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Speech of An Taoiseach Leo Varadkar T.D. In Budget Debate in Dáil Éireann


Budget 2018 is taking place at a time where we are making good progress in a range of areas which are under our control. At the same time, looking beyond our shores, we see uncertainties, risks and a rapidly changing global economy.

Thankfully we have moved beyond crisis management and are now in the position where we can plan for the future. But regardless of the choices we make our journey will be shaped to some degree by forces beyond our control.

Brexit, potential changes in US tax and trade policy, and a broader international shift in attitudes to trade and globalisation will impact on our economic future to an unknown extent.

This budget ensures that we remain in control of our destiny. It insulates us from uncertainty abroad, and enables us to lay the foundation stone for building a better, a stronger, and a more secure Ireland in the years ahead.

Values and Aspirations
The best economists agree that a budget is not a collection of numbers. It is an expression of a government’s values and aspirations. Budget 2018 is an expression of our values and aspirations for the country, a powerful statement about how the economy is doing, and what that means for our society.

Our values are self-evident from yesterday’s budget. We believe in balancing the books, and have succeeded in doing so for the first time since the crash.

We believe that the next generation should be free from the burden of excessive debt, and we want them to be optimistic about building their life here.
We believe in continuing with debt reduction, all the time proceeding with prudence and acting responsibly, so that we do not repeat the mistakes of the past.

We believe in modest, sustainable tax reductions for middle income individuals and families so that we can make life easier for those who work so hard and make it possible to fund our public services and welfare system.

At a time of very low inflation, Budget 2018 means that a family with a combined gross income of €60,000 is likely to be about one thousand euro better off in take home pay this time next year because of our tax changes and when added to a projected average pay increase of 2%. That may seem a modest enough gain, but it will make a difference for the family concerned. It enables that family to plan for the future with renewed optimism. More importantly it’s real and sustainable, and it’s only the start of what I believe will be a prolonged period of income growth and rising living standards.

We believe in helping people who need it the most.

So, we have strengthened the safety net by increasing weekly payments by €5 for a wide range of people including pensioners, carers, people with disabilities, one parent families, those seeking work or on employment support payments such as community employment, Tús and the Rural Social Scheme.

We believe in bigger budgets for public services so we can make a real difference in the areas that matter to many people, such as education, health, and housing.

For example, funding is being provided to deliver a further 1,300 additional teaching posts, as well as an estimated 1,000 new Special Needs Assistant posts in 2018. New funding will be provided for higher and further education by an increase in the National Training Fund levy.

And we want an allocation of an additional €310 million up to 2021 to meet infrastructure needs in higher and further education.

Health has received a record allocation which will allow additional resources to be focused on reducing waiting times, increasing capacity in our acute services, enhancing mental health services and services for people with disabilities.

There is a particular focus on primary care, including a new GP contract which is central to the development of the reformed health service we all so much wish to see.

The Minister for Health has also announced measures which will reduce the monthly cost to patients of their medicines. This will benefit people with medical cards and people who don’t have medical cards, through the DPS.

However it is not simply about spending more money. As our experience during the mid-2000s demonstrated, increased spending must be accompanied by reform. Extra spending does not equal better services. The correlation is indirect at best and often absent altogether.

In the case of the Health Service, the Government is working on a Reform Roadmap in response to the Sláintecare Report of the Oireachtas All-Party Committee.

We understand the stress faced by people without a home and the strain on our society that homelessness is. We know so many people struggling to buy or to rent a home. These people aren’t faceless statistics, they are our friends and families, constituents and supporters, people we know and people we want to help.

So, when it comes to housing the total budget is now €1.9 billion, an increase of €600 million compared to 2017. This investment will see housing provided to 25,000 individuals and families in 2018. These are new tenancies.

The Government recognises the need to go further in its work on housing and we have therefore announced that €750 million of the Ireland Strategic Investment Fund will be made available through a new vehicle, called Home Building Finance Ireland, for commercial investment in new house building. It will use the expertise of many existing staff of NAMA.

The Housing Budget also includes an increase in the Housing Assistance Payment of €149 million, a further €18 million for homelessness services, bringing the total spend to over €116 million, and an extra €31 million in social housing current expenditure.

So, we believe in supporting individuals and families and allowing them to plan for the future. We believe in making work pay. And we believe in laying the foundation stone for a sustainable and prosperous economy, which benefits all our citizens, young and old, in rural and urban areas.

Budget 2018 is built on these values but it is also built on our aspirations.

We want to improve people’s lives, and enable individuals and families to plan for the future with confidence.

We aspire to create a sustainable economy that supports the life cycle of our citizens, from cradle through to old age, one that reflects the reality of life and not simply a changing economic cycle. We aspire to full employment, a job for everyone who wants one, and the opportunity to move up to a better one if you work towards it.

We want to share the benefits of our return to economic growth by improving the lives of those in their later years. Among the changes included in Budget 2018 which will have a direct impact on older people is a further €5 increase in the state pension to come into effect in March, an increase in the free travel scheme, and a range of measures to keep people independent in their homes. The telephone allowance is being partially restored and the fuel allowance extended by another week.

We also believe in ensuring that all parts of the country have an equal opportunity to share in our economic growth and prosperity. For that reason, we created a Ministry for Rural and Community Development which is already delivering real results. Funding is being directed towards creating the conditions for sustainable rural development and providing local level supports to help sustain vibrant and sustainable communities across Ireland.

In this budget we have included a range of benefits for rural Ireland. This includes the retention of the special 9% VAT rate for the tourism, hospitality and leisure sectors, all the more important in the context of Brexit and vital for the economy in rural Ireland.

It also provides the resources to allow for the recruitment of an additional 800 Gardaí during 2018 to tackle crime, rural and urban. There are an additional 250 places for the Rural Social Scheme.

Funding for the Local Improvement Scheme is being maintained at €10 million and there is an increased focus on Rural Recreation projects, Town and Village Regeneration, and EU schemes such as LEADER and PEACE.

We have already taken a number of actions to mitigate some of the economic risks arising from Brexit.

But challenges arise from the fact that we still don’t know what the outcome of the Brexit negotiations will be.

Therefore we need robust and comprehensive plans across a range of scenarios to ensure we are ready for whatever ultimately emerges.

We are already experiencing currency fluctuations which are having an adverse impact on businesses particularly in sectors which are heavily exposed due to their levels of trade with the UK.

Our Enterprise Agencies are continuing to work directly with businesses offering advice and support to help them adapt to these challenges. So, we have provided resources in the Budget to double the number of Brexit-related Staff at State Agencies. The investment of an additional €3 million will enable the recruitment of a further 50 staff, doubling the additional Brexit related posts to 100 in 2018 and to ensure a joined-up response to Brexit. This is also evidence of my plan to double Ireland’s global footprint being implemented, something we should do even if there was no Brexit.

Importantly, the Budget provides for a €300 million Loan Scheme to give cheaper credit to SMEs and food businesses. This will provide affordable financing to Irish businesses that are currently impacted by Brexit or will be in the future. The new scheme is open to all trading SMEs and large firms employing fewer than 500. The scheme will see a sizeable reduction in interest rates charged for lending to about 4%. It will be delivered by the Strategic Banking Corporation of Ireland through commercial lenders, to get much needed low-cost working capital into Irish businesses.

We are also delivering targeted investments in agri-food, tourism and other sectors to help them respond to the challenge.

It is likely that our enterprise policy, Enterprise 2025, will need to be reoriented in certain areas to reflect changes in the external environment which are likely to be ongoing rather than transient. We are anticipating changes in the external environment, and we are swift to respond to new circumstances.

These changes are part of the reason why I recently announced the Government's intention to double the Team Ireland footprint overseas by 2025 with new and augmented diplomatic missions, as well as significantly increased resources for our investment, tourism, cultural and food agencies overseas.

The Global Footprint Initiative includes new and augmented diplomatic missions, and an increased agency presence overseas.

It will enable us to effectively promote our interests and values on the international stage, and to aid our efforts to diversify and grow trade, tourism and inward investment.

Budget 2018 includes provisions for relevant Departments and agencies to allow them to begin the work of expanding our global footprint.

This includes an increased allocation to the Department of Foreign Affairs and Trade of €23 million for next year, which includes a provision to raise staffing levels overseas and provision of €112m to the Department of Transport, Tourism and Sport to further enhance our tourism offering and to market Ireland abroad.

I expect that these increased allocations will start to take effect quickly. Minister Coveney has announced that Ireland will open new embassies in Chile, Colombia, Jordan, and new consulate offices in Vancouver and Mumbai. Other developments include the commitment to developing a new Ireland House in Tokyo.

In addition to these announcements, relevant Departments and agencies are currently preparing a comprehensive plan for consideration by Government by the end of the year, which will identify further opportunities to expand our global footprint in the short and medium terms.

This is more than simply an investment in embassies, it represents an investment in the agencies which work so hard to promote this country and whose work is so integral to our future. So there are increases for Bord Bia, Tourism Ireland, Culture Ireland, the Irish Film Board, the IDA, and Enterprise Ireland.

It is an investment in Ireland abroad, to ensure that we are secure at home.

It takes a long-term perspective to the challenges of this island, and offers a global solution to immediate dangers.

Foundation Stone for the Future
The problem with the values and policies of the far left is that they want to sacrifice the economy to pay for improvements in society, without understanding that it all too quickly becomes unsustainable. Venezuela is just the most recent example of this. A promising start that is ending in bankruptcy, poverty and oppression. They want to do everything, based on nothing. They want everything to be free and paid for by someone else. This isn’t sustainable. It can only fail. The same problem occurs in reverse with the values of the hard right.

We believe in the politics of the new centre, where we have a strong opportunity-orientated society underpinned by a strong competitive economy. The two form a virtuous circle, rather than being in conflict.

We are thinking not just about next year but also the next ten years, and beyond, an economy that creates opportunity, and a society that flourishes precisely because our economy is based on strong foundations.

This is the seventh budget since Fine Gael came to office.

Working first with Labour, and now with the Independent Alliance and Independent Ministers, we have made remarkable progress in bringing the country back from the brink and giving us hope and options for the future. This budget begins something new. It lays the foundation stone for our ambitious plans for the years ahead.
Having rebuilt the Republic we are now able to build something new, a Republic of Opportunity for all our citizens, free from the boom and bust cycles of the past.

One of the oldest Irish jokes is the story of the tourist who asks for directions and is told, ‘Well I wouldn’t have started from here’. That was true of where we stood in 2011, when Ministers Noonan and Howlin faced incredible challenges in rescuing our economy, and had to do so from a starting position neither would have chosen.

Things are different now in 2017. Having done the hard-work, and the Irish people having endured enormous sacrifice, we are now where we want to be. We are starting from a good position, we know where we want to go, and we know how to get there.
This budget is where we begin.

Last week we paid tribute in this house to one of my forbearers, Liam Cosgrave.

In his first budget as Taoiseach in 1973 Liam Cosgrave took pride in the fact that it was people-centred to reflect its greater values. By putting stability first, it was able to put people first.

This budget attempts to do the same. We honour his memory, in word and in actions. We honour his legacy by continuing his work for Ireland.

It is the only vision for our country that offers that long term vision.

Rainy Day Fund
In Budget 2018, the Government is establishing a Rainy Day Fund.

As a first step, we are allocating €1.5 billion from the Irish Strategic Investment Fund, and €500 million per annum from 2019 onwards.

This is a long-term project to build some protection for future macroeconomic shocks.

We will not decide to do this on our own, but rather after consultation with the Dáil and Seanad. We want your input and you will help shape our approach.

So, the Minister for Finance has published a consultation paper on the Fund and Government looks forward to the views of the Oireachtas on its operation.

Capital Investment
For Ireland to succeed, we need to think long-term and that means planning for an Ireland in 2040 which will be home to almost 6 million people.

So, Budget 2018 is prioritising investment in capital infrastructure.

We are investing in the future.

So, central to this is the new National Development Plan that the Government will approve before the end of the year.

The Ten Year Framework will also help ensure a phased approach with sequencing which avoids overheating or the development of imbalances in the economy as occurred in the past.

In doing so, we will ensure that investment in education and higher education, and in roads and public transport, is timed and targeted appropriately into the future. And the same is true for housing, healthcare, broadband, and investment in sport and culture.

This approach is essential to ensure that all parts of our country share in the recovery and our growing prosperity.

To achieve this, the Government has ring-fenced an additional €4.1 billion for allocation over the period to 2021 – on top of the existing Capital Plan and the extra €2.2 billion already committed to housing.

This will increase capital expenditure by more than 70% over the next four years to almost €7.8 billion by 2021. This will see public investment in Ireland moving from relatively low levels to among the highest in the EU.

We are confident about what we can achieve because it is grounded in recent experience.

I know that people are sceptical about ten year plans, but look at what we did in the last five years when we had little money.

Luas Cross City, Páirc Uí Chaoimh, the National Gallery extension, the Sports Capital Programme, the Greenways, the new National Children’s Hospital now under construction, Newlands Cross, the Gort-Tuam motorway, the N11, 50 primary care centres, and 200 new schools all over the country. Imagine what we can do in the next ten years now that we do have the money.

Sinn Féin
We on these benches will not take lessons in accounts or accountability from some parties in this chamber, least of all from Sinn Féin. This year’s Sinn Féin budget submission is called ‘On your side’. I like it as a title. It’s so good we actually used it ourselves in 2004 in our local elections campaign.

Six years ago Sinn Fein’s pre-budget submission was entitled ‘Route to Recovery’ and had the stirring subtitle ‘A Just Society’. That also rings a bell. I look forward to reading the Sinn Fein submission in a few years time, and its plans for building a Republic of Opportunity.

Looking back on what Sinn Fein has submitted over the last few years you feel like you are not reading so much about an alternative budget but about an alternative reality.

Sinn Fein had so little faith in the ability of the government to get things right that they claimed a few years ago, that ‘the budget looms over us like the end of world’.

They revelled in apocalyptic language about how bad things were – and how things would never get better if the government’s fiscal policies were pursued. They claimed there would be no recovery, the deficit would never be reduced, unemployment would never fall, and families would never see their finances improve.

The only solution they could offer was a war on wealth, higher corporation taxes, higher income taxes and a plethora of new levies and to tell the IMF and Europe to get lost.

Each year they confidently predicted that our approach was not working. Until they saw that it was.

Then they began saying that the effects were temporary. And now they have very little to say about the economy at all, except that they are ‘on your side’.

They condemn the Budget for including €387m of income tax reductions for working people and families. If Sinn Féin cannot support modest reductions in taxation in times of economic growth and fiscal surplus, what would they do to middle income families if there was a downturn? I think we all know. Tax them harder.

It might have been better if their economic policies had been on the people’s side during the worst years of the economic crisis.

They offer easy answers but no real solutions.

Making Work Pay

We believe in improving living standards for people who get up early in the morning, work late at night, work weekend and shift work, because we believe that work should pay. We make no apology for saying so. It is one of our objectives and part of our value system.

And because we believe that work should pay we want everyone, including those on middle incomes, to benefit also through pay incentives, tax reductions and cheaper access to public services.

In Budget 2017, we reduced USC.

In Budget 2018, we have taken further steps to reward work and attain a sustainable increase in living standards.

The threshold for payment of the higher rate of income tax is being increased, while the 2.5% and 5% USC rates are being reduced.

Self-employed people will also benefit from a further increase, of €200, in the earned income tax credit. Stay at home parents have their tax credit increased also.

The Government is also responding to the needs of young families. We have introduced paternity leave for new fathers, and are working to further improve provision for both parents including extending paid maternity leave for mothers of premature babies. That is funded in Budget 2018 too.

This year the Government also implemented a number of policies to expand access to childcare for working families, including the Universal Childcare Subsidy, open to all children aged 6 months to 3 years.

In Budget 2018, we are providing a further €20 million to further develop the free Pre-School programme to ensure a full two year service from September 2018 for all children.

We are also increasing the FIS by up to €10 per week for low income working families.

Free GP care has been introduced for children under 6. The cost of prescription medicines reduced in this budget – medical card or no medical card.

Dental benefits, like the scale and polish, are restored later this month as well as subsidised eye glasses and hearing aids.

A pay deal to restore the pay of public servants has been agreed and fully funded in this budget and the minimum wage increased again.

Improving the living standards of middle-Ireland people who work hard and contribute to our society and economy, those who get up early in the morning is not achieved through a single action or in a single budget – it’s about sustained progress, step by step; lower taxes, better pay, better conditions, more subsidised public services. This budget is another step.

The focus of this Budget is on building a sustainable and resilient economy. But this only has meaning and value when it has tangible benefits for our people by rewarding work, protecting the most vulnerable and creating opportunity.

I believe in this Budget our partnership government with the Independent Alliance and Independent Ministers and TDs has struck the correct balance between planning and preparing for an uncertain future as well as improving the quality of life for our citizens.

Our philosophy is simple. When we have it, we make it count.
We don’t squander it, and we don’t spend it for the sake of spending it.
We invest it in the future.
We spend it carefully because it is your money.

This Budget provides the foundation stone for us to build for the long-term. Individuals and families can plan for the future, confident in the knowledge that our prosperity will be shared and sustainable.

We have faith in the future because we have learned from the lessons of the past.

The budget reflects this government’s values and aspirations. Our partnership government of Fine Gael and Independents believes in making a difference to people’s lives, and we believe that with the right values and aspirations we can make a real difference.

We know where we want to go. Budget 2018 is another small, sustainable, steady step on the road.