A Cheann Comhairle,
This Government has just passed its halfway point during this term of office.
Yesterday’s Budget has advanced three vital goals for the Government in the remainder of our term.
1. To continue to correct the public finances so that Ireland can successfully exit the bailout on December 15th signalling the end of the bailout era;
2. To continue to create more jobs and accelerate the reduction in unemployment by building on the 3,000 currently being created every month; and,
3. To support hard working families on average incomes who have given a lot since the crisis began.
Exiting the Bailout
We are on track to achieve our commitment to the people of Ireland to successfully exit the EU/IMF bailout on
December 15th.
The budget delivered yesterday by the Ministers for Finance and for Public Expenditure & Reform was essential to reach this goal.
Three years ago on the eve of a Bailout it was a very different story for Ireland.
We had a Government in denial. Ministers were misleading the public as to the imminent bailout.
The private sector had been losing 7,000 a month in the previous three years.
The banks were lurching from one crisis to the next.
It was a time of despair. For our people. For our economy. For the Future.
The new Government which took office in March 2011 was elected on the promise to sort this mess out, to ensure it could never happen again, and to bring a new… real… prosperity to Ireland.
In the past year we have made significant progress in undoing many of the mistakes of Fianna Fail.
In February, we removed the millstone of the Promissory Notes from around the necks of the Irish people and consigned the toxic Anglo-Irish Bank to history.
In lifting this unfair and invidious burden, we provided breathing space for the economy to recover and grow.
The deal reduced the State’s cash borrowing requirement by €20 billion over the next 10 crucial years.
It also means that the adjustments to be made to meet our deficit targets will be less onerous that would otherwise have been the case.
In June, during a highly successful Irish Presidency of the EU, we finalised arrangements with our partners to extend the maturity of the EU component of our Programme loans, extending the weighted maturity for loans to Ireland by up to seven years.
As we look to re-enter the markets fully, this will help keep downward pressure on our borrowing costs – this is important not only in regard to government borrowing, but also for our semi-states, banks and large companies who raise capital on the financial markets.
It will have a positive ripple effect across the economy.
It means an additional €9 billion in savings at a time when we need it most.
Securing these outcomes was possible thanks to skilful and painstaking negotiations by the Minister for Finance, supported in his unceasing efforts by the Tánaiste and me, and backed-up with the creative energies of his officials. It was a team effort.
It was also a concrete reflection of the trust we have built up with our partners, and the extent to which we have been able to restore our reputation.
People believe in Ireland again.
After the huge sacrifices of the Irish people we are finally seeing light at the end of the tunnel.
It has not been an easy few years, nor could it have been due to the scale of the economic calamity that hit the country.
We still have much to do before the country is back on solid foundations but exiting the bailout in December will restore confidence in our country.
It won’t mean our financial troubles are over.
We still have to get our public finances back into working order.
The huge amount of progress we have had in addressing the deficit is one of the reasons we have seen a return of confidence in Ireland.
We will complete the job, as promised in 2011, to reduce the deficit to under 3% of GDP by 2015.
The Budget correction this year of €2.5 billion will leave us with a 4.8% deficit next year, ahead of the required 5.1% target, and within striking distance of our overall goal.
And next year we will produce a small primary surplus, demonstrating that our national debt, which has been rising for so many years, is under control.
Jobs and Employment
Restoring confidence in the Irish economy will allow us to achieve our next vital goal: to create more jobs and to get Ireland working.
As Minister Noonan pointed out yesterday this is the first Budget since 2007 that has been delivered in against a background of rising employment.
The private sector is adding 3,000 new jobs every month.
Irish exports have reached record levels and we can build further on this as the European economy starts to recover, some signs of which have emerged.
Previous budgets and capital plans were all designed to increase employment and it is encouraging that they are starting to show results.
But more must be done if we are to reverse Fianna Fail’s jobs crash which saw 250,000 private sector jobs lost in their last three years in office.
Budget 2014 was pro-jobs and pro-enterprise in its design.
It avoided job destroying increases to income tax and corporation tax.
In addition the Government is introducing a €500m jobs package with 25 new tax measures to increase accelerate job creation over the next year.
Measures such as maintaining the 9% VAT rate for the tourism sector. It has already created 15,000 new jobs in all parts of the country since the introduction of the new rate, and has increased the number of incoming tourists visiting Ireland.
An expanding and growing tourism industry has the capacity to create more jobs quickly.
We have also reduced the air travel tax to zero to encourage airlines to establish new routes into Ireland. I expect the airlines will respond to this incentive shortly.
The Government values the spirit of enterprise and entrepreneurship as we rebuild an economy based on enterprise, exports and innovation.
To incentive the unemployed to create their own jobs we have established a new ‘Start Your Own Business Scheme’ for people who have been unemployed for 15 months or more by offering a two year income tax exemption for those who start their own unincorporated business.
To promote entrepreneurship, from next year we are offering a Capital Gains Tax relief to entrepreneurs who reinvest the proceeds from the disposal of assets into a new investment in productive enterprise.
To help attract additional major film productions to Ireland we are bringing forward the start date of the new Film Relief scheme to 2015 from 2016 and extending it to include non-EU talent. These productions can often involve thousands of temporary jobs and can provide a significant boost to the tourism sector.
To help small business we are amending the cash receipts threshold for VAT from €1.25 million to €2 million with effect from the 1st of May 2014. This will assist cash-flow and reduce administration in a larger number of SMEs.
Ireland has the best environment in the world for agriculture and is matched by an industry which is driving by world class standards. It has the potential to expand in the coming years and create even more jobs.
The extension of Capital Gains Tax retirement relief to disposals of long-term leased farmland in certain circumstances will encourage older generations to lease out their farmland on long term leases to new, younger farmers.
To grow the industry the eligibility for Young Trained Farmers relief is also being extended by adding three more qualifying courses to the list of relevant qualifications required for the 100% rate of stock relief and for the Stamp Duty relief for the purchase of agricultural properties.
Also significantly for our capacity to create jobs we are continuing the high support for the job agencies (IDA Ireland, Enterprise Ireland, and the Local Enterprise Offices) which have estimated that they will create nearly 50,000 new jobs in 2014.
The Construction Industry
In advancing efforts to get Ireland working again the Government is acutely conscious that many of the 250,000 people who lost their jobs in the three years before we took office were working in construction.
Just as the tourism industry fell below normal levels during the crash so did the construction industry and therefore it also requires our attention to restore it to health.
From having been wildly over-heated, the sector is now worth about 5% of GDP, about half the European average.
And, in employment terms, we are significantly below the EU average of 7% of total
employment.
There is good reason to believe the pendulum has swung too far.
We want to see a new and renewed construction industry, properly regulated and based on the highest international standards.
It must be done on a sustainable basis – there can be no going back to boom/bust reckless approach that has had such disastrous consequences for the country.
But we recognise the important role that a right-sized construction sector can play in supporting economic development and job creation in Ireland.
Sustainable construction is a vital part of planning and providing for the future – whether in building vital economic telecoms and energy networks; educational infrastructure, including schools; or in providing the space for new commercial and industrial enterprises.
I believe that the measures contained in Budget 2014 can be the catalyst for that recovery and spur on the wider economy.
Through the raising of additional funding from the sale of State assets the Government has organised an additional €200m capital programme for 2014.
While supporting a reviving construction industry the package will also support local economies nationwide. The package includes projects such as:
· Cork City Events Centre;
· Restoring Heritage Buildings at risk;
· The National Sports Campus;
· Additional Sports Capital Grants;
· 5,700 Housing adaptation grants for elderly and disabled;
· Social Housing construction recommencing; and
· Maintaining the current network of local roads
In addition, the Home Renovation Incentive and the extended Living City Initiative in particular will help the residential construction sector.
Work Activation & Youth Unemployment
However, there is absolutely no point in creating new jobs unless we can get people off the dole queues and into employment.
We cannot rely on economic growth alone to reduce the dole queues as might have been done in the past.
Ireland is in a dynamic labour market of over 500 million people and we need to make every jobseeker as ‘work ready’ as they can be.
Through Pathways to Work we are fighting back against long-term unemployment and youth unemployment and I want to commend Minister Burton for her efforts in this regard.
We cannot allow a situation where young people are incentivised to graduate from school onto welfare.
To do so would to be to accept the massive long term social and economic consequences of a generation of welfare dependants.
We already have one fifth of households categorised as jobless, double the European average.
A whole new approach to work activation and welfare reform is required to break the cycle of welfare dependency.
Our young people should be in education and training, not languishing on dole queues.
This is the context of yesterday’s changes to the jobseekers allowance rates.
These Budget changes will ensure that young people will be at least €60 better off in education, employment or training than claiming welfare.
For example, people under age 26 years who participate in a Back to Education course will have their Jobseeker's Allowance increased to €160 per week.
That means that in addition to the enhanced career and job prospects from improving skills and education levels, there is a huge financial incentive for young people to participate in education, employment or training.
These actions are part of a much bigger strategy to address the problem and should not be viewed in isolation.
We are in the process of rolling out the Youth Guarantee which will aim to provide adequate further training and education places for unemployed young people.
Budget 2014 has allocated an additional €14 million to increase the number of places available for young people. Specifically:
· 1,500 new places on the JobsPlus scheme and amending the criteria for under 25s to only 6 months unemployment to become eligible.
· 1,500 new JobBridge places for under 25s.
A minimum of 2,000 training places will be ring-fenced for under-25s who are out of work in 2014, at a cost of €6m. These places will be provided under a follow-up to the successful Momentum programme which operated in 2013.
Next year, the Department of Social Protection will spend €1.08 billion on work, training and education places and related supports for jobseekers – an increase of almost €85 million on the projected spend this year
The changes relating to Jobseeker’s Allowance for young people are being made in this context – to place a greater emphasis on work, training and education supports rather than income supports.
At the end of the day work must always pay and the Government will continue to implement its Pathways to Work strategy to ensure that our system supports work over welfare.
While Sinn Fein are merely populist on this subject the sound bite statements by Fianna Fail simply remind everyone of their own inaction in Government and their own complete lack of understanding of work activation policy.
While in Government they operated a social welfare system that didn’t introduce one single reform related to work activation which saw Ireland fall further behind other countries.
In fact they commonly introduced changes that were the polar opposite to best international practice which was cruelly exposed during times of so called full employment when Ireland still had a jobless household rate higher than the European average. Following the crash the problem is now endemic.
Fianna Fail now insult the intelligence of the tens of thousands of young people desperate for a job with their one dimensional approach to politics and policy.
To those young people I say that this issue will remain a priority for Government for the rest of our term in office and I believe the Budget yesterday and the Youth Guarantee initiatives will help get them started on their career.
Support hard working families on average incomes
Better supporting younger people to help them find jobs is just one way the Government is helping hard working families on average incomes.
This group has sacrificed much since the beginning of the crisis and deserves support as Ireland begins to recover.
At the outset we have reversed Fianna Fail’s plan to increase income tax by €500m over two years and have maintained income tax rates, bands and credits to ensure that work continues to pay for working families.
Commuting families will benefit from keeping excise duty for fuels the same which will also benefit home heating bills.
In relation to education there are no further changes to the student grant scheme and no increase in class sizes.
The Government will also provide for the recruitment of over 1,250 new classroom & extra resource teachers and introduce a new Book to Rent programme in primary schools to keep costs down.
To further help working families we have introduced free GP care for all children under 5 years old.
Despite the scare mongering of opposition who are trying to confuse this measure with other health related policies the Minister for Health secured additional separate funding for the introduction of this key reform following the settlement of the Health Estimate.
Every parent knows that the early years of family life are very expensive (high mortgage burden, crèche fees, doctor’s visits).
Hard working parents of over 240,000 children, who have enough to worry about, will now have the reassurance that they can bring their children to the doctor without having to pay for each appointment.
Working families have also been helped by the decision not to amend child benefit in this Budget.
This announcement is the first step on the path to this radical reform - Free GP Care to all is the foundation stone of Universal Health Insurance.
UHI will ensure that everyone is treated on the basis of their medical needs, and not on whether they can afford to pay for their care.
This was a core part of the election manifestos of both Fine Gael and Labour in 2011 and we are delivering on that promise.
It is part of a much wider reform of the health system designed to achieve more with less, to remove the waste and inefficiency that bedevilled our health system under Fianna Fail.
The HSE Budget has been reduced by a total of €3.3 billion.
Staff numbers have been reduced by 11,320 since their peak.
Over the same period, the population has increased significantly, with increased demand for health services.
Despite the difficult financial environment, under the leadership of Minister James Reilly, major achievements have already been made which have a daily positive impact daily on services provided to patients
including.
Between January and August of this year the number of patients waiting on trolleys was down 30% compared with the same period in 2011 – an enormous achievement of the Special Delivery Unit personally pioneered by Minister Reilly in both opposition and in Government.
Construction on the National Children’s Hospital is on track to commence in early 2015.
Huge progress is being made in building primary care capacity and in chronic disease management. The HSE is currently delivering on average one primary care centre a month. 32 new primary care centres have been delivered since May 2011.
Consultants will now see, treat and discharge patients 24/7…saving the State hundreds of millions…an issue the last administration were afraid to tackle.
The biggest reorganisation of Irish hospitals in the history of the State was announced in May.
The six new Hospital Groups will have much greater freedom to run themselves. The future of smaller hospitals has been secured by the establishment of hospital groups.
All of this has been achieved by Minister James Reilly notwithstanding the difficult financial environment.
I recognise the financial challenges facing the health system are greater than even.
In order to protect services for those that need them most in the context of declining budgets and increasing demand, Minister Reilly has set the health services achievable but highly ambitious targets in terms of cost reduction.
I know that these reforms cannot happen overnight. It will be a complex and major undertaking that requires careful planning and sequencing…it will take time, patience, diligence, and determination.
It will also take – and will get - the full support of my own Department as well as that of the Minister for Public Expenditure and Reform – support.
Conclusion
Ceann Comhairle,
In presenting this budget the Government knows that many lives in this country have been blighted by the economic carnage left behind by our predecessors.
We appreciate the struggles and the hardships that so many have endured.
The past few years have been painful and challenging, and have left no family untouched.
Each one of us on these benches has heard at first hand the stories of people desperate to get back to work; of young families struggling to pay bills and meet mortgage payments.
But I believe this Budget shows we are coming out the other side.
While many may not see it in their communities there is a sense of progress.
Stability has returned. Confidence is rising. Investment is increasing. Jobs are being created. People are moving forward with their lives once again.
The future is no longer something to be feared.
The people of Ireland own this recovery.
It was their sacrifices that made it happen… that made Ireland stand apart on the world stage as a country that is dealing with its problems… that it remains a highly attractive place for jobs and commerce.
Budget 2014 is another step on this road to recovery.
It will deliver us back our economic independence after three years in an international bailout… it will create more jobs for our people… and it will support the hard working families of Ireland.
I commend it to the House.
Ends