I welcome the Minister of State, Deputy Fleming, to the House for statements on budget 2023. He has 12 minutes to address the House.
Budget 2023 (Finance): Statements
I am pleased to have the opportunity to appear before the Seanad today to contribute to the debate on budget 2023, which the Minister for Finance and the Minister for Public Expenditure and Reform presented to Dáil Éireann this afternoon. As with the budgets of the past few years, budget 2023 is being framed against a difficult and uncertain economic environment. While we all hoped this year would see us building our recovery from the Covid-19 pandemic, Russia's invasion of Ukraine has changed the domestic and international landscape. The war, which first and foremost has had a devastating humanitarian cost, has also created substantial economic costs and elevated uncertainty. This presents a significant challenge as we set out budget 2023.
Inflation has hit its highest level in decades. The latest projections are for it to average 8.5% this year and around 7% next year. This is a familiar picture across international economies. The impact of the war is also weighing on economic growth. Higher inflation will reduce purchasing power and consumer spending, with rising interest rates and uncertainty dampening investment. While Ireland recorded strong growth in the first half of the year, we are now revising downwards our forecasts. Modified domestic demand – the preferred measure of domestic activity – is projected at 1.25% next year. This is having a very real effect on our day-to-day lives. It is directly impacting businesses' and households' incomes and living standards. It is for this reason that the Government has today presented a cost-of-living budget focused on helping our citizens in meeting these challenges and putting money back in their pockets.
Despite the difficult and deeply uncertain economic environment, we should recall the resilience of our economy and society in responding to crises, not least the Covid-19 pandemic. The Government employed the full range of fiscal resources we had carefully built up over many years successfully to protect households and business, insulating our economy from long-term damage while supporting our healthcare and front-line workers. This approach helped to deliver a remarkable labour market recovery, with employment in the second quarter of this year reaching 2.5 million people, the highest level on record and, as of August, the unemployment rate had fallen to 4.3%.
In tandem with this, the public finances have bounced back strongly. This reflects the responsible approach we have taken in managing our response to recent economic shocks. The Government must find the correct balance that does not jeopardise fiscal sustainability. While the recovery in the public finances is broadly based, we must recognise a portion of the surge in tax revenue is due to windfall corporation tax receipts. The Department of Finance and many other commentators have warned about the risk this could present, particularly if the situation were to change suddenly and significantly in the future. In light of this vulnerability, the national reserve fund will be replenished with some of these revenues, with €2 billion directed into the fund this year and a further €4 billion transferred next year.
It is also important to remember that, as in the pandemic, the Government has already responded quickly and decisively to support households and businesses, particularly the most vulnerable, with rising cost-of-living pressures. Not only did we take the decision to bring forward budget 2023 by two weeks to provide a more timely response, we have also announced cost-of-living packages amounting to just under €2.5 billion over the course of the year and amended our fiscal strategy for 2023 by doubling the size of the tax package and increasing public expenditure. While a strong fiscal response in budget 2023 is warranted, given the uncertain situation and the direction of monetary policy, we must carefully balance the provision of supports with not adding to demand pressures, ensuring the sustainability of the public finances and keeping resources available to respond to tomorrow's challenges.
Today, the Minister for Finance and the Minister for Public Expenditure and Reform, Deputies Donohoe and Michael McGrath, announced a package of supports amounting to some €11 billion, with a further €300 million in public service support measures funded from the contingency reserve fund. Given the urgency of the challenges we face, €4.1 billion of this package will be spent this year. In terms of taxation, the current excise reduction of 21 cent per litre in respect of petrol, 16 cent per litre in respect of diesel and 5.4 cent per litre in respect of marked gas oil is being extended until 28 February 2023. This extension is also being applied to the 9% VAT rate for electricity and gas.
In addition, the budget includes an income tax package that amounts to over €1 billion, with the standard rate cut-off point increasing to €40,000 and the main tax credits, that is, personal, employee and earned income credits, rising by €75. The home carer's tax credit is also being increased by €100 to support stay-at-home parents. The 2% universal social charge, USC, band ceiling is increasing and the reduced rate of USC for those who have a medical card and earn less than €60,000 per annum is being extended for a further year. Further consideration will be given to the introduction of a third rate of income tax, with a report to be published prior to next year's summer economic statement.
Alongside the cost-of-living crisis, housing remains a key focus of the Government. The unprecedented level of investment in housing is starting to yield results, with some 25,000 new homes built in the past year, which is the highest level in a decade. However, the Government is committed to doing more. Consideration will be given to the recommendations of the independent review of the help-to-buy scheme in future budgets. In the interim, the scheme will continue until the end of 2024 at the current rates. A vacant homes tax is being introduced to increase the supply of homes for rent or purchase to meet demand. This tax will be charged at a rate equal to three times the property's existing basic local property tax, LPT, rate. In terms of the rental market, the Government is introducing a new rent tax credit to support tenants, which will be valued at €500 per annum and will benefit 400,000 people. It is available this year and next year as well.
In the area of climate action, the Government remains committed to protecting the environment, reducing emissions and supporting newer, cleaner technologies. Carbon taxation is necessary to provide the additional funding for vital climate measures, such as retrofitting. As such, the rate per tonne of carbon dioxide emitted for petrol and diesel will increase by €7.50 to €48.50 from 12 October.
However, given the current cost-of-living pressures, this will be fully offset with a reduction to zero of the National Oil Reserves Agency levy.
On agriculture, several important reliefs, such as the farm consolidation stamp duty relief, are being extended to support young farmers and the farming sector more generally.
The Government has also announced specific measures to support business and enterprises. These include amendments to the small benefit exemption and reductions in the excise fees for special exemption application orders to provide support to the night-time economy. More broadly, the Government is introducing a temporary business energy support scheme to assist firms with the rising cost of energy during the winter months. This scheme will provide eligible businesses with up to 40% of the increased cost in their energy bills.
Regarding revenue-raising measures, it is not appropriate for energy companies to earn excess profits from the current volatile conditions. The EU is undertaking work to capture the windfall energy gains of these firms. Ireland aims to participate in the EU-wide response, although if this is not feasible, the Government will propose its own measures.
To support public health objectives, excise duty on a pack of 20 cigarettes is being increased by 50 cent, with a pro rata increase on other tobacco products. Also, a zero VAT rate will be applied to defibrillators from 1 January 2023, along with several other VAT changes.
On longer term matters, the Department will develop a roadmap for personal taxation reform and commence reviews of other regimes based on the Commission on Taxation and Welfare’s recommendations over the coming months.
It is clear that effective Government action had already put Ireland back on the road to recovery from the pandemic, with our employment levels and public finances in good health. This has put us in a strong position to confront the challenges we face today. Our decisive response to date has helped to mitigate the impacts of inflationary pressures on vulnerable households and businesses. Today’s cost-of-living budget will continue to provide much-needed support over the final months of this year and into next year. Given the elevated uncertainty we are facing, we will continue to manage the public finances effectively to have the resources available to best respond to future challenges and support people.
There is a potential conflict of interest in this budget. It is partly a negative one, so I had better declare it as a negative one as well as a positive one.
Today’s budget is further evidence that the number one priority of the Government is to protect all the people and families facing an unprecedented cost-of-living crisis caused by the continuing plague of populist politics, in particular the illegal invasion of Ukraine by the Putin regime. Populism has the easy answers. There is always an enemy of the people who exists in plain sight but who is never specified. Trump, those behind Brexit, and Putin, along with many other populists of the hard left and far right, always point the finger but never pull up their sleeves and get down to work on the solutions to the problems that nearly every sector of our society will face this winter. Older people trying to heat their homes, families trying to feed their children and make ends meet, and businesses trying to keep their doors open and retain jobs do not need fantasy policies that have wrecked other economies. Rather, targeted funding and tax measures are needed to ensure all homes remain warm, families can cherish their children and Irish businesses can face what will be a difficult winter given the rising costs of energy, food and supply chain goods.
The Minister for Finance, Deputy Donohoe, and the Minister for Public Expenditure and Reform, Deputy McGrath, come from very different political traditions but have ensured the interests of our nation and all its people and communities are supported through these unprecedented economic challenges. The scale of the global economic challenge is being felt in every country, but because of the Ministers’ responsibility and patriotic management of the economy, the Government has a budget package of more than €10 billion to deliver targeted help to all the people in need of supports. Facts matter. Policies and choices facing the Government must be based on facts. The Irish people deserve to know the facts. Our economic management through Covid, and now in the post-Covid world, is one of the greatest success stories in the world. Respected UN data prove time and again the massive success of the Irish economy and the political management of our redistribution under progressive budgetary policies.
A successful economy creates the tax yield that must be spent wisely and that supports society to ensure the values of our Republic are given real and practical purpose. The two Ministers have consistently been practical politicians who have avoided the showboating and negative populism of others to concentrate on doing the job the people want and elected them to do. I thank them for the seriousness with which they take their patriotic duty.
In the time left, I will outline just some of the measures announced today that will ensure we can deliver to the people at this time of need. We had a double payment of welfare in October in addition to the normal double payment at Christmas. We have an energy credit of €600 per family. Childcare fees will drop by more than €2,100 per year, on average. The increase to the higher tax band will give back up to €790 per person. There is a tax credit for renters of €500. There is a €500 grant for carers of those with disabilities. There is a €12 increase to all core welfare payments. There are free school books at primary level, and college fees have been reduced by €1,000 for all students. The Student Universal Support Ireland payment has been doubled. There are energy supports for SMEs of up to €10,000 per month, which is critical to keep jobs in the economy and family incomes intact. There is funding for more than 1,000 gardaí. An IVF scheme is publicly funded for the first time. The GP card scheme has been expanded, with more than half the population now eligible. There is free contraception for women up to 30.
I am delighted the first-time buyer’s grant will be kept for another year. We look forward to some tweaking of it in further budgets. This is one of the key components and pathways to homeownership. It was pointed out today that in excess of 35,000 families have availed of it. In my constituency, Wicklow, 1,354 families are now living in their homes because of the grant.
I listened to the Opposition debate in the Lower House. I normally do not get dragged down into the politics of it but I believe facts matter. Fantasy policies and the figures coming from Sinn Féin need to be called out at this stage. According to Sinn Féin’s housing budget, the party is to deliver an additional 2,900 houses, but it has based its figure on pre-pandemic prices. It takes no account of inflation and the supply chain issues. Only a few weeks ago, it called for a crisis intervention plan to slow down the disorderly exit of private landlords from the rental market. Its spokesman said all options must be on the table for consideration, including tax reform in the private rental sector. However, what would the party do in its budget? It would add €400 to the cost of a landlord who wishes to rent a property. Just over a year ago, Deputy Ó Broin was lambasting the State for the use of the private sector in respect of the purchase of turnkey developments, saying turnkey developments built by private developers and brought to the State comprise the single most expensive way to provide social housing. Lo and behold, in the housing budget of 2023 there is a reference to 1,000 turnkey social homes at a cost of €256,000 each.
Sinn Féin does not believe in homeownership. It actually detests homeownership. In its budget, it is removing the three key planks of homeownership: the first-time buyer's grant, the first home shared equity scheme and Croí Cónaithe, which allows people to spend €50,000 purchasing a vacant property so they can build their own home.
In the minute I have left, I want to speak about my own sector and my disappointment today over the position on VAT. I hope this will be open for debate. I hope the decision was not based on the gouging that has been done by some hotels within this country, because the people gouging will gouge one way or another regardless of the VAT rate.
Is this based on other statistics or figures?
One of the key issues at this point is the decoupling of food and accommodation because they are two completely different products. As the Minister pointed out, food has a huge cost input. All those costs have gone up in the past number of years. Food works on a tight margin. Regarding accommodation, from a Government point of view delivering budget hotels is complex, difficult and challenging. When the State takes nearly 20% of the budget accommodation out of the system, that causes problems. Airbnb is also an issue. Its business model is taking up hotel accommodation. People should be in hotels and homeless families should be in homes. Dublin has a shortage of approximately 20,000 bed spaces. Budget hotels are very hard to deliver and need a lower VAT rate. We need an open and frank discussion on VAT in the hospitality sector. The issue needs to be publicly debated because there are genuine concerns.
That is crystal clear. I thank the Senator.
In difficult circumstances, the Government has, on balance, done a good job with the resources it has. It is not simply a matter of a little for everyone; rather it is a matter of taking a look at the crisis we are in and making sure it does not derail the economy and plunge households and enterprises into a catastrophic crisis from which they may never recover.
I agree with the point made by Senator Casey on decoupling the provision of food and accommodation. I know that is easier said than done because a hotel bill is a hotel bill and covers both. In the past couple of days I had a problem with my mobile phone and had to spend the best part of 12 hours loitering around the Grafton Street area. I was struck by the number of businesses that are looking for staff. Staff are required everywhere. Since the Covid crisis the level of participation in the workforce has declined. Whether that is people who went home to eastern Europe or other parts of Europe or people who took a different pathway in their lives and took up educational endeavours, there is a huge shortage of staff in the city of Dublin. One only has to walk down to any street to see the notices on every window looking for staff. That is one problem.
The second problem is that many activities are highly dependent on keeping their energy costs reasonably low. I am talking about butchers' shops, small groceries with fridges, freezers and the like, restaurants with cooking facilities and so on. The crisis posed by massively increased energy prices is real and substantial. The Government has done a good deal to address that in a balanced way.
I welcome a number of measures, including the decision to reduce VAT to 0% for newspapers and online journals. Journalism is in crisis for various reasons, such as changing patterns of consumption and free social media, in particular as consumed by the younger generation. This step has long been advocated and I am glad the Government is taking it because we need newspapers, balanced opinion and a variety of sources for information and opinion on current affairs and all the other matters dealt with by the media.
I wish to discuss the vacant home tax. It is designed to apply a multiple of local property tax to vacant homes, and they are defined loosely as homes which, I presume, are capable of being occupied but are not occupied for more than 11 months in any given year. I note it is to be a self-assessed tax. What is the likelihood of somebody who had a home that was not occupied for 12 months of the year actually fessing up and saying they would like to pay three times the local property tax on it? It is a huge gamble on people's honesty that somebody would be asked to do that. Could the Minister enlighten me on one aspect? If a person had such a home and there was a member of his or her family, a relative or even a total stranger to which he or she gave occupancy for two months, even without receiving rent, does that let the person off liability for the vacant home tax? If it does, what are we talking about here? People will play a game with the Revenue and say their first cousin was making use of a property for six weeks in a given year or their nephew from Canada came over and stayed in the house. It seems to me to be codology.
What is really needed is something that is not easy and that has eluded successive Governments for a long time, which is to look to towns and cities and put in place a series of measures that would use up vacant and under-used space above shops. For example, Boyle in County Roscommon has shops with dried up flowers in their windows and a vacant look to their upper storeys. I have come to two conclusions. First, commercial rates are a serious matter for small shopkeepers and businesses occupying such premises. Second, letting out upper floors under the current regime of the safety provisions relating to landlords' liabilities mean people would have to put in fire escapes and a lot of other things, and invest a lot of money, to make properties available, and there would be no certainty that people would pay a sufficient rent to remunerate them. On vacant properties and homes, in fairness, this is a token gesture that will probably have no effect. I am not saying that it is easy to mobilise all those resources, but I believe very strongly that something along those lines should be done.
The Government made a strategic blunder in granting the right of tenure of indefinite duration to anyone who is a tenant of a domestic dwelling for more than six months. Landlords have left, and will continue to leave, on that account. The Government may offer all sorts of tax incentives to landlords, but the real issue is that landlords now realise that if they let a property for three years they will never get it back under the current law. I hope the Sinn Féin party will not take offence when I say that the situation will get even worse if its proposals are adopted because it would mean that people could not even get vacant possession for the purpose of selling a property.
We have to change and reverse thrust, and at least give people who have invested in making one home available to other people the right to recover possession of it after three or five years, and with adequate notice periods, in order to ensure that private landlords remain engaged in the provision of rented accommodation.
I thank the Minister of State, Deputy Fleming, for coming to the House to discuss this very important topic. I commend the Minister of State and the Ministers, Deputy Paschal Donohoe and Deputy Michael McGrath, on a very welcome budget. It is offering support and it is putting money back in people's pockets, but it is also helping employers and helping employees to be kept in jobs, which are two core messages today.
I would first like to welcome the increase in the tax band as people will now earn over €40,000 before paying the higher rate of tax. When that is combined with the changes being made to the USC, it will be an extra €831 onto the average wage. That is a lot of money and is very welcome. With regard to the small benefits exemption that the employer can give the employee, that used to be €500 and it is now up to €1,000. That will help in regard to the retention of jobs in a situation where many employers are finding it very difficult to retain their employees. Tenants will benefit from the €500 non-refundable tax credit for renters. So many people are renting privately but they are not in receipt of any supports. This is very welcome, given rents have gone through the roof, as we are all aware. Many of the higher costs are as a result of unprecedented challenges, first with Covid and now with the Ukraine war. I welcome that the Government is supporting businesses that are exporting to other countries and that are having difficulty because of the war in getting their goods out.
The measure for young farmers is very important. I compliment both Macra na Feirme and the IFA, which did a wonderful job in lobbying and putting forward the message that we need to keep young farmers on our land. It is such a cultural thing here in Ireland that there needed to be a roll-over of stamp duty relief, as well as the measure on slurry relief. I compliment the two organisations because they brought so many people on board with them. This will certainly keep young farmers in position.
I welcome the living city initiative. I am from Limerick city and I live just off the Georgian area. For many years, nobody was living in many of those houses. People have moved back in but there is still a long way to go because there are a lot of restrictions around planning permissions and a lot of red tape that people have to overcome. These are all costly exercises, for example, putting in fire escapes costs a lot of money. I would like to have seen a greater focus on this area. While it is most welcome that it is being extended for a further five years to 2027, I believe extra supports have to be given to people to encourage them to bring the houses back into use. The cost of goods and labour needs to be taken into account. The Minister of State might be able to look at this for the finance Bill.
The zero VAT rate for defibrillators, medicines and hormone replacement therapy is very welcome. The zero VAT rate for newspapers will help to bring down the cost of newspapers. The physical paper that the newspaper is printed on has gone up along with everything else, which has hit the media. I believe this was the right thing to do.
I also draw attention to the film industry. I have been very involved with organisations in Limerick like Troy Studios and Odyssey Studios. The Minister, Deputy Harris, was in Limerick last week and he announced almost €5 million for the development of that industry in Limerick College of Further Education, which is run by the education and training board. Because we have a film industry on our doorstep, many people have participated in the courses. One thing I would like to have seen mentioned is regional uplift, which is about investing in the regions outside of Dublin. The way it is at the moment, and I mean no offence to anyone from Dublin, the film industry is being driven towards the studios in Dublin and Wicklow, which is not helping with regional uplift. I believe that regional uplift needs to be looked at in the finance Bill. There are so many American film groups looking at this but because that regional uplift is being phased out and there is no mention of it in the Bill, they are saying it is going to be too expensive to come here. That is something I would like the Minister of State to commit to looking at.
I do not have a vested interest in the hospitality industry, although my family background is in that area, so I suppose I should declare that. On the 9% VAT rate, small businesses in the hospitality industry are major employers and over 200,000 people are employed in that industry. I would like a commitment that the 9% VAT rate will be reviewed in February, when it is due to finish. I believe that if small businesses are still feeling the pain, we cannot let them feel unwanted, given so many jobs depend on it. I would like to hear the Minister of State give a commitment today that in February, when it is due to finish, it could be reviewed.
I know we will be talking about many issues in regard to the Minister, Deputy Michael McGrath’s budget, and many families will benefit from that. Certainly, lower paid income earners are going to get substantial payments. The business supports package that is being put in place is very important. To have a 40% increase compared to this time last year, and up to a total of €10,000 a month, is quite a fair scheme. I have met with many small business owners in recent weeks who showed me that their bills have trebled in the last six or eight weeks. People are facing very high bills and it is important to show the right message and show that the Government is listening. We had a small business conference over the weekend and I met many business owners. People are very concerned. I believe this 40% increase up to a maximum of €10,000 is sending out the right message to those small businesses. It will help to keep small businesses afloat and it will also help to keep the people who are employed by those business owners in jobs.
Thank you. For what might turn out to be a slightly more jaundiced view of the budget, I call Senator Paul Gavan.
He has gone very yellow.
It is good to see the Minister of State. He is always welcome. I think the shine is going to go off this budget fairly quickly.
Already?
I do. I know it comes as a surprise to the Leas-Chathaoirleach. There are a number of topics to cover in the relatively short time I have. I will start with the issue of how we deal with the huge surge in energy costs. Let me be clear. There is no ideal way to deal with this, and I want to acknowledge that straightaway. The difficulty with what the Government is proposing is that the €200 credit will be snaffled up by the energy providers - there is no question about that. The Government is only providing one €200 credit between now and Christmas. There will be children going to bed tonight without any heating because there is complete uncertainty. Nobody knows what that €200 credit is going to be worth, given the ability of energy suppliers to hike prices, and we know that is what they do. It is not effective.
What families needed in this budget was certainty. Sinn Féin's proposal to roll over the price cut was the right way to go because pegging prices at a particular amount gives families certainty over this winter. They know what their costs will be, they can plan and they can feel that, if necessary, they can put on the heating. They do not have that certainty under the Government's budget proposal. I acknowledge that there are no easy solutions and there are flaws in both strategies. Certainty is the key issue, however, and the Government has let families down by not delivering that certainty. People do not feel they can afford to pay their home heating bills and credits are always snaffled up. There is a fundamental flaw in the proposal that needs to be acknowledged.
On housing and renters, from where did the Government get the €500 figure for its tax credit? Over the past year, annual rents in Limerick have increased by approximately €1,800. As to the idea that a €500 tax credit will cover anywhere near the cost of the hikes renters have endured, that is clearly not the case. To compound matters, the Government has not done what Sinn Féin has called for, namely, place a ban on rent increases for three years. That would give people certainty instead of facing horrendous hikes. I know landlords in Limerick who will simply decide this evening to increase their rents again and pocket that money. The Government has no means of preventing that without taking the action Sinn Féin has called for.
I always get on well with Senator Casey but to hear him attempt to give a lecture on housing, given Fianna Fáil's track record, is embarrassing. Let me remind him of the facts. The July homeless figures showed there were 10,568 homeless people, including 3,137 children. Since his Government's decision to lift the ban on evictions, homelessness has increased by 25%, child homelessness is up by 43% and family homelessness is up by 30%.
That is scandalous.
That is the Government's record, yet Senator Casey thinks he can come in here and give us a lecture on housing. Let me remind him also that the Government's target of building 12,600 social and affordable houses this year is not going to be hit. The Minister admitted last week that the figure will be 30% off that target. The Government cannot even deliver the pledges it has made, which are clearly not good enough. I make no apologies for Sinn Féin saying we will deliver 20,000 social and affordable houses.
The Government's think tank, the Economic and Social Research Institute, ESRI, told Ministers last year that the Government is spending exactly half what it is needed on social and affordable housing. That is where the problem lies. Fine Gael tends to talk about housing like it is some kind of natural disaster saying. It says that what has happened is terrible. The current situation is all the result of Government policies. I remind colleagues that this is the seventh budget shared between Fianna Fáil and Fine Gael. Fundamentally, they have failed year after year and that is why homelessness figures have hit a new record level again. That is their record and it is what they must deal with.
In the time remaining to me, I will deal with the income tax issue because I have a problem with the measure on income tax. It will cost taxpayers more than €500 million, yet three in four earners will not benefit from the measure at all. What message does that send to lower paid workers like a staff teacher or nurse who earns €35,000, for example? It is fundamentally unfair that three out of four workers will not benefit from this huge tax change. Someone who earns €135,000 will benefit by €830 but someone who earns €35,000 will benefit by €190. Whose side is the Government on in terms of looking after ordinary workers? Those figures make it very clear and very stark.
Hear, hear.
I want to mention the vacant sites tax. I think Senator McDowell will acknowledge just as happily as I will that he and I rarely agree on issues but, my God, this tax is a farce and a fig leaf. Fundamentally, Fine Gael will never tax vacant houses and we can see that now from this proposal. It is so easy to elude having to pay any tax under this measure. It is frankly pointless. Why can Fine Gael not acknowledge that one of the key solutions to the housing crisis is to tackle the issue of vacant homes?
Hear, hear.
The best way to tackle the issue is to apply an effective tax rate to encourage owners to move vacant sites on and back into the marketplace. Let us be frank. This is the last effort we will see the Government make on this matter and it is not an effort at all. It is just another means of avoiding a key issue and looking after its own people as opposed to tackling the issue of vacant homes. That is not good enough.
I am hugely disappointed that the proposed rise in the minimum wage is less than the rate of inflation. In effect what this Government is proposing for the lowest paid workers is a pay cut. How can that be justified? It is interesting to note that Cliff Taylor, who is certainly not a Sinn Féin supporter, wrote in an article in The Irish Times this afternoon that most people are still going to be worse off after this budget. The newspaper also rubbished the vacant homes tax as a fig leaf.
Fundamentally, the Government had opportunities to make fairer and better choices. Above all, the Government failed on the issue of certainty. As families go to bed tonight and face into the winter, what certainty do they have? Do Senators on the Government benches really believe that the energy providers will not hike their prices again to snaffle up the credits of €600 paid in three instalments of €200? Of course they will. Where is the certainty for working people and families? The Government has not delivered and people will quickly see that.
On a fundamental issue of fairness, the €12 increase in social welfare payments is simply not enough. Sinn Féin proposed an increase of €17.50, which is a significant difference, because we know people are hurting. The Government could have made better choices. I notice, for example, that the special assignee relief programme, SARP, is still belting away making sure that millionaires continue to get tax breaks so that they can become even wealthier. That is a political choice Fianna Fáil and Fine Gael make year after year. They take the richest people in the State and make sure they can write off even more of their tax to make even more millions for themselves, while social welfare recipients are left with just a €12 increase. The facts are stark. This is another budget that favours the better off and fails working families. We deserve better.
Well said.
I am delighted to be here on budget day. The marks of the three parties in Government are on this budget. It shows that collaboration across parties is fundamentally a good thing.
Hear, hear.
There are areas of this budget where I wish more had been provided, specifically stay-at-home parents. This is an area I feel very passionately about and it one the Minister of State mentioned.
I am astounded by the 25% cut in fees provided in the childcare package for people who avail of a crèche. This was one of the Green Party's core commitments when we went into Government. We thought the initiative might take another few years to introduce but it has been accelerated, with funding of €1 billion provided for childcare next year. When it comes to stay-at-home parents, and this falls under the Department of Social Protection, we must ensure that all parents, regardless of the choice they make, are supported and protected. Those who forgo an income to care for their children also have childcare costs because they are no longer in receipt of an income. The number of stay-at-home parents in Ireland is particularly large when compared with other European countries, which is no bad thing. This area needs to be looked at again next year, notwithstanding the increase of €100 in the tax credit.
A couple of weeks ago, the Government announced that childcare professionals were to be paid properly for their work. This is the first time a Government has ever used core funding to support crèches and enable them to pay their workers a proper wage.
If we consider the other benefits for families, I believe this is a budget that supports families. It recognises that people with dependent children, who cannot work, do not have tax credits or are not entitled to social welfare payments, need more support. That is exactly what this budget does.
The Green Party had five specific asks going into the budget, all of which are being delivered. The first was to provide financial assistance to families and small businesses under financial pressure due to the rise in the cost of living, with particular emphasis on those least able to meet the rising costs. That is being delivered in the budget. The second was to help to accelerate Ireland's move away from fossil fuels to renewables so that we end up producing our own clean energy rather than importing expensive dirty fuel. The third was to place a windfall levy on fossil fuel companies that would go straight to those who need it most. The fourth was to cut childcare costs and the fifth was to ensure continued investment in public transport, delivering low-cost, high-quality services. All five of these measures are provided for in the budget.
One of these was financial assistance for families and small businesses under financial pressure because of the rise in the cost of living, with a particular emphasis on those least able to meet the rising costs. This is being delivered in the budget. We also asked that help be provided to accelerate Ireland's move away from fossil fuels to renewables so that we end up producing our own clean energy rather than importing expensive dirty fuel. We asked that a windfall levy be placed on fossil fuel companies that goes straight to those who need it most. We also asked for cuts to childcare costs and to ensure continuing investment in public transport delivering low-cost, high-quality services. All of these measures are in the budget.
The fossil fuel crisis warrants some comments from me as the Green Party representative. I agree somewhat with Senator Gavan that there is no easy way to deal with this. This is because we are dealing with a fossil fuel crisis not of our own making in this country. It has been caused by a war and Putin. The cost of gas on the international market is 14 times what it was several years ago. We must deal with this responsibly as a Government. I do not believe that an energy cap is a responsible measure and I will explain why. Sinn Féin states that underpinning this policy is that it creates security. We have seen that it absolutely does not create security. The UK, which has been using this for some time, has had to keep increasing the cap. In fact the cost has been increasing for the end user. Windfall taxes are the correct approach. What we have outlined in the budget is that if we cannot secure windfall taxes against fossil fuel companies at European level we will introduce them in this country. Energy caps take from the people in Ireland who most need it and hand it over to fossil fuel companies. Essentially the companies are told they can continue with the fossil fuel industry as long as they want and the country will back them up and hand over the hard-earned cash of our people. A windfall tax looks for energy companies to give back and then for us to use that money for the most vulnerable. This is the correct approach even in these difficult circumstances.
As an education spokesperson it is important that I commend the Minister for Education, Deputy Foley, and the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, who is supporting her, on installing solar panels on every school in Ireland. This was announced in recent days. It got every child in the country very excited. Even children who do not have solar panels at home, or who do not have a prospect of having them in the next short while, can be part of the energy transition. The whiteboards in their schools can be fuelled by the sun. Nothing brings it home more to children than seeing how they can be part of climate action.
The Green Party is very supportive of the measure regarding free school books for primary schoolchildren. I note, however, that the cost of €110 per child for school books is predominantly as a result of book companies bringing out edition after edition. Families who have several children or who know people in their community who have used older editions are not able to reuse them. They have to buy a new book. This is why it was in the programme for Government that we would try to end the practice and look for a more sustainable approach to school books, have more lending of school books and end workbooks. It is important to make sure we are not now saying that families will not pay for school books as the State will do so but that new editions will still be created, unnecessarily creating more waste and wasting money. It is important to voice the perspective of the Green Party on this issue. It is probably slightly different to other parties in this respect. It is an important point. Families know they have older editions of books sitting in the press that they are no longer able to use. I could say an awful lot more. I took up a lot of time discussing energy, which was correct. I will now hand over to the next speaker.
Budget 2023 takes place at a remarkable time for this country. While we hear a lot about Putin's war and what else is happening in the world, it is very important to remember that our State is in an extraordinarily well-off situation. That we have an Exchequer surplus at all is simply remarkable. We are one of only two countries in the European Union that has a surplus, Denmark being the other. If we think about it, we do not have to borrow for current expenditure or capital expenditure and this is the equivalent of being a cash buyer with very deep pockets. Our debt maturity is one of the longest in Europe. The vast majority of Irish debt is fixed at a 1.5% interest rate. While the era of low borrowing rates may well be coming to an end we cannot forget that at the beginning of this year we had approximately €27.5 billion sitting in reserves with the National Treasury Management Fund.
Even though we have all sorts of uncertainties in the State with regard to the future, we cannot underestimate how fortunate our fiscal situation and stance are. It is remarkable to look at the figures today and in the White Paper last Friday. Even if we take the corporation tax revenues out of the public finances for next year we are still on track to record a surplus. No other country in Europe can lay claim to this. In thinking about this extraordinary good fortune that our State has, it is unconscionable that anyone should go cold or hungry or would ration heat for fear of running out of money this winter. Despite some very positive measures today people will go cold and hungry. There will only be one €200 credit between now and Christmas. People will go short. The one-off payments are welcome but Threshold summed it up very neatly today. The €500 renter's credit is the equivalent of one week's rent. When we think that renters in this country spend an average of €20,000 on rent, €500 is a drop in the ocean.
Hear, hear.
It will not have a life-changing impact on them. Extension of eligibility for the fuel allowance is great but it will not kick in until January. I would argue there is a lack of urgency with regard to some of the measures introduced today.
In thinking about the impact of the budget and the extraordinary situation we find ourselves in, we must look at the two permanent cost-of-living crises in this country. These are childcare, on which there were some positive developments today, and housing. Some Senators will have seen the Financial Times report last week that declared to the world this country is no place for young people. It spoke about the huge number of young people actively contemplating leaving these shores, even though they have jobs and decent incomes, because of housing. In a report the National Youth Council highlighted its research that seven out of ten young people aged between 18 and 24 are actively thinking about leaving these shores principally because they have no real prospect of accessing affordable housing for purchase or for rent anytime soon. We have a paradox of plenty in this country. Evictions have increased by 54% and rents have increased by more than 12%. People in secure good jobs are unable to do what their parents were able to do before them. Does the budget do anything real for them? I do not think so.
I am the Labour Party spokesperson on workers' rights. When we launched our alternative budget last week, we set out five key tests. The first is that no job would go under this winter as a result of a company's crippling energy bill. We wanted to see an energy wage subsidy scheme but we saw something different from the Government today. While we are yet to see the detail in that regard, I am alarmed that there are no reassurances that the companies that could benefit, particularly those whose energy bills double between 2021 and receiving the payment and which could have 20% of their energy bills paid for by the State, will not be subject to any conditionality in terms of there not being any pay cuts, redundancies or dividends. My direct appeal to the Minister is to put that conditionality into that scheme when it takes effect because we cannot see companies benefit to a significant extent in terms of helping them with their energy bills and yet them enforcing pay cuts or redundancies or, indeed, paying out dividends this winter.
The second test was that we wanted to see a boost to the pay of the lowest paid in this country. The report of the Low Pay Commission has been sitting on the Tánaiste's desk since summer and it is appalling that the 80 cent increase in the national minimum wage, which is a cut in pay in real terms because it is less than the current rate of inflation, will only take effect from January. The increase being below the rate of inflation is a second key issue. As regards those who are marginally above the minimum wage, people earning between €23,000 and €36,000 per year will only get a measly extra €4 per week as a result of the tax changes announced today. Anybody earning below that will get four times that amount. How can that be fair? There is an irony here because although the indexation of the standard rate threshold matches inflation projections for quarter 3 of the year, the increase in the minimum wage does not, and nor does the €12 increase in social welfare rates.
The third key issue relates to boosting the pay of the lowest paid and the cost of disability. For years, disabled workers have been crying out for a cost-of-disability payment. The once-off €500 payment is to be welcomed but it will be spent between now and Christmas. What are disabled workers going to do when they start into 2023? There is a real issue for the Government in responding to that need. The Labour Party wanted the Government to respond to the call by trade unions and employers to facilitate once-off pay increases and, to be fair, the small benefit exemption does increase to €1,000, and we welcome that.
The final issue I wish to raise in the few seconds I have remaining has been touched on already. A lot of fuss has been made about the introduction of a vacant homes tax and that it was necessary to carry out research on how many vacant homes there are in the country and the appropriate rate and all of that, yet the detail we have been presented with today is a joke.
It is a joke.
It will be a self-assessed tax. Who is going to 'fess up and say their home is vacant for 30 days of the year? The rate of just 0.3% is a joke. The Department of Finance is setting itself up for failure. It is saying the vacant homes tax is not expected to yield significant revenue. If the Government is serious about a vacant homes tax, the rate needs to be significantly higher and it cannot be self-assessed. The local authorities need to be engaged.
I thank the Senator but we have to move on, although not because of the sentiment she is expressing. I call Senator Ruane.
I welcome the Minister of State to the Chamber. Budget 2023 comes at a time of great anxiety for many people across the country. The cost-of-living crisis has been extensively discussed already but I wish to give the context that, for many people, there has been a cost-of-living crisis for years, if not forever. During recessions and after recessions, during booms and after booms, before the Ukraine war and during it, people have experienced significant deprivation and poverty. Last year, my colleagues in the Civil Engagement Group and I described budget 2022 as a missed opportunity and called on the Government to use the suspension of EU fiscal rules and learn from the lessons of the Covid-19 pandemic and the vulnerability it exposed within our society to take transformative action. The opportunity was not taken and people are paying the price for those decisions today.
I will speak briefly on energy. We know that people are struggling with rising costs. While I welcome the €600 energy credit for households, it does not go far enough. We should be regulating and capping standing charges. We need to ensure that ordinary people are never again exposed to the volatility of fossil fuel markets. That means investing in renewable energy and scaling up retrofitting, including the retrofitting of social housing. This necessary action for people and the planet is missing from budget 2023.
We must ensure that we not only temporarily alleviate people's circumstances but look to addressing them in the long term with a vision for generations to come in terms of market income inequality, that is, income inequality before transfers are applied. Ireland has one of the highest rates in the EU in that regard. More than half a million people in this country are living in poverty. Civil society groups working on behalf of those living in poverty, including Social Justice Ireland and Barnardos, called for an increase in social welfare payments of €20 this year. The €12 increase announced is insufficient and the purchasing power of those payments will be lower in 2023 than it was at the start of 2022. Let me be clear that the decisions made in respect of social welfare payments are decisions on whether people will live and stay in poverty, whether single parents will be able to afford to feed their children, whether pensioners will be able to heat their homes and whether people with disabilities can afford the additional items they need to survive.
On disability, we know from the Indecon cost-of-disability report that households with disabled persons face additional annual costs of between €8,700 and €12,300 and that the bulk of these costs are not met by current supports. Although welcome, one-off measures such as the €500 lump sum payment for disability allowance recipients simply do not scratch the surface of what is needed to tackle the true cost of disability in the long term.
More broadly, I ask the Minister of State if, in devising proposals in respect of social welfare payments, the minimum essential standards of living developed by the Vincentian Partnership for Social Justice were utilised to inform the rates of payments. People need to live, not just survive.
On the issue of pensions, the recent announcement of the increase in the requirement to attain a full contributory State pension to a 40-year contribution rate is a deeply regressive and discriminatory step. It discriminates against those who engage in care work and, frankly, will simply be unattainable for many people. Women are already disproportionately under-represented among those claiming the full contributory State pension. According to the National Women's Council of Ireland, only 16% of those in receipt of the full pension are women. The increase in the contributory threshold will only save the State €400 million per year up to 2040, yet it continues to spend €2 billion every year on private pension tax relief - expenditure that the ESRI has described as regressive - while employer PRSI is among the lowest in Europe.
Staying with the issue of gender, and equality more broadly, in 2017 the Government made a commitment that gender and equality proofing would be utilised in the budgetary process. Last year, however, we saw that policies were not gender and equality proofed. I ask the Minister of State to provide information on how the measures in this budget have been subject to gender and equality proofing. Sometimes there can be a misunderstanding of gender proofing as it being the inclusion of measures in the budget that positively affect women. While some people may point to that, and I obviously welcome the moves in respect of IVF, budget equality proofing and gender proofing are also about how other aspects of the budget negatively affect and have consequences for women. They are not only about the positive things in the budget, but how other decisions negatively affect women, such as the decision in respect of the pension issues.
On housing, long-term solutions to the housing crisis are not coming forward in the budget. Although tax credits for renters may provide some relief, they will not solve the housing crisis in the long term. Earlier this year, the Seanad passed a motion proposed by my group that called on the Government to introduce progressive long-term solutions such as committing to the definancialisation of housing as a core principle of future housing policy, ending the State's over-reliance on the private market to address the shortcomings in housing, establishing a construction company owned and operated by the State and investing radically in the development of public homes on public land.
Instead, we are seeing poor use of State money, including spending of more than €102 million between June 2021 and June 2022 on leasing for social housing. It is planned to spend an additional €98 million this year. The State should instead use that money to invest in the development of social housing to be owned by the State.
I welcome the announcement of a vacant homes tax, which I hope will see more homes coming back into active use. This was proposed in 2017 by our group and championed by our colleague, the former Senator Grace O’Sullivan, in the Derelict and Vacant Sites Bill 2017.
I welcome the provision in the budget for the creation of two new data commissioners. Along with other members of the Oireachtas joint committee, I called for this to be done. While I would have liked to have seen a greater increase in the moneys available to the commission to undertake the work, the creation of the two new commissioner posts is welcome.
The increase of €177 million in overseas development aid, ODA, is welcome, but we are still a long way from the €232 million increase required to put us on track to meet our commitment of 0.7% of GNI expenditure on ODA. I note that €75 million of this additional ODA funding is to be dedicated exclusively to the humanitarian response in Ukraine. While this is welcome, it means that just €100 million in new funding will be allocated to address the multiple other humanitarian crises around the globe, including the devastating flooding in Pakistan and the famine in the Horn of Africa.
On a related note, I ask if the budget includes scope for climate finance and, crucially, loss and damage payments for global south countries outside the existing ODA budget. This is extremely urgent. We know that tens of millions of people who have been displaced recently in Pakistan and in other countries that have done the least to cause the climate crisis need to begin receiving the reparations that are owed to them to survive.
I acknowledge that €1.1 billion has been announced in shock measures relating to small and medium-sized enterprises, SMEs. I appreciate that this may be more relevant to the next debate, to which Senators Black and Flynn will contribute. These one-off payments seem to be lumped together. A mixture of areas, including community and voluntary organisations, the Gaeltacht, sports, culture and the arts, are getting €60 million. Due to Covid-19 and the Ukrainian crisis, community and voluntary organisations, like people in other areas, have huge costs. However, some €1.1 billion is being allocated to SMEs. I am confused by the small allocation within this budget to an area that has six or seven different sectors within it. I ask for clarification on why they are being rammed together and just €60 million is being provided to them. Why is such a big investment being made in SMEs but not in the community and voluntary sector?
I thank Senator Ruane. That concludes the official party spokespersons. We now move to the regular speakers, each of whom has five minutes. Some speakers are sharing time. I call Senator Cassells, who has five minutes.
I thank the Leas-Chathaoirleach. It is great to have the Minister of State, Deputy Fleming, in the Chamber on this very significant day when we see expenditure on this country's budget exceed €90 billion. As I sat in the Dáil today and listened to both Ministers, Deputies Donohoe and Michael McGrath, I thought about the bravado of the Chancellor of the Exchequer in England last week. He rocked up in the House of Commons like Arnold Schwarzenegger, with both barrels loaded in typical Tory style. The only problem was that he held on to the ammunition too long and now it has exploded in his hands. It is like a warzone in the UK Cabinet now because the bravado has dissipated. Some people in here are suggesting that we should be reckless and spend beyond what we have. I remind them that being reckless with expenditure has a real impact on real people. We have seen what has happened this week as the result of the nonsense from the Tories last Friday. The international markets do not believe what they are at. They do not believe they can balance their books because they cannot. The levelling out or fall in the value of the pound has a real impact for real working people in the UK in terms of pushing up inflation and making life more expensive. People’s mortgages are going to increase. As we have seen, they cannot access borrowing to buy a home.
Let us counterbalance that and contrast it with what happened today, with the presentation of a balanced budget that has delivered for real people. The Ministers, Deputies Donohoe and Michael McGrath, may not be Arnold Schwarzenegger - they are a bit more like Ben Affleck in "The Accountant" - but they are equally ruthless. This morning, "Gift Grub" portrayed the Minister, Deputy Donohoe, as Rocky. Like Rocky, he delivered some good knock-out blows this afternoon when he knocked bluster, nonsense and spoof on the head and instead dealt with real issues, real measures and key asks from all our communities. Week in and week out, we make speeches here and in the Dáil looking for key asks. I know that the simple measures which were announced today, such as the free books scheme, are going to make a difference to people’s lives. As a dad of three kids, I know about the cost of sending kids back to school. This measure will have a huge impact on reducing costs next autumn when kids go back to school.
I attended a joint policing committee meeting for more than three hours last week, when our new chief superintendent spoke about how he wants to be obsessed not with creating physical Garda stations but with having a simple philosophy of putting gardaí on the street. The speech he made last Monday in Navan will be made a reality as a result of today’s announcement of 1,000 new Garda recruits. The electricity credit of €600, along with the double payment of the children’s allowance, will make a big difference in people’s lives when they are balancing the budget for Christmas. If you are a mum or dad at home this evening thinking about Christmas, which is only a short period of time away, you may be wondering how you will have the money to pay the household costs and to make sure your kids have the decent Christmas you want them to have, like any mum or dad wants for their kids. They are going to bed tonight happy because they have the financial assurance that they can make that happen - they can buy the kids the presents they want from Santa, they can provide the food on the table, they can heat the house and they can keep the Christmas lights on the tree. They know they have that because of the certainty the Government gave them today. That is what governments are there for.
As a courtesy, I will let the Senator know he has one minute remaining.
I will watch the clock. Just as governments are supposed to do, the responsible people in the room got up and did that today. When you look at this budget in the round in terms of what it has achieved, you will see that it has achieved the key principles of helping people with real financial assistance, putting money in people's pockets to give them certainty to plan for the next year and addressing in the round the very structures that make society function in regard to education, policing and housing. That is a real use of State benefit for the majority of people. It is a hugely commendable budget. What will make the big difference is that people know that as they go to bed tonight. I congratulate the Minister of State.
I thank Senator Cassells. As we will be tight on time, I ask all Members to co-operate. I call Senator Kyne, who is sharing time with Senator Seery Kearney. Is that agreed by the House? Agreed.
Every measure in today's budget, as announced by both Ministers, was welcome and necessary. More importantly, we were able to do it because we had the resources to do it. Tax revenues have stood up compared with last year because of every person in this country who is working, paying tax, purchasing and living. We have seen the resilience of our labour market after the Covid supports we put in place, the purpose of which was to protect jobs and the link between employees and employers. That has meant we are able to put in place the initiatives today in regard to spending and tax. The surge in taxes from corporation tax is welcome. At the same time, the Minister has taken note of the reliance on that. We have to be cognisant of that. People will not see the VAT and excise reductions because they are already there in the case of diesel and petrol.
It is certainly necessary that these reductions are continued and their impact can be seen in reduced prices at the pump. Their extension up to 28 February next year is to be welcomed.
The income tax package of more than €1.1 billion is also extremely welcome. The standard cut-off rate is increasing by €3,200 to €40,000 before hitting the higher rate of tax and that is very welcome. I have said it in the House at every budget speech that if the bands are not changed, eventually everyone starts paying higher rates. The bands and thresholds have to increase. I also welcome the increase of €75 in the personal, employee and earned income tax credits and the increase of €100 in the home carer tax credit. The USC thresholds have increased as well to ensure the increases in the minimum wage are not gobbled up by the USC. The band is increasing from €21,295 to €22,920 for the second USC band. I also welcome the comments by the Minister about the preparatory work on the third rate of income tax. The Government will look at that. If it is decided that it is the right thing to do next year in advance of budget 2024, it can be looked at again.
I welcome the extension of the help-to-buy scheme to be continued under the current conditions and rates, and its review. I also welcome the new rental tax credit of €500 for this year and next year as well. It is prudent that some of the revenues collected this year in corporation tax will be put into a reserve fund for this year and next year.
Today has been a good news day for those in a family, including those in a lower-income or middle-income family. We saw the announcement of both universal and targeted measures to assist families as they face into this cost-of-living crisis. This crisis can be supported by reasonable and prudent measures. We still have a reserve in case the situation gets worse and that is important. Putting in place a cap and writing blank cheques to energy companies outside the State does not give certainty. It empties our coffers instead of giving certainty and support to families and being responsive where we need to be. Families with a child in full-time childcare are looking at getting €175 per week off their childcare costs. That is an enormous intervention. For families where the monthly childcare fee is the equivalent of a month's mortgage or rent payment, this has now gone down by 25%. The number of people who will get fuel allowance is going to increase as we widen and increase the eligibility criteria. Those people will get a lump sum of €400. Pensioners, carers and people on disability benefits will have €624 extra, plus the €500 lump sum in November. Families with young children will receive double child benefit and those on the working family payment will get an extra lump sum of €500. This is about giving money to people and putting it in their pockets at the time when they most need it, and the Government being responsive to that in a responsible way.
We are keeping to time now as if everyone turns up, it will be very tight. I call Senator Murphy.
I welcome the Minister of State to the House. On a different note, I have been talking to a number of people involved in the credit union in recent weeks and they have asked me to pass on their thanks for the work he has done. All politicians recognise the work he has done in that area and hopefully more progress will be made in the months ahead.
How do you define poverty? Somebody on a low-to-middle income, which we might think is a decent wage, can experience poverty because they are trying to pay a mortgage and high childcare costs. The cost of fuel is a big one for people who have to travel to work and do not have an allowance. We have to look after people on social welfare and make sure they do not fall through the net. We should also accept and realise that there are people on low-to-middle incomes who have a lot of issues with poverty.
This budget has been fair and has addressed the issues. There has been much criticism of corporation taxes in the past but by God, there are not many criticising them now. While the Minister was right to point out that relying on these taxes totally would not be a good idea, the fact of the matter is that if we did not have them now, this budget would not be as good.
The €12 rise in social welfare payments is not the whole story. The fuel allowance has increased, childcare costs have been cut and a double social welfare payment is to be made. We have introduced a renter's tax benefit and announced additional electricity credits. Some previous speakers have not mentioned those measures. It is only fair in this debate that they are mentioned. Apart from the €12 increase, there are all these other issues.
A budget will not suit everybody. Of course everybody will not get what they are looking for. Electricity costs and energy costs are huge at the moment and are definitely a worry for many families. I firmly believe the three €200 credits that are being given represent the right way to go. People might refer to Britain and other countries capping the payments or the energy bills. We do not know how that is going to work out. We are all in no man's land here. It is a new situation. I think Britain will be in a lot of trouble. It is costing it £100 billion. If Britain has no money in the kitty in February or March, where will it be then? I believe the Government here will move on a windfall tax. When that money is taken in, obviously it will be regurgitated out to the consumers. The ESB earned approximately €700 million last year in this country. The dividend to the Government was €126 million. That figure must be increased when we are going through a crisis. Companies will say they have to invest their money in renewables, which is fine. However, for the times we are in, we must ensure the consumers - the people out there who are worried about energy or keeping the lights on - are looked after.
I welcome the 9% VAT reduction. We have often spoken about this in relation to newspapers. They have been struggling and this reduction will be welcomed. I also hope the music industry will be looked after in terms of the moneys for the arts and culture because that area is still struggling. While it has got back on its feet to a degree, it will still need support going forward. I am confident there is money there for that.
I will make a final comment on vacant homes. I have said this before. There is a bit of a myth with regard to this particular issue about hundreds of thousands of vacant homes. Thinking about this in my home county, while I acknowledge there are some vacant homes, and we should go after those and put a tax on them, there are many problems involved in vacant homes. There are often legal problems, family problems and a myriad of other problems out there and many of them will never be sorted out. By all means we should go after the 20,000, 30,000 or 40,000 vacant houses that are there, put a tax on them and get them into use, but there are a lot of houses for which that vacant tax will not work. It will be found not to be constitutional and all sorts of issues will hold things up for quite a long period.
I thank Senator Murphy for being so helpful with the time. We are motoring on. I understand Senator Ahearn is proposing to share time with Senator Burke.
I am sharing with Senator Dolan, if she arrives, and Senator Burke in her place if she does not.
Is that agreed with the House?
Agreed.
Agreed.
I welcome the Minister of State to the Chamber. I also welcome the budget announced today by the Ministers, Deputies Donohoe and Michael McGrath. It has to be put into context. Every party comes up with its proposals on what it wants to do in the budget and what money should be spent on. The most important thing to recognise is that the position we are in enables us to do what we are doing. That does not happen by accident. The public is looking in and seeing that today's measured decisions are being made in recognition of the challenges ahead over the next number of years and on the back of a strong economy.
That has been achieved by managing the economy well over the past ten to 12 years, after coming out of a recession, going through three crises - Brexit, Covid and a war in Ukraine - and now inflation. We are in a position where we can support people, households, families and workers. We do not have to look too far abroad to see how difficult it would be if we were not in that strong economic position to be able to protect people. It seems, day after day, things are getting worse in the UK where they have to borrow to lower taxes. Today, we have managed to put money back into people's pockets and lower taxes, yet hold money back for a future point if we need it. As well as this budget being a spend-budget and giving money back to people, it has also been prudent. We have held back €2 billion this year and propose to hold back €4 billion next year because we do not know where we will be in six months and, therefore, it is important to be in a position where we can introduce measures over the next six months.
I could go through a load of measures that have been brought forward and welcome them all. The main point is that we recognise people are struggling, and money has been put back into their pockets today to help them get over the winter months.
I welcome the Minister of State to the House. I also welcome budget 2023. I have been a Member of the Seanad for quite a few budgets and this is the best budget I have ever witnessed in these Houses. Great credit is due to Governments over recent years that we are in such a great financial situation in which the current Government can give out such an amount at this time. It is greatly needed by the people.
A lot of money has been given to health, education, local authorities and many agencies. It is time that we should look at efficiencies. There is a responsibility on governments to check efficiencies and determine how efficient local authorities, the health system and the Department of Education are, because some money is not well spent. It behoves all of us as in this House as public representatives and the Government, in particular, to hold everybody to account and to see how public money is spent. This is taxpayers' money. It is ratepayers' money and money from people who pay the property tax. Hard-pressed people's money is being given out by the Government. There is an onus on every one of us to see that we get value for money in education, in health, and in our local authorities.
The most efficient body I have dealt with in the past 12 months has been the Sustainable Energy Authority of Ireland, SEAI. Staff there are very efficient and get back to people. They tell people whether they will get a grant. When a person lodges an application, staff get back to them straightaway to say whether the application has been successful. It is great to say that about any State agency. I am pleased to see how efficient SEAI is.
All in all, I welcome budget 2023. With 2.5 million people employed, we are nearly at full employment. Great credit is due to the Government on the way the economy is being run.
I thank the Senator for that different perspective. I call Senator Ollie Crowe, who has been waiting patiently. I apologise; Senator Lynn Boylan is next.
I will wait another minute.
Senator Crowe will have another wait.
No. problem. Ladies first.
My place is down to being first on the speaking list regardless of my gender. Tá áthas orm go bhfuil an deis agam labhairt sa díospóireacht seo. I will use my time to focus on some environmental aspects of the budget.
The big-ticket item is retrofitting. It was rightly pointed out that the Government has not allocated as much to retrofitting as Sinn Féin did in its alternative budget. We would invest €503 million in retrofits in 2023. That is €153 million more than the Government's 2022 allocation and far in excess of its 2023 capital allocation. More important, it is about how the money is spent, and budgets are all about choices. We would have spent that money in a fairer and more efficient way. I recognise it was said that the SEAI is great at getting back to people. It is great at getting back to people to tell them that they will not get a retrofit for years. My father is waiting four years at this stage to get a retrofit done on his house.
Unfortunately, there was no proposal in the budget to fix the broken retrofitting system. While the Government gives ever greater amounts to those who can afford the large upfront payments, more people continue to be locked out. Sinn Féin has proposed a radical overhaul of the broken system. We would abolish the Government’s national home energy upgrade scheme and establish a new tiered retrofit scheme. We would replace the Government’s better energy warmer homes scheme with a new retrofit scheme for low- and middle-income households. We would also put a cap on households with an income of €130,000 or more receiving support because they do not need a State handout to afford to retrofit their home.
On solid fuel, people have been browbeaten over turf but no alternatives have been provided for them. We know that 10% of households rely on solid fuels mainly in rural areas, and they tend to be the poorest, coldest and most carbon-intensive homes. Sinn Féin would establish a new retrofit scheme for solid fuel homes, targeted at low- and middle-income households. This is typical of the Green Party approach that we have come to expect. There is plenty of stick and very little carrot when it comes to helping people transition to a decarbonised future. Instead, Sinn Féin would take a targeted, plan-led and area-based approach based on need rather than ability to pay.
We would also provide a 50% increase in funding for local authority housing retrofits, which would again protect those most at risk of poverty, fuel poverty and the impact of the rising cost of energy. The Government announced the provision of €2 million compared with Sinn Féin’s €42 million for social housing retrofits. The Government’s climate watchdog, the Climate Change Advisory Council, CCAC, called on the Cabinet to reverse its policy, which excludes hundreds of thousands of homes from attic and wall insulation, because they require up-front payments. Sinn Féin would heed the CCAC’s call and make sure the payments are made quickly and in advance of works. We are in a time of crisis. The money needs to get out as quickly as possible and contractors need to be put to work in the households that are in most need.
We know families want the opportunity to put solar panels on their roofs and we would provide grants for that. Unlike the Government’s approach, which provides the same grant for all households, our scheme would provide different levels of funding, ranging from 100% to 10% depending on household income. We would introduce targeted measures based on fairness. We would also provide funding for solar panels for schools, and we have the legislation ready to go to alleviate the planning issues.
As to a windfall tax, we accept the surge in energy prices has been turbocharged by Russia’s illegal invasion of Ukraine, but it is not all down to the war. We cannot ignore Government failures that have led to the price shock now facing households. Our wholesale energy market is broken. I raised this issue in December 2020 when I called for reform of the wholesale energy market. The Government objected at every stage to reforming the market. We now see electricity generators making windfall revenues and profits on the back of a surge in gas prices, even when most of the energy is coming from renewables. It is an outrage that budget 2023 contained nothing on a windfall tax. Despite all the bluster that we heard from Government representatives on the airwaves in recent weeks, they now seem to want to wait for the EU to make the move to take on price gouging rather than do it themselves.
I fear the energy rebate will not work. We have called for a cap on electricity bills that would give people certainty going into the winter.
The credit provided will quickly be overtaken by price increases and hard-pressed families will still be left worrying. Many people are turning back to solid fuel stoves. If the Minister of State was listening to "Today with Claire Byrne", he would have heard that elderly people are buying Superser heaters. People are reopening their fires because they are terrified of the energy bills that are coming. That is why a price cap gives people the certainty that they can get through this winter and afford to pay their bills.
Sinn Féin disagrees with the energy credit. I have one request of the Minister of State in that regard. The Traveller community was left out of the previous energy credit. The credit was not received on many halting sites. I was on a radio show the other night with a colleague from Fine Gael who admitted this, but said there was nothing that could be done where there was a single meter point reference number, MPRN. The energy credit was €20 million underspent in the last budget. We need a commitment that the Traveller community will not be excluded from the energy credits in this budget.
To clarify, it was the Leas-Chathaoirleach's mistake to call me. It was certainly not mine. The Senator certainly had plenty to say.
I welcome the Minister of State, Deputy Fleming, to the House. He is a regular visitor. We are living in extraordinary times with considerable challenges. The Government needed to deliver a budget to match these times and I am delighted to say it has done so.
The healthcare plan is especially welcome, with 430,000 more people becoming eligible for free GP care next year. For the first time, more than half of the population will be covered by either a GP visit card or a medical card, representing the biggest expansion in eligibility for decades. Hospital inpatient fees will be abolished for adults, representing a saving of up to €800 per year. These are significant strides forward and they will make an incredibly positive difference to the lives of hundreds of thousands of people. Similarly, the new, publicly-funded IVF scheme that will launch in 2023 is very welcome news. As I have highlighted previously, this issue affects tens of thousands of families supports are needed for those wishing to have children.
Parents will see childcare fees fall by an average of €1,200 per year per child, a reduction of 25%. This measure will mean subsidies paid to childcare providers under the current scheme will increase from 50 cent per hour to €1.40 per hour for a maximum of 45 hours per week. Childcare is a major issue in west Galway, Galway city and throughout the country. I welcome this announcement.
As Senators will be aware, healthcare and childcare were two of the major issues leading up to the last general election. Since that time, we have faced a global pandemic and we now face a global cost-of-living crisis. Despite these extraordinary events, the Government continues to make progress on these issues. Regardless of political allegiance, that should be acknowledged and applauded.
There are a number of very positive social welfare initiatives in the budget, including an increase in €12 per week in payments, double welfare payments in October and December this year, an increase in the fuel allowance and the lowering of the fuel allowance threshold, which will mean tens of thousands of people will become eligible for the payment. The once-off payment of €500 for carers of people with a disability is welcome, but more must be done for carers. Their role is not talked about often enough and they need more support.
I also welcome the energy credit for all households, the tax credit for renters, the reduction in college fees, increased SUSI payments and free school books for children in primary school. It is clear the Government has introduced a wide range of measures to assist people in getting through the cost-of-living crisis, which is exactly what is required.
With regard to what the budget provided for businesses, we know that SMEs are the heartbeat of the Irish economy. They have once again shown their resilience as they emerged from the pandemic and rebounded quickly. However, the energy costs they face are simply unsustainable. The temporary business energy support scheme will cover 40% of the increase in electricity or gas bills, up to a maximum of €10,000 per month per SME. As the Minister of State will be well aware, in Laois and throughout the country, many public houses and restaurants are heated by kerosene oil which does not fall within the conditions of the scheme. That issue may need to be looked at to support the hospitality sector. While this is a welcome measure, the Government must be aware that even more supports may be required. Energy bills have more than doubled in the past year for SMEs in the past year and the gap between the increase in cost and what the new scheme will cover is what made SMEs sustainable in many cases.
I listened to the contributions made by Senators Casey, Cassells and Murphy on the hospitality VAT rate, which is also very important. As Members will be aware, the current rate of 9% is scheduled to return to 13.5% on 1 March, as indicated it budget 2023. I strongly urge the Government to push the timeline back by an additional six months until September 2023. This would allow SMEs some breathing space as they attempt to come through the energy cost increase. It is essential that we provide SMEs with the greatest possible supports during this period. From talking to people in the restaurant, bar and hotel trade, I know the VAT hospitality rate is a very important issue for them.
I especially welcome the 50% reduction in the fee for special exemption orders, from €410 to €205. This is a significant boost to the late-night economy. Having spoken to operators as late as this evening and bodies representing the sector in recent weeks, I know the reduction will make a significant difference.
The Government has delivered and ambitious budget that will make a real and meaningful difference to the lives of people in this country. Any day that can be done is a good day. Small and medium enterprises will still need further support and I look forward to discussing that issue in the days and weeks ahead.
I welcome the Minister of State, Deputy Fleming. This is a cost-of-living budget of more than €90 billion. We see the Government responding to a need and an energy crisis for families throughout Ireland. We hear from the Opposition that retrofitting needs to be done but we need people in place to do that job. The Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, has provided for 4,000 additional places on the apprenticeship programme. This will ensure people are trained up to deliver the trades and skills we need to do the work.
We also have major shortages in many areas, for example, healthcare assistants. We need to ramp up the upskilling of people in all sorts of Quality and Qualifications Ireland, QQI, qualifications in order that they can take on these roles.
I was pleased to see we will again reduce the teacher-pupil ratio. That is crucial in our primary schools. We know the impact of early years education so it is crucial that we do this. It is also important that we fight for teachers in rural areas and ensure we maintain teachers in primary schools. We will also have 2,000 special needs assistant, SNA, posts and free primary school books. This will be a huge benefit to families throughout the country.
The third level student contribution will be reduced by €1,000 this year and €500 next year. This will have a considerable impact on students and their families. The PhD stipend for researchers who are on Science Foundation Ireland, SFI, or Irish Research Council, IRC, grants, will increase by more than €500.
We are also seeing the largest ever special education budget. This Government, in particular Fine Gael, is focused on special education. We know through the Minister of State with responsibility for special education, Deputy Madigan, that more than 27% of the budget for education will be spent on special education.
The National Educational Psychological Service, NEPS, is being offered to schools and it is crucial that they have access to this when identifying special educational needs in special schools and special educational classes. Its funding has been increased by €2.9 million which will fund 54 additional professional and technical staff.
We live in uncertain times. It is crucial that this budget will give certainty to families.
I welcome the Minister of State. I also welcome today's budget which is very fair and targeted. I compliment the Departments of Finance and Public Expenditure and Reform on their prudent management of the economy, which means we have the funding in place to deliver a budget today. Earlier today, the Minister cited the example of a single pensioner living alone in receipt of fuel allowance who will receive €2,375 between now and the end of 2023. That is extremely positive and it is an example of the targeted funding provided the most vulnerable in society.
I join a number of colleagues in expressing disappointment that the tourism VAT rate of 9% was not extended and that no signal has been given that it will be extended.
I agree this needs to be looked at for the 2023 season. As I said, a number of hotels, particularly in Dublin city, that gouged should not be responsible for an entire industry being targeted like this.
I welcome the extension of the health device scheme, which is something the Opposition was not in favour of. More than 35,000 people have availed of this scheme since 2017. I welcome the addition of at least two more years of this scheme.
I have been well known for promoting saving An Post and I am delighted that €10 million was allocated in the budget for 2023, with another €10 million for 2024, followed by another €10 million for 2025 for the scheme to maintain the network throughout the country. I thank the Minister of State, Deputy Naughton, in particular, for her work on that.
Senator Dolan mentioned significant investment in special education. There will be a total of 686 additional teachers and 1,194 additional special needs assistants, SNAs, with an additional €20 million allocated for the summer programme for 2023, which needs an overhaul. That funding will put special education on a steady footing for the year ahead.
Overall, it is a very fair and targeted budget for those who are most vulnerable in our society.
I thank the Senators for their contributions. I have taken copious notes of what each Member said and I will bring them back directly to the two Ministers, Deputies Donohoe and McGrath. I know Members will be discussing some of the expenditure measures in more detail immediately ahead. I want to touch on the comments people made. Some of them were repeated and some people had different angles on the same topic, which is fair.
Senator Casey said the reason we could do this today is because of the good management of the economy in recent years. Somebody pointed out that what is happening in relation to packages in other countries is all on borrowed money. Not a penny is being borrowed to finance what is being done here today. That is an extraordinary achievement for any country anywhere in the world. It is an example of how well the economy was managed during Covid. We kept businesses alive and pumped money into them, so when Covid was over, their employees were still on hand and they all came back to work. We now have 2.5 million people in the workforce. The hospitality industry is suffering, as we speak, trying to recruit staff. Things have gone a full circle in that regard. Obviously, the main issue that was mentioned was VAT in the hospitality sector. All I can do is repeat that the Minister said today that the current rate will continue until 28 February 2023. He did not say anything more or less. He did not say it was going to stop before then or that it will go on beyond that. He just used one specific date. That is where we are for the next five months. Senator Casey raised that issue.
Senator McDowell raised the issue of VAT on newspapers, which many people said needs a long discussion. On property, there is the new vacant home tax. In particular, he felt self-assessment was the issue. That was mentioned by another Senator as well. Somebody suggested it would make a joke of the system, because who would own up to pay a tax? This tax was based on houses that are in the local property tax net already. Revenue has been clear in following up on houses around the country it believes are habitable but were not in the property tax net in the past two years. It has a comprehensive list that is different from what may be coming from the census of population, where somebody calls once or twice over a couple of weeks and finds no one there. The Revenue Commissioners list is the most accurate. Somebody queried the local authorities did not do as well. Simply, I have great confidence in Revenue. Its people are the best to collect money in Ireland. The local property tax is self-assessment and the rate is almost 100%. Income tax in this country is self-assessment and the rates are very high. The idea of saying we do not trust the people to do their tax return sounds like a popular thing to say. However, in reality, it does not bear any truth when 97% or 98% of people operate the self-assessment situation because they know they are subject to audit, which keeps people on the straight and narrow. Self-assessment is the way to go on that.
Senator McDowell asked about over-the-shop allowance as well, which was mentioned by Senator Maria Byrne in respect of Limerick in particular. She also highlighted the issue that people would now not pay the top rate of tax until €40,000. I mentioned the rental credit and the issue of the rollover relief for young farmers.
Senator Gavan raised the issue of energy costs. Definitely, there are mixed views in the House around the three €200 payments and how much we get before Christmas. There is the situation where some will get it through their bill and others who have meters and do a top-up can get it on a more ongoing basis every time they top up. The specifics of that have yet to be worked out.
On the issue of rental credit, again, there always an element of truth in what people say, such as that it does not cover everything and landlords can continue to put up the rent on existing tenants. Of course, most people know that most areas now are rent pressure zones and that cannot and does not happen. Again, it is an easy thing to say.
It is factually incorrect-----
(Interruptions).
The Minister of State, without interruption.
In rent pressure zones, there can be a specific increase that is specifically limited to the figures in the zones. Obviously, when there is change of tenancies, that is a different situation. The next issue was mentioned by several Senators. Again, I will repeat the phrase that there was an element of truth in what they said, but it was not the full truth - one Senator gave the full truth - regarding some of the people on social protection, that the €12 increase they will be getting is totally unsatisfactory. It has been made very clear today. To take a simple, typical example of somebody on social welfare, for example, a single pensioner living alone and in receipt of a fuel allowance, that person will receive an additional €2,375 between now and the end of next year. That is €45 a week; it is not €12 a week. The €12 a week is one little bit of what is being done. Those people will have the fuel allowance, which is an extra payment of €400, the living alone allowance of €200, the energy credit of €600, and the extra double week in addition to the Christmas bonus, which was always there. That person, who people in the House have said will only get €12 a week, but it is €12 a week on one particular aspect of all the increases we are giving, will get a €45 a week increase – not €12. It is important people get the full, rounded picture of what is happening and it is important we give the full, rounded picture on that.
The free book scheme was mentioned, as well as the extra Garda recruits, which are very helpful. Templemore will be able to process those on an ongoing basis. There will be a new recruitment procedure for the Garda shortly.
Again, people said there were targeted measures and universal measures, which is correct. The childcare cost changes were welcomed by many in the House, as was the fact more people are getting the fuel allowance. The social welfare increases, as I just mentioned, were not just the €12 that I highlighted. A number of people welcomed the reduction in the VAT rate of 9% for newspapers as well.
I apologise for interrupting. The closure was announced today of the Fingal Independent-----
Is that allowed?
(Interruptions).
It is because he is a Government Member.
The Minister of State, without interruption.
Again, there are mixed views on the efficiency of Sustainable Energy Authority of Ireland, SEAI. Some said it was a very efficient organisation and others said it was quite slow. Others said we should spend more on retrofitting, but started off by saying they would abolish every scheme that is there already. If we abolish all the schemes that are up and running and starting to have an impact and start from scratch, in about three years’ time, we might get a house retrofitted. The idea that we will do more by abolishing every one of the schemes in place, as was said today, will not be accepted. If somebody supports the policy of abolishing every retrofit scheme in the country, that is fair enough. However, I would not accept that approach and the people will not accept that. They are promising something in the fine day ahead.
The Minister of State's own party-----
(Interruptions).
Senators-----
Many people mentioned the help to buy scheme. That has helped 35,000 people-----
(Interruptions).
The Minister of State, without interruption.
Am I okay on time?
You are grand. Keep going.
A number of people mentioned the help to buy scheme, from which 35,000 people have benefited. There is a clearly a philosophical difference in this Chamber, and in other chambers and between people. I am one of those people who got mortgage interest relief to help me buy my house. I would always like to live in a country where the Government supports people buying their own houses. Some people have a philosophical difficulty with the State not owning every house in the country. There is a different philosophical view on that and it does not have to do with money. I support homeownership and I support the State supporting people to get homeownership.
A number of issues were mentioned relating to extra people getting the GP cards and removing the hospital inpatient charges, as well as on higher education.
A number of people spoke towards the end of the debate about the importance of special education. There is a big emphasis on special education facilities in secondary schools because, while we all know there has been a big expansion of such facilities in the primary sector over recent years, now there is an emerging issue at second level.
The question of the €10,000 for post offices was mentioned in the context of its importance in keeping those local facilities fully in operation.
One topic I should have mentioned in my earlier statement - one of the Senators mentioned it early in the debate - is an assessment of gender equality and equality generally in respect of the budget. The new report Budget 2023: Beyond GDP - Quality of Life Assessment refers, among other things, to the distributional impact of the main tax and welfare measures in the budget. The report shows that that impact is strongly progressive and that households in the lowest income deciles will benefit the most from the budgetary measures introduced over the two periods detailed in the report. That continues the trend of progressive budgets that was found also in the Department's analysis of budget 2022.
I thank all Senators for their time and all their contributions. It is good that we had a positive, healthy exchange. As I said, my officials and I will bring all the points raised back to the two relevant Ministers for consideration in respect of the finance Bill and the social welfare Bill, which will come before this House in due course.
I thank all Senators for their contributions.