in enterprise and tech and focus intently on the potential of indigenous Irish companies to grow, innovate, scale up and go global from here.
This will require considerable attention and a reorientation of policy and resources in the coming years if we are determined to support the evolution of a more innovative, indigenous, Irish enterprise base and a more productive one with good sustainable jobs, born and bred here.
Part 3 deals with VAT. The escalating cost of heating homes is keeping people awake at night, to put it bluntly. It is coming between families and their sleep. It is rare that I will argue for a blanket VAT rate cut as those kinds of cuts are not progressive in nature and, by definition, are untargeted, often very expensive and sometimes unwise. Coupled with an improved fuel allowance system, a household budget package, for example, a carbon credit for working families as proposed by the Labour Party, and a short-term VAT cut on energy and on certain utility bills would help families through the winter. The European Commission has generally given sanction for governments to take extraordinary measures such as this and there is a case to be made for it.
As retail and other services rally, VAT, as we know from yesterday's Exchequer figures, is way ahead of profile. Some of these extra unexpected resources could be put to better use for now other than repairing the balance sheet and paying debt down. I will be very interested to hear the Minister's position on this and I hope he does not tell me that the income tax cuts will do the trick on this front.
In some of the time I have remaining to speak I will refer to the provisions of section 77, which are designed to introduce a zoned land tax. This measure cannot simply be the failed vacant sites levy given a lick of paint and presented as something else entirely. What we do with the land we have available, its cost and the way in which it is managed is fundamental to how our society works. All of the evidence we have available to us, the evidential base and our anecdotal evidence, points to the fact that land hoarding, speculation and the absence of a "use it or lose it" or "use it and we will at least tax it" incentive has undoubtedly contributed to the lack of supply of housing. It is galling to see zoned land, ripe for development with access to services, flipped and flipped again repeatedly for very significant gain as the value of development land grows. Everyone loses here except the developer. Innovations are needed in our taxation system to encourage the timely development of land for housing. The question arises, however, whether this is it and if this is what is needed. As it is presented and structured in this Bill, I am not absolutely certain. Arguably, if the vacant sites levy was working and if it was properly enforced, as the legislation initially intended it to be, the Minister would not be compelled to come to us with this provision in this Bill. In truth, there was a marked reluctance by the previous Government to allow the measures to achieve what they set out to do, and there was a poverty of ambition at local authority level.
I read the provisions of section 77 again earlier today and they need to be very tightly drafted and with only a small number of what I would describe as proportionate or reasonable exemptions attached. I note in the Minister's earlier contribution that he said he may very well be bringing additional amendments to those provisions on Committee Stage, and I very much look forward to that debate because a lot will turn on how this section is structured. We need to ensure it does exactly what it says it will and what the Minister intends. We need to be very clear, for example, about what is meant by "serviced land". I know that when compared with the definition of "public infrastructure and facilities", the list referring to the proposed zoned land tax is shorter and not as comprehensive as that which applies to the current vacant site levy.
All of this will, as I say, require greater examination and discussion on Committee Stage, as will the question as to why the tax cannot come in sooner as our housing crisis is now beyond urgent. Many if not all of us in this House have served on local authorities, some for considerable periods, and we know that most local authorities are going through the development planning process at this stage. They have at their fingertips very detailed information as to where the zoned land is, where the services are, and what is to be zoned into the future. That gives Government a head start and an incentive to proceed with the introduction of this new measure more quickly than the Minister announced on budget day and than is provided for in this legislation. I ask the Minister to show some urgency on this point.
The employment wage subsidy scheme, EWSS, has been enormously successful in ensuring companies remain viable during the unprecedented challenge presented by the pandemic and that people are kept close to their employment. The Minister will know it is a hobby horse of mine but it is something worth considering, which is the transformation of the EWSS into a more permanent feature of our labour market system based upon, for example, the German Kurzarbeit model which has been good for companies, workers and the German economy. We should learn some lessons from how the EWSS has evolved and how useful it has been to allow us to deal with the unprecedented crisis we have been in for almost two years now. This is something the Minister should consider and we ought to explore in more detail on Committee Stage because we know the EWSS will expire in the spring of next year and, as I said earlier, we are not out of the woods yet with Covid-19 and it will take longer for our economy to repair.