Tuesday, 1 October 2019

Ceisteanna (69, 89)

Pearse Doherty


69. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the additional expenditure that will be committed for sector-specific mitigation measures in the event of a no-deal Brexit; and if he will make a statement on the matter. [39626/19]

Amharc ar fhreagra

Richard Boyd Barrett


89. Deputy Richard Boyd Barrett asked the Minister for Public Expenditure and Reform the areas of the budget he is planning to increase in view of the threat of a no-deal Brexit; and if he will make a statement on the matter. [39608/19]

Amharc ar fhreagra

Freagraí ó Béal (11 píosaí cainte) (Ceist ar Public)

The recent proposals by the British Government to impose a belt of customs checks on either side of the British border on our island is testament to the disregard it has for the peace process that has been built on this island but it is also probably a sign of its disregard for other matters. It is a wake-up call to businesses, given the impact on the economy and jobs as a result of a no-deal Brexit, if it is to come to pass, and we all know it is now more likely than it was this time last year. In the event of a no-deal Brexit, what expenditure is the Minister committing for mitigation measures in affected sectors and what will they be? I am asking this a week out from the budget because my understanding was that we had moved away from the "big bang" announcement. I am not asking the Minister to detail the measures; I am asking him to give us the fiscal parameters of the Brexit contingency measures which, in all fairness, would usually be in the spring statement and the summer economic statement, but we now have to wait for the "big bang" approach.

I propose to take Questions Nos. 69 and 89 together.

My intention is not to provide a "big bang" announcement. Whatever my last two budgets have been, they cannot be accused of being big bangs in terms of the changes we made from an expenditure, tax and social welfare point of view. The reason I am not in a position to tell the Deputy today what the resources are going to be for dealing with the consequences of a no-deal risk is that I am still working with the Ministers for Agriculture, Food and the Marine, Business, Enterprise and Innovation and Transport, Tourism and Sport on it. What I have said is that in the event of a no-deal Brexit taking place, the funding in that regard will need to be additional to the budget framework we have outlined of €2.8 billion, plus any changes that can be made on top of it. I have outlined in the summer economic statement the kind of deficit swings that are possible for our economy to experience if we end up in the position of having to deal with this risk.

I am aware of all that. As I said, I am not asking for the Minister to itemise the measures or to give figures down to the cent. However, surely to God, despite the fact there are negotiations ongoing, the Minister can tell us whether the Brexit contingency fund he proposes to announce this day next week is in the region of €100 million, €200 million, €300 million, €800 million, €1.5 billion or €2 billion. Can the Minister give the House any indication of what scale he is looking at because it is required?

Sinn Féin has made it very clear today that it wants the money that is earmarked for the rainy day fund to be diverted into a Brexit stabilisation fund. This is not new; we have argued for it consistently with the Minister in recent years. It is a €2 billion fund that would be there to be drawn down, if necessary, to deal with the impacts of a potential no-deal Brexit. Can the Minister outline the scale of what is involved? Surely to God the negotiations over the coming weeks will not result in a doubling or quadrupling of the figure with which he is working. I refer to the discussion we had at the Committee on Budgetary Oversight regarding the concerns I raised about the rainy day fund. It cannot be used as per the legislation as drafted. I refer also to my freedom of information request and the response I received, which confirms this in the context of a no-deal Brexit. Is the Minister any closer to making a decision as to whether the €1.5 billion earmarked to be invested in the fund will go into it or whether he will reallocate those resources to deal with potential Brexit mitigation measures?

The Deputy is asking questions on which I have not yet even given the Cabinet a perspective because they are the result of the work we must do to get a budget ready. I will update the Cabinet on all that next week, when I have concluded my work with all other Departments. It is a matter for announcement on budget day. When I am in a position to inform the House of the scale of the fund, I will do so. That will be next week.

I wish to argue in favour of a big bang of increased expenditure and boosting people's incomes in the event of a no-deal Brexit. That might seem like a radical proposal-----

-----but 20 or 30 years ago it would have been considered ABC Keynesian economics. In the face of a possible serious disruption of the economy, whether as a result of Brexit or, for that matter, a looming recession, what Keynes, who was not a socialist, argued is that one should boost people's incomes, boost demand, boost spending power and boost investment in key strategic areas. As the Minister considers his options in the case of a no-deal Brexit, I argue that he should consider this and that Brexit should not become a new excuse for austerity because in the case of the last major disruption post 2008, austerity made a bad situation worse. What we need, if there is to be a serious disruption to our economy as a result of Brexit, is increased expenditure in the vulnerable sectors, protection of jobs through State intervention and the boosting of people's incomes. We should not hold back on supporting vulnerable sectors, and workers should not have their incomes held back when what we need to do is boost their spending power in order to keep the economy afloat against the possible contraction that could result from Brexit.

The Deputy refers to the potential return of what he calls austerity. Let me be clear that my plan for next week, as we conclude our position on the budget, is for continued day-to-day spending on public services to be maintained and that we will continue to spend more to ensure that our public services have the funds they need to hire teachers, to have the right number of nurses and to put in place the money our hospitals need to cope with the rising costs in respect of demographics. That will not change.

Regarding the supports Deputy Boyd Barrett outlined and the Keynesian approach to this, my point of view is that if we end up dealing with a no-deal Brexit, the economy will need an injection of demand and investment to help it deal with the effects that that would have on people's lives and working standards. We are trying to craft a set of supports that will allow families, businesses and farms to respond to that. I hope we do not have to use those supports because the political consequences of a no-deal setting, as Deputy Pearse Doherty noted, and the economic consequences are so serious. However, we need to be in a position that if it comes to that, businesses and citizens will have an understanding of what we will be able to do to respond.

I am a bit taken aback by the Minister's response. As stated, I am not looking for details in respect of the specific measure or the final figure; I am looking for a ballpark idea of his thinking on the level of investment needed for a no-deal Brexit. This would normally be set out in the summer economic statement or the spring economic statement, and the Minister is telling me he has not even discussed it with Cabinet. We are a week out from the budget and possibly within 31 days of a no-deal Brexit and he is indicating that he has not discussed the scale of support that would be required in that context, a context that will take approximately €6 billion off the general Government balance. I am absolutely staggered that none of these discussions are happening at Cabinet level and that none of his Cabinet colleagues is asking him the questions I am asking. I am very surprised by that and also very nervous about it. However, if the Minister cannot give me an answer, he cannot give me an answer. Perhaps he can answer the question about the rainy day fund. The legislation is very clear. His Department officials, in response to my freedom of information request, were very clear as well. The fund cannot be used for Brexit mitigation measures. Can the Minister confirm that the €1.5 billion that is earmarked to go into the fund by the end of the year and the €500 million already factored into budget 2020 will not go into the fund and will instead be redirected or held back in case we need the money in the context of Brexit?

I welcome the Minister's comment to the effect that he will not let Brexit become the new austerity, particularly as that would be absolutely the wrong approach. However, there have been certain signals that, for example, social welfare increases or boosts in workers' incomes might be held back in the event of a no-deal Brexit. I put it to the Minister that that would be a mistake. Even holding things as they are would in effect amount to cuts in real terms. Workers and the least well-off need their incomes increased, particularly in the event of a no-deal Brexit.

I have a suggestion for the Minister. I refer to the Wrightbus company, which is in trouble in the North. Against a background of needing to increase our electric bus fleet and transform and expand our bus fleet for reasons of climate change, if no other, and also in the context of no-deal and the difficulties that could arise, a very good gesture on the part of the Government would be to look at perhaps trying to push some work the way of that bus company in order to get some buses down here and enhance cross-Border trade in a key area while helping to save jobs in the North. It would be a useful gesture and a practical economic measure.

It is up to the National Transport Authority and Bus Éireann to decide where they will buy their buses. They must try to source buses at best value, and hydrogen and mixed-fuel buses are an awful lot more expensive than the buses they have traditionally had in the past. As I said to the Deputy, it is my intention that our day-to-day spending on our public services will continue to increase if we end up dealing with a no-deal Brexit. That is what we are seeking to do.

I have stated that our position on tax and social welfare will be very different from what it was in the past. We should be really careful about finding ourselves in a position in which we must borrow to, for example, cut taxes. If the country finds itself dealing with the consequences of a no-deal Brexit, potentially within weeks, and if we are to borrow, we must borrow to support our economy, help to keep people in work and intervene in particular parts of our country. That is what we will borrow for, and I will take great care to try to ensure that I do not make any further changes which might ultimately prove unaffordable.

Deputy Pearse Doherty knows that what I was referring to was the fact that budget day packages must be agreed by the Cabinet on the morning of the budget. Not a Cabinet meeting goes by without very extensive and lengthy discussions on Brexit. What I specifically said to the Deputy was that I am already engaged in lengthy discussions on no-deal supports with the Departments of Agriculture, Food and the Marine, Transport, Tourism and Sport and Business, Enterprise and Innovation.

I will bring that to an end on budget day. Likewise, I will deal with the decision regarding the rainy day fund on budget day.