BaileNuachtAithisc an Taoisigh

Speech by the Taoiseach Enda Kenny TD Budget 2017 Dáil Éireann, 12 October 2016

 

Check against delivery

A Cheann Comhairle,

Budget 2017 is the first Budget of this new Partnership Government.

This is a different type of Government, but it is one that is committed to combining all of our different talents to build a strong economy to deliver a fair society.

This Budget reflects the issues that are most important to our people and the future of our country. Firstly, it won’t jeopardise our recent economic progress by taking reckless risks. While our economy is recovering, that recovery has not been felt in every community or by every family. We have to ensure that the right decisions are taken so that the benefits of a strong economy and a fair society can be felt by everyone.

Secondly, the years ahead will be dominated by the upcoming negotiations on the withdrawal of the United Kingdom from the European Union and its impact on our economy and society.
The Government was prepared for that eventuality and now we must continue to take action to lessen the impact as much as we can.

Related to this is our absolute need to get Ireland working again. While we have made huge progress in creating new jobs there are still too many people out of work. Continuing to reduce unemployment with a special focus on regional and rural development is a top priority.

Thirdly, the Budget will continue to use the fruits of a recovering economy to make our people’s lives better. New funding and initiatives in health, education, policing, childcare and social welfare will make a positive impact on the daily lives of everyone living in Ireland, young and old.

Finally, one of the biggest economic and social problems is the continuing lack of available housing following on from the crash in the construction industry. This Budget provides significant funding to many of the measures outlined in the Government’s Action Plan for Housing.

The approach to preparing this budget has also been very different – more open, inclusive and transparent than ever before.
I want to commend Ministers Noonan and Donohoe for their work along with all Government Ministers in designing a package that helps to address many of the challenges we face.

In designing this Budget there has never been so much consultation and I want to commend all those who constructively engaged in that process.

This year we conducted the 2nd National Economic Dialogue, published some of the key budgetary inputs, including strategy papers on tax, and engaged more deeply and widely with others.

The Oireachtas has rightly become a much more significant participant, including through the work of the Committee for Budgetary Oversight established in July. I expect that the Committee will play a significant role in the years to come.

While the Budget is a significant milestone for this Government and this Oireachtas, it is only a step - an important step - in the ongoing journey of healing that we are taking as a people.

To make sure that we all get to that destination together we won’t contemplate any reckless risks that might derail us.


Protecting the Economy
In a week in which we have seen sharp volatility in foreign exchange rates, this budget needs to acknowledge the uncertain international environment in which Ireland finds itself.

As a consequence the Government’s commitment to the sound management of the public finances remains absolute.

Economic and social progress go hand-in-hand, but only a strong economy, supporting people at work, can pay for the services needed to create a fair society.

As a country we can continue to draw strength from the progress we have made.

Our economy is growing at a healthy rate, reflected in strong tax returns, increased domestic demand, growing consumer spending and new jobs.

We are expecting to grow at about 4.2% this year – well ahead of our EU partners.

The public deficit is set to be under 1 per cent this year and we plan to eliminate it altogether in 2018.

From a high of 120% in 2012, our debt-to-GDP ratio now stands at 79%, continuing to move closer to the goal of 45%.

It is true that GDP, deficit and debt figures mean little to the families who are struggling to cope with financial pressures but we need to avoid at all cost the cycles of boom and bust which have devastated our country and have split up families to the far corners of the world.

We need to plan for steady, reliable growth.

And we need to do this at a time of unprecedented international uncertainty.

We have seen a slowdown in world growth, increased geo-political risk and low inflation.

UK Decision to leave the European Union
However, the biggest source of uncertainty is the UK’s decision to leave the EU which will have wide and deep ramifications – globally and within Europe, but especially for this country.

This is the first budget since the decision was taken, and much work remains to be done, by us and by others, before the shape of things to come becomes clear.
We have seen much market volatility since the UK Prime Minister outlined her preference on when to trigger article 50.

While the Government is continuing to revise and implement its Brexit response plan in light of emerging positions, we are taking steps in this Budget to ensure that the country, its businesses and its people are better equipped to deal with what lies ahead.

Enterprise Ireland, the IDA and Bórd Bia will continue to work closely with our SMEs and other businesses to help them manage the many practical implications.

For small and first time Irish exporters, the UK will remain a natural first market with all the benefits of proximity, same language and similar business culture.

We are taking action by putting extra resources and up to 50 new staff into the enterprise agencies based in Dublin, the UK and other target world markets to support businesses to maintain sales, to develop new sales opportunities by diversifying markets and to attract overseas investment in response to Brexit.

The additional capital funding for the enterprise agencies delivers on the Government’s commitment to regional development through the 8 Regional Action Plans. This will involve targeted funding in support of the IDA Regional Property programme that will deliver 3 new advance factories this year and next year, and competitive regional funding calls through Enterprise Ireland and the Local Enterprise Offices.

The Government has been implementing a strategy to reduce overall reliance on the UK and to support companies expanding into new international markets. Over 40% of Enterprise Ireland client companies are now exporting to more than five countries, a clear indication of progress but more still needs to be done.

I intend to ensure Irish exporters continue to have the support to help them both deepen their presence in the UK and diversify globally.

The Government is aware of the need to adjust existing schemes and to introduce new schemes to help Irish businesses at a difficult and uncertain time. The Minister for Jobs, Enterprise and Innovation and the Minister for Finance are working to deliver on these new schemes related to risk sharing in the coming weeks.

To help farmers deal with the fallout of Brexit the Minister for Agriculture, Food and the Marine has announced a new loan fund of €150 million which will support highly flexible loans for up to six years, for amounts up to €150,000, at an interest rate of 2.95%. It will be available to livestock, tillage and horticulture farmers. These loans will enable farmers to improve the management of their cash flow and reduce the cost of their short term borrowings.

In a related measure to help farmers manage cash flow we are also introducing a step-out year from income averaging - allowing a farmer facing an exceptionally poor year to pay only the tax due on a current year basis with any deferred tax liability becoming payable over subsequent years.

When it comes to attracting new jobs and investment into Ireland our advantage of having a strong pool of highly skilled, multilingual workers in the only English-speaking country within the Eurozone, and soon the EU, will put Ireland on the shortlist for additional investment post Brexit.

Ireland consistently ranks as one for the best countries in the world for doing business. This ranking is testament to Ireland’s favourable business and regulatory climate.

We recognise that competition for new investment will be fierce and as such we must remain competitive and attractive for new business.

Reducing the high rates of personal income taxes has been identified as essential to make work pay for all workers and to attract home skilled emigrants.

Budget 2017 is the next step in a now three-year process of reducing income taxes, with a particular focus on alleviating the tax burden for low and middle-income earners.

The threshold for entry to USC has been increased from €10,036 to €13,000, with the result that 30% of income earners, over 748,000 individuals, are now exempt from USC.

The lowest two rates of USC have now been reduced in three successive Budgets.

Since January 1st we reduced the marginal tax rate on middle income workers to 49.5%, the first time since 2009 that this rate has fallen below 50%. This marginal rate will now fall again from January 2017 to 49%, as the 5.5% USC rate is being cut again to 5%.

The Programme for Government commits to the continued phasing out of the emergency USC tax in the lifetime of this Government in order to make work pay.

For the self-employed a new Earned Income Credit was introduced this year and is being enhanced in Budget 2017 to a total annual credit value of €950. This credit is estimated to be of benefit to approximately 150,000 self employed taxpayers across the country. In line with the Programme for Government we will finish the job of matching this credit with the PAYE credit by 2018.

As part of our goal to make Ireland more attractive to entrepreneurs and start-ups we are also reducing the capital gains tax rate down to 10% that will apply to the disposal in whole or in part of a business up to an overall limit of €1 million in chargeable gains. The relief will represent a simplified and upfront benefit for individuals who propose to sell their business and start new enterprise challenges.

We are also maintaining the Start Your Own Business relief up to end 2018, enhancing the Foreign Earnings Deduction relief and extending the Special Assignee Relief Programme to end 2020.

In continuing our strong ongoing support for the agri-food industry the Government is also introducing a series of new measures on VAT reform, the extension of farm restructuring relief and the scheme of accelerated capital allowances for investment in energy-efficient equipment.

The Government has also decided to maintain the special reduced VAT rate for the tourism sector in order to help a vital source of local jobs in the post-Brexit world.

Creating Jobs & Balanced Regional Development
All of these measures have one thing in common – they are designed to help protect jobs and to create jobs.

I know from talking to people up and down this country how much a job means, especially to those who have lost one. I know that people want to work.

They want to make that wider contribution to society, to develop themselves to their fullest potential.

They want the dignity that comes from working, and they want a secure future, for themselves and their families.

That is why I am particularly encouraged by the milestones we have recently passed.

Earlier this year there were more than 2 million people at work for the first time since 2009 – an increase of 56,200 over the same time last year.

Over 175,000 new jobs have been added to the economy since the launch of the first Action Plan for Jobs in early 2012.

Our target now is to add 200,000 more jobs to the economy by 2020, including 135,000 outside of Dublin.

Creating more jobs across Ireland’s cities, towns and villages is a key part of our plan for making Ireland’s economy stronger.

I have already mentioned that our eight regional action plans for jobs are being implemented and this Budget will provide the funds to continue to build out advance factories and fund regional competitive funds for domestic businesses.
In addition we are providing for a wider rural development package with additional resources for the roll out of the National Broadband Plan, boosting the Rural Development Programme by €100 million to take its 2017 budget to over €600 million.

Our plan for rural development also benefits our coastal communities with funding available to implement the Seafood Development Programme in addition to a new income tax credit for fishermen.

To help lower-income farmers we will be introducing improvements in the means-testing arrangements on Farm Assist and will also be expanding the Rural Social Scheme by 500 places.
Investing in Public Services
Rebuilding a strong and balanced economy is not an end in itself. A strong economy is meant to work for the families and people who depend on it.

The economic crash of recent years, the near collapse in the public finances, and subsequent international bailout of Ireland by the EU and the IMF took a heavy toll on new investment in public services.

Thanks to the sacrifices of the people and the careful management of the economy by the Government in recent years we are now in a more stable environment where we can plan for new investment in public services with confidence.

In our Programme for a Partnership Government, we committed to spending at least €6.75 billion more on public services by 2021 compared to 2016.

This increase will go towards targeted improvements with particular focus on health, education, disability, and childcare. We will oversee the recruitment of additional front-line service professionals such as doctors, nurses, Gardaí, teachers, and social workers.

The work is already underway.

Health
The growth in our economy has provided increased funding to our health service. The allocation to health in Budget 2017 is €900m more than this time last year. It also represents the highest ever level of health funding in the history of our country. Most importantly, it is testament to the priority placed by the government on the health and wellbeing of our people.

Quality care and improved services to patients when they need them will be the touchstone of this budget increase to our health service. Because with this increase in spending, comes huge responsibility. Better outcomes for patients, services protected and enhanced, support for the vulnerable and the sick when they need it.

The additional funding will allow for 1800 additional staff – nurses, doctors, healthcare professionals. It will also help overcrowding in Emergency Departments, improve waiting times for patients by allocating funding to the National Treatment Purchase Fund, provide a medical card to the 11,000 children who receive the Domiciliary Care Allowance, support mental health services and establish a “Healthy Ireland Fund”.

Homecare services are critical to allow older people to stay in their own homes for as long as possible. For this reason there is also a special effort to fund more services for our aging population to prevent unnecessary nights in hospitals and to provide the supports to allow people to remain in their own communities. The extra funding will support 950 additional Home Care Packages, additional Transitional Care Beds, the expansion of Community Intervention Teams, Additional Acute beds and increased funding for aids and appliances.

Funding has also been provided to increase the number of doctor training places, and to deliver on the 80 additional primary care centres around the country.

Childcare
This Government is determined to build on supports for parents in relation to childcare. Childcare needs differ in every home. Parents want more choice and more affordable options. The cost of childcare is on the minds of working parents - whether it’s worth going out to work or not. For parents who choose to stay at home and care for their children they too want to see some additional support.

The Homecarer’s tax credit is being increased by 10% to €1,100 from January 1st, and the new Affordable Childcare Scheme will start from September next year. The new scheme will be both a universal and targeted scheme ensuring that all children will get a fair start.

Access to quality and affordable childcare can be one of the highest hurdles confronting parents, particularly those returning to the workplace.

As we reflect on 100 years of independence, the opportunity for Ireland now that our economy is growing again is to make a conscious choice to invest in people, their wellbeing and their future. There is clear evidence that shows what happens early in life affects health and wellbeing in later life stages.

It is now 6 years since I established the Department of Children and Youth Affairs. It was one of just two Departments that I created in the last government.

We have come a long way – a referendum on children, a new Child and Family Agency. Minister Zappone has carried this progress and just last month introduced a second preschool year and two weeks paternity leave for new fathers. The extension of the Pre-School programme saves parents on average €4,000 per child and benefits up to 127,000 young children through early education and care.

This budget builds on the progress made to date. It is with the principles of equality of opportunity, enterprise and reward and hope in mind that I welcome the package of childcare measures.

Education
Minister Bruton’s key priority is to make Ireland’s Education and training system the best in Europe. Budget 2017 brings the plan a significant step forward.

The additional funding for the education sector will deliver an extra 2,400 teaching posts in schools – additional resource and guidance teachers and SNAs. This will cater for over 11,000 extra primary and post-primary students, and provide for extra resource teachers, and teachers involved in guidance provision.

We are also continuing the ambitious investment programme in school building and extension that will result in the capacity increase of an additional 20,000 school places next year.

Safer Communities
This Government supports the tireless work of An Garda Síochána in keeping our communities safe. Following on from the reopening of Templemore training college, we will continue the significant investment in An Garda Síochána. We will increase Garda numbers to 15,000 starting with the recruitment of 600 Gardaí this year, 800 Gardaí next year and up to 500 civilian staff by the end of 2017. I particularly welcome the €30 million to be injected to support An Garda Síochána in its ongoing emergency response to organised crime as well as burglaries and other operational priorities.

Housing
The Budget provides for a substantial package to deal with one of the biggest social and economic problems facing our country – a lack of available and affordable homes.

The residential construction sector has still not fully recovered from the devastating collapse which saw the number of new homes built plummet to all time lows.

The knock on effects have been felt by everyone looking for a new home, whether they be first time buyers, renters, or those who need social housing.

The only sustainable solution is to increase the supply of private and social housing. How we achieve this is set out in our Action Plan for Housing launched within the first 100 days of this Government.

Our plan aims to double the annual level of residential construction to 25,000 units and deliver nearly 50,000 new social homes by 2021.

To help deliver new private sector housing in high demand urban areas, we launched a new €200m Local Infrastructure Housing Activation Fund. Already demand is very high with new projects expected to break ground in early January.

First time buyers have never had more difficulty in buying their first home. This Government makes no apology in our belief that home ownership is a good thing and should be facilitated as long as it is a sustainable arrangement for any prospective home owner.

To help bridge the affordability gap for first time buyers we are introducing a new Help to Buy scheme. For those looking to buy second hand homes or to extend their existing home, the Government is extending the very successful Home Renovation Scheme for another year.

The number of available rental properties continues to be a real problem that is driving higher prices for rent. In response the Government is increasing the tax relief for landlords to encourage them to stay in the market and others to make available new units. We are also boosting the generous tax relief for those with spare rooms to rent under the Rent a Room scheme.

Future Work Programme of the Government

A Cheann Comhairle,

This is an ambitious Budget from an ambitious Government.

Despite the cynicism this Government is delivering for people and is protecting the progress made to date.

This Budget is a major step in delivering on our Programme for Government but there are many more steps to take to fulfil its promise.

As Leader of this Government I want to assure the House that this Government and its Ministers, whether Fine Gael or Independent, are working flat out to deliver on that promise.

I have ensured that there is a major programme of work in the months ahead that involves every Government Minister, Department and Agency to deliver on the Programme for Government.

The coming weeks will see a lot of activity to implement the Budget, the Action Plan for Housing and continued preparations for the Brexit negotiations.

We are also busy drafting a new Action Plan for Rural Development and a new Atlantic Economic Corridor Plan that will be launched in the coming weeks.

Before Christmas we will publish a new Pathways to Work Strategy that specifically targets new policies to help those in long term jobless households move back into the world of work. This is essential to break the cycle of intergenerational poverty that some families are trapped in.

I want to see the continued progress on the National Children’s Hospital, the National Maternity Hospital, and the review next year of the €42 billion capital development programme which will see an additional €5 billion provided over the period of the plan.

We will also continue to deliver on the taskforce for the North Inner City and apply learnings to other areas of the country under my personal stewardship and Kieran Mulvey on the ground.

This coming Saturday will see the first meeting of the recently established Citizen’s Assembly who will begin work, including consideration of the question of the 8th amendment.

And later in November the Government will consider the response to the publication of the report from the Expert Commission on Water Services and engage with the Oireachtas Committee.

The Government and the Oireachtas will be busy with an ambitious legislative programme that includes many issues of vital interest to our people.

Conclusion
A Cheann Comhairle,

This Budget marks the start of a new phase in Irish life, politics and government.

It shows that our Partnership Government is working and delivering.

We don’t have the luxury of playing politics with people’s lives.

We know that after all they have given, all they have endured, people now have the right and the expectation to look forward to a better and more hopeful future.

They want to be able to look at the government and see that all its members have a sense of where they and their families are at in their lives.

This budget is the first step. But it is an important step.

There will be no going back to the old boom and bust.

Only forward now and in Partnership.

And I commend this Partnership Budget to the house.

ENDS