Sinn Féin - On Your Side

Morgan - Disappointing Budget will make little impact

5 December, 2007


Sinn Féin spokesperson on the economy and public finance Arthur Morgan TD said "For months now the Minister has tried to reduce expectations in relation to the Budget. Even with expectations set so low this was a budget that promised little and delivered little."

"This budget is disappointing for ordinary workers struggling on low and medium incomes and all those expecting improvements in public services, particularly health and education. It is a minimalist budget.

"Increases in social welfare are too low to keep families faced with sharp increases in the cost of living out of poverty. Nor did the Minister do anything innovative in terms of encouraging people out of welfare and into work. What has been gained from the widening of the standard rate tax band, while welcome, will be quickly lost with cost of living increases. And the Minister reneged on commitments in the Programme for Government to expand medical card eligibility, a key priority for Sinn Féin. It was also very disappointing that they failed to tackle the childcare issue, particularly childcare infrastructure."

Deputy Morgan said:

"Since the summer, Minister for Finance Brian Cowen has been industriously beavering away to condition the public for a tight budget. He has been strenuously trying to dampen down expectations, created by his own party, with their unrealizable pre-election promises. Fianna Fáil, in advance of the election had promised 2,000 Extra Gardaí, 4,000 Extra teachers, 1,500 Extra hospital beds, 2,000 Extra consultants, tax cuts, PRSI cuts, affordable housing and much more. The deceit on which the election was won is clear for all to see, as tax cutting proposals which were never viable, have had to be abandoned in the face of a &euro1.75 billion shortfall in tax revenues.

"This budget will be disappointing for ordinary workers struggling on low and medium incomes and all those expecting improvements in public services, particularly health and education. It is a minimalist budget.

"Increases in social welfare are too low to keep families faced with sharp increases in the cost of living out of poverty. Nor did the Minister do anything innovative in terms of encouraging people out of welfare and into work. What has been gained from the widening of the standard rate tax band, while welcome, will be quickly lost with cost of living increases.

"Where is the commitment to a substantial social housing programme that would have ensured the end of social housing waiting list, and would have had the additional benefit of boosting the construction sector? Where are the long overdue steps towards the creation of a state pre-school system? The measures on childcare do not go nearly far enough to assist families unable to cope with childcare costs equal to a second mortgage. And the Minister reneged on commitments in the Programme for Government on medical card eligibility, a key demand for Sinn Féin.

In terms of public finances Deputy Morgan said:

"Sinn Féin was the only party which argued in the run up to the election that, with the slow down in economic growth, the Government could not afford to cut taxes and maintain, let alone improve, public services and provide essential infrastructure. Sinn Féin opposed proposals from the Government parties and others to introduce tax cuts, because these cuts were not viable.

"In the run up to this budget Sinn Féin argued that maintaining healthy public finances had to underpin the Government's approach to Budget 2008. While the Minister has announced a number of positive taxation measures as part of this budget these maintain the status quo - they do not represent a move towards a fairer or more progressive taxation system. Why has the Minister yet again failed to strengthen the limit on the use of tax reliefs by certain high income individuals introduced as part of the 2006 Finance Act? This should have been done in order to ensure that these tax reliefs are not exploited by some high income individuals to reduce their tax bill to such a level that they end up paying less tax than an ordinary worker. The Minister should have used this Budget to do this.

"Sinn Fein welcomes the fact that the Minister has increased tax credits to keep those on the minimum wage out of the tax net - but we remained concerned that the minimum wage is not meeting the 60% of the average industrial wage envisioned when it was introduced. I welcome the fact that the Minister has increased the standard rate income tax band. Sinn Féin has strongly argued that those on or below the average industrial wage must be kept within the standard rate tax band.

"I also welcome the fact that the Minister has sensibly decided not to proceed with the cut of 1% in the top rate of tax that his party had proposed in advance of the general election. This would have cost the exchequer &euro280.4 million and would have benefited those on higher incomes most as did the reduction from 42% to 41% in last year's budget. Reducing the standard rate tax band by 2% would have cost the exchequer &euro1.13 billion. This is clearly revenue that is needed to fund our public services."

Job creation

"I am concerned that the government completely ignored the expansion of low paid employment, something which has serious long term consequences for the tax take - both in terms of income tax revenue and revenue from spending taxes. Employment growth for 2007 shows a net 78,400 new jobs for the 12 months to the end of June but there was not a commensurate growth in income tax receipts as the vast majority were low paid.

"Government priorities must also include ensuring that attempts by some employers to drive down and depress wages in key sectors of the economy through the exploitation of migrant workers is prevented. Nothing in this budget - in terms of adjustments to tax credits and bands - will compensate for the loss of earnings that people across this state will experience if the downward pressure on pay and conditions as a consequnce of the failure to regulate for equal rights for agency workers is not addressed."

Social Welfare

"The Minister's increases in social welfare, particularly with regard to pensions, carers and lone parents are welcome, but in the main do not go far enough to tackle poverty in this state. The &euro12 increase in the main payments may be in line with inflation, but when you look at how low the existing payments are, you can see how little &euro12 will go to improving the life of somebody reliant on welfare. The universal nature of child benefit means increases there have the least effect where they are needed.

"Nor do the increases offer anything substantially different or innovative in terms of encouraging people out of welfare and into work. This was the main social welfare priority for Sinn Féin in our budget proposals. We called for the medical card scheme to be extended for five years for people returning to work, for Family Income Supplement payments to be increased substantially and automatically flagged to low income workers, and for wage disregard thresholds in relation to Job Seekers Allowance and Rent Allowance Supplement to be raised. Once again the Minister has failed to use the opportunity presented to him in the yearly budget to achieve something of note. Instead we are left, as usual, with a piecemeal approach to welfare, with incremental, paltry increases."

Economic growth

"The economy has come on leaps and bounds over the last two decades but it is leaking jobs. But the government has failed to use the successes of the last number of years to build for future competitiveness. We have seen a slide off in both the construction and manufacturing sectors and worse, we have seen parts of the country become economic blackspots. East Cork recently lost the proposed Amgen development and in Waterford, 470 jobs went in Waterford Crystal. In Galway yesterday we saw the loss of 500 jobs from Abbott. Recent CSO figures confirm Tralee is one of the state's worst unemployment black spots. There are 1,300 people out of work in the North Kerry town - that's an unemployment rate of 14.2 per cent. The government and its employment agencies have done little or nothing to bring replacement industries to the area. There hasn't been one job created by the IDA in North Kerry in the last 5 years.

"We need to be innovative, not traditional, to make sure we are developing the kind of economy we want for the future.

"Sinn Féin has consistently argued that ending the partition of our country will contribute to the building of a strong competitive economy. Much of the business community, North and South, is behind us in this demand. The border has only ever served to harm our ability to compete internationally, with duplicate government and public service structures; unnecessary administrative burden on those wishing to do business in both jurisdictions; and, of course, two currencies. We are competing with ourselves for economic investment.

"Ireland's physical infrastructure north and south, also remains a source of competitive disadvantage. Successive governments over the boom years to date have failed to introduce the infrastructure needed to build competitiveness. The government built a motorway that couldn't handle capacity around Dublin, then handed it over to private operators to profit from. We pay the highest rates for broadband which is the slowest in Europe. They came belatedly to R&D and have failed to invest sufficiently in it to redress that imbalance. In transport, energy, information and communication technology, Ireland's infrastructure lags well behind those of comparable countries in the OECD. I am pleased to see the Minister's commitment to improving infrastructure, but this must happen on time and in budget. We cannot have a repeat of the Port Tunnel - we have neither the time, nor the resources for any more of the Government's days-out with their friends in the construction sector." ENDS

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