Wed, 03 Jun 2020

At time of uncertainty Ireland is primed for action, says taoiseach

Taoiseach Leo Varadkar
10 Oct 2019, 22:28 GMT+10

One of the earliest recorded examples of economic strategising appears in the very first book of the Bible. Joseph, son of Jacob and Rachel, was able to predict the trajectory of Egypt's economy a period of boom, followed by a period of bust. Forewarned, he was forearmed, and he was able to guide the country through the worst of the crisis, saving his own people as a result.

We have many examples in our own history including in our own recent history - where warnings were not heeded, and a period of economic growth was followed by an economic collapse. Steps were not taken to prepare for what was coming, meaning the country was left defenseless when the worst happened. There was no economic strategising, there was no long-term vision, and we all suffered.

Sadly, those same people have not learnt the lessons of history. Many Opposition speakers on Tuesday attempted to have it both ways. They attacked the Government for being too reckless in the way money was allocated, while at the same time criticising us for not spending enough money.

We had Budget submissions from some Opposition parties that hoped for the best, but were not prepared for the worst. Containing the kind of optimistic promises that are only ever made when you have no intention of delivering upon them.

It is notable that Sinn Fin, Labour and the Greens all based their alternative budgets on an 'orderly' Brexit, despite everything that is happening at present.

So, they criticise us for not increasing pensions or weekly welfare payments but do not tell pensioners or people on welfare about the small print in their alternative budget plans.

Terms and conditions apply!

Such an optimistic outlook is convenient because it allows them to increase spending and still claim to deliver a surplus. However it is not realistic because basing economic policies on hopeful predictions is not an acceptable way of managing the economy and safeguarding people's lives forecasts not endorsed by IFAC.

In contrast, the Government designed Budget 2020 to give certainty to businesses and citizens, protecting the hard-won progress of recent years, and avoiding a situation where Budget decisions might need to be reversed in the near future.

There wasn't one single Brexit related policy in the Green Party's submission, and the word 'Brexit' only receives a single mention in it. The Greens attention to the climate crisis is admirable but ignoring the one that might happen in three weeks is simply unfathomable.

Sinn Fin's budget submission resembles an ostrich only the body is visible because the head is buried beneath the sand.

Despite claiming that 'there is an overwhelming need for the world to confront climate breakdown' they opposed any change in carbon pricing.

Despite 27 Nobel Prize winners recently presenting a massive body of evidence to show that carbon taxes are essential.

The same view is held by Ireland's Climate Advisory Council.

Carbon tax on its own will not stop climate change but we won't stop climate change without it.

It's sad that so many on the left are still 'deniers'.

Despite the threat of a No Deal Brexit Sinn Fin proposes over 1.2 billion euro new taxes on income of employees, without any care for how it will impact the economy.

Despite claiming to want to help the economy they propose higher taxes on business, higher taxes on Middle Ireland, and higher taxes on inheritance.

The Belgian artist and writer, Erik Pevernagie, has observed that 'When politicians bury their head in the sand, ignorance rules the country. In the land of the ostriches, the blind are king.'

We are now 22 days away from the possibility of a No Deal Brexit, and everyone in the country knows the dangers and challenges we face.

We are forewarned and our objective in Budget 2020 is to make sure we are forearmed.

It is an economic vision to provide security at a time of uncertainty, and because it is grounded in reality it offers real hope, not false hope.

It is our economic strategy to channel our growth and prosperity to prepare for an uncertain future, while at the same time continuing to grow and prosper, albeit more cautiously. Investing in the future by investing in infrastructure and in climate action. Doing what we can to make life easier for families and the elderly.

During times of certainty the economic watchword of this Government was prudence. Now, at a time of uncertainty, our core aim and belief is action. Acting to continue our investment in balanced regional development, because we know it is the best way of ensuring that all parts of the country can grow and prosper. Acting to protect our planet, acting to help families.

So Budget 2020 is about four things:

1. Shielding our citizens as best we can from the worst of No Deal;

2. Ramping up investing in our economic and social infrastructure;

3. Protecting the environment; and

4. Making life a little bit easier for families.

Budget 2020 is explicitly designed around the risk of a 'No Deal' Brexit, where we project 0.7% growth next year in contrast to 5.5% growth this year.

That doesn't necessarily mean that we think a No Deal will happen. But as a Government we believe it's the best thing to get ready for one.

That way we won't need an emergency budget because this is the budget that will protect us from the worst of No Deal.

Budget 2020 contains a billion euro plus No Deal package. This is new money and comes on top of grants and loans for business and farmers announced in the last Budget.

355 million euro is being spent on on-going Brexit Preparedness, Compliance and Activation Supports. Of this, 185 million will ensure compliance conditions are met and trade disruption is minimised at ports and airports, including staffing and support services. 170 million will ensure the continuation of existing Brexit programmes already in place.

650 million for the Agriculture, Enterprise and Tourism sectors and to assist most affected workers and regions. Of this, 220 million to be immediately deployed in the event of a No Deal Brexit with 110 million for Agriculture and Fisheries and 110 million for enterprise.

40 million will be available for Tourism. This will target the worst affected regions, there will be new marketing initiatives, and there will be additional immediate funding of 7 million this year.

There will also be funding to secure 'new routes' to regional airports including Shannon and Cork.

365 million is also being provided for extra Social Protection expenditure for income replacement, training and activation for people who lose their jobs, while 45 million is provided to help workers in adversely affected parts of the country for example the border region should that prove necessary.

We are ramping up investment in our economic and social infrastructure. This is not an austerity budget. We don't need to take that journey again. In fact, spending will rise by 3.3bn.

An extra 800 million will be invested in our economic and social infrastructure, bringing total infrastructure spending to 8.1billion. That's an increase of 11% in 2020, on top of a 25% increase this year. That means new schools, primary care centres, housing, roads, buses, broadband.

This is part of the delivery of Project Ireland 2040, driving economic activity and jobs across the country.

There is never a better time to invest in our infrastructure than when the economy is slowing down. This investment will help create new jobs all over Ireland.

In housing, for example, 11,000 houses will be added to the housing stock in 2020, more than any other year this century.

This is also a climate and environment budget. We are using Budget 2020 to step-up Climate Action.

In Budget 2020 the increase in the carbon tax is modest but meaningful. It puts us on a trajectory to get it to 80 euro per tonne by 2030.

This means people now know what the carbon tax will be in 2030, so that when someone replaces their home heating system, they see the value in moving away from home heating oil because that will be more expensive in ten years' time. It means it makes sense to invest in insulating your home. It means it makes sense to live close to where you work if you can afford to do so.

Or when someone is looking at replacing their car over the next decade, they are encouraged to go with a hybrid or electric model because that is what makes long-term sense.

We know that this change will not be easy, so instead of there being big hikes in the carbon tax in any one year, we will have a series of small and planned annual increases. Furthermore, we are ring-fencing all new revenue raised from carbon tax to fund new climate action and just transition. Just transition to protect those most exposed to higher fuel and energy costs and for whom new jobs must be found.

The increase in the fuel/energy allowance ensures that the 20% poorest households will actually be slightly better off as a result of the carbon tax being used to fund this increase.

Between now and 2030, the carbon tax will raise an extra euro6.5bn and it is our policy to ring-fence all of this for climate action and just transition.

Let me give you some examples of what this ring-fenced fund will be used for in 2020:

- A 6 million euro Just Transition Fund targetted at the Midlands;

- 5 million more for bog restoration and rehabilitation which will restore bogs to their natural habitat and become sinks that absorb carbon. This is on top of an existing 2 million allocation. This will create over a hundred jobs;

- 20 million to deliver a new model to group housing upgrades together as set out in the Climate Action Plan. Targeted at the Midlands, this will sustain an estimated 400 jobs directly and indirectly, as well as significantly upgrading the social housing stock in the region during 2020.

While we make these changes we will also protect the most vulnerable in our society.

A total of 52.8 million euro is being made available to retrofit the homes of people living in or at risk of energy poverty through the Warmer Homes Scheme. This represents the biggest ever allocation for the Warmer Homes Scheme more than double the initial allocation for 2019. 13 million of this funding is ring-fenced revenue arising from the increase in the Carbon Tax.

The ring-fenced fund will also be used to fund climate actions, such as: new greenways & urban cycling pathways, pilots for sustainable agricultural measures, and extra investment in the charging network and grants for electric vehicles.

Every Budget from now on has to be a climate and environment budget.

Budget 2020 is also about making life easier for families - building on what we've been doing for the last three years.

Last year we reduced the monthly Drugs Payment Scheme threshold for the second year running.

We increased all GP Visit Card weekly income thresholds, having extended them to carers the year before.

And we reduced prescription charges for all medical card holders over the age of 70.

In the coming years, we will extend free GP care on a phased basis to all children aged between 6 and 12 years, starting with the extension of free GP care to children aged 6 and 7, no later than September.

Budget 2020 enables us to continue the good progress made by this Government in making life easier for families, while ensuring that young people from all walks of life can have the best possible start.

The cost of childcare is a significant financial burden on families, and can act as a barrier to parents who want to return to work. So the National Childcare Scheme will commence in November. Its primary aim is to assist parents with the cost of childcare through universal and income-linked subsidies and an improvement in quality care.

This new initiative will streamline the current mix of childcare schemes to a single, user-friendly scheme. This will improve children's outcomes, reduce child poverty, and help with the cost of quality childcare for thousands of families across Ireland.

The thresholds are 60,000 euro net - up to 100,000 gross and an estimated extra 7,500 additional children will benefit as a result.

From September 2020, working parents will get an increase in the hours for the National Childcare Scheme, up from 40 hours to a maximum of 45 hours. There will also be an increase in the hours available to children whose parents are not in work or study, from 15 hours to 20 hours per week.

Budget 2020 also helps reduce the cost of healthcare.

From July, prescription charges for all medical card holders will be reduced by 50 cent per item and the monthly threshold for the Drug Payment Scheme reduced by 10 euro per month for those without medical cards.

About 56,000 people over 70 will benefit from increased income limits for the medical card.

We are increasing the earnings disregard for One Parent Family Payment and Jobseeker's Transition by 15 euro, from 150 per week to 165 euro per week.

We are increasing the Working Family Payment income threshold for families with up to 3 children by euro10.

The weekly rate of the Qualified Child Increase for children under 12 is also up, by 2 euro per week, to 36 per week.

For children over 12 it is increased by 3 euro per week, to 40 per week.

These actions will further reduce poverty, child poverty and deprivation which have all been falling for 4 years now.

We have also broadened eligibility for the Household Benefit Package by changing the under 70 household composition criteria to allow for an adult son or daughter to reside in the household.

The Family should be at the centre of our society.

Budget 2020 allows us expand Free GP care to the under 8s and provide free dental care to the under 6s.

It gives parents two weeks of paid parental leave each, and increases childcare subsidies.

It cuts prescription charges and provides more medical cards to those who need them.

It extends the Help to Buy Scheme for first time buyers, which has already helped more than 15,000 first time buyers to purchase a home since it was launched.

We will honour the commitments we've made to restore and increase pay for hard-working public servants about 400 million euro set aside next year for - teachers, Garda, defence forces, nurses and other civil and public servants.

Budget 2020 is also about creating safer communities.

Since I became Taoiseach, over 1,500 new Garda have attested, meaning our Garda strength is now over 14,200. The Government is committed to reaching 15,000 Garda by 2020 and we are on course to meet this target.

Budget 2020 makes a funding allocation for 700 additional Garda.

To those who are critical that there are no tax cuts, and no pension or welfare increases. I understand the critics and take it on board but may I remind the Dil of what was done in last 3 budgets.

We reduced USC and income tax and increased the pension and weekly social welfare payments.

That's worth about 1,500 euro to the average family every year.

We can't do it again this year because of Brexit.

But in a five year term, we can do better again, putting even more money in people's pockets. We will put our proposal to do so, to the public, at the next General Election.

Budget 2020 provides for our growing and aging population.

We are providing for increased demand for health, education and disability service.

The Nursing Home Support Scheme or Fair Deal will continue to provide residential care services for older people. 1 million additional home care hours will provide residential care services to enable older people live independently for as long as they can.

The new GP contract will see additional investment in 2020 to enhance GP services and enhanced management of chronic disease.

We are investing in Community Services to provide for additional 1,000 therapists, nurses and other professionals in the community between now and 2021. This really is Slintecare in action.

An additional investment of 25 million euro for the NTPF will further reduce waiting times for operations and procedures. When I became Taoiseach, 57,000 people were waiting more than 3 months for a hospital operation or procedure. We expect that number to fall to 39,000 within weeks. With more money for the NTPF, we can drive it down further.

Over 740,000 people will benefit from a 100% Christmas Bonus in 2019. This will be paid in early December.

There will be an increase in the Living Alone Allowance by euro5 per week and this will benefit an estimated 216,000 people.

We are increasing the hours that carers can work or study outside the home from 15 hours to 18.5 hours per week.

We also have a very substantial package to help business and jobs that are viable into the future but vulnerable because of a hard Brexit, especially in sectors like tourism and agrifood.

There were some criticisms yesterday that the Government has not been prudent in its handling of our country's finances, but the counter-evidence is here.

We ran a Budget surplus in 2018 and 2019 and were one of the few countries in the developed world to do so. IFAC said it wouldn't be achieved but it has been.

We'll do it again in 2020 if we secure a Brexit Deal.

Yes, supplementary budgets are required this year again. We spent 500 million euro more than the 66,600 million we budgeted for. It's only fair to put it into context. That is 0.75%. So for every 100 euro we said we'd spend this time last year, we spent 100.70 euro. And there were good reasons to do so. It has meant extra pay for nurses and our defence forces, essential Garda overtime, more home care packages and new medicines coming on stream. It was necessary extra spending, not waste. And I stand over it.

To help unlock the entrepreneurial potential of our SMEs we have introduced several targeted initiatives.

As well as loosening the rules governing the Key Employee Engagement Programme KEEP - companies will now be able to get full income tax relief in the year of investment rather than spread as before through the Employee Incentive and Investment Scheme.

We are also adjusting the R&D Tax Credit to make it easier for micro and small businesses and SMEs to undertake innovation. The R&D credit is being increased from 25% to 30% for micro and small companies, which will also now be able to claim the credit before they commence trade.

Education will be also enhanced as a result of Budget 2020.

Over 1,600 additional posts will be created including:

- Over 1,000 additional Special Needs Assistants;

- Over 150 extra teachers to meet demographic pressures; and

- Over 400 additional teachers to support those with special educational needs.

The standard capitation rate is being increased by 2.5% per pupil.

For small schools, there will be a reduction in the staffing schedule of 1 point in small primary schools with less than 4 teachers

We will also provide an enhanced school meals programme, providing hot meals for 30,000 children.

1 million euro will be provided for a Free Primary Schools Book Scheme pilot for up to 50 primary schools throughout the country. I look forward to working with Minister McHugh on designing this for September.

We are also investing in Culture. Since I became Taoiseach, spending on Culture, Heritage and the Gaeltacht has increased by 25% - 70 million. Given the challenge of Brexit we were not able to increase the spending on Culture as much as we would have liked this year, but we have increased its budget by 15.4 million and we have made solid progress over the past three Budgets towards the commitment to doubling the spend by 2025.

Our mission is to share our culture with the world, through our people, through our music, through our sport, and especially through our stories.

We are investing in our artists and culture, and increasing our investment in Gaeltacht areas and our language, including dars na Gaeltachta and our islands.

With the real risk of a No Deal Brexit on the horizon, the Government's priority must be to shield the country from the worst of No Deal. Budget 2020 seeks to do that.

Brexit is our focus, but it is not our only focus.

In Budget 2020 we have been able to ensure continued investment in public services and infrastructure. We have made this a priority because we recognise that even in a No Deal Brexit scenario we must prepare for the challenges and opportunities ahead.

Budget 2020 enables us to plan for the future and protect the progress and our prosperity. Ramping up investing in our economic and social infrastructure, protecting the environment, and making life a little bit easier for families.

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