Seán Sherlock (Cork East, Labour) | Oireachtas source

I welcome the fact that time has been devoted today for statements on the summer economic statement. If I may make a request, I ask that at some stage time be provided in the finance committee or the budgetary control committee so we can have a more iterative process and a question and answer process to interrogate the points made heretofore on the macroeconomic piece of the economic statement and the microeconomic element.

If we take some of the points made on the universal social charge, there is a difference in emphasis between the parties. In its manifesto, my party made a commitment to abolish the universal social charge for the first €72,000 of an individual's income. A school of thought seems to be emerging here, and whether there is common ground to be found on the treatment of the universal social charge on a cross-party basis remains to be seen. As I said, we need to have a more iterative process in committee to discuss how we can find some common ground on this.

I wish to speak specifically on the summer economic statement as it relates to next year. I do not want to go to far beyond next year, given the political ferment we are in at present. I acknowledge the projections, but the net message of the summer economic statement is that approximately €300 million is to be made available for additional tax cuts and approximately €600 million is to be made available for additional expenditure in 2017.

The Irish Fiscal Advisory Council, IFAC, has described the sum as a contractional one. The ESRI, in its quarterly economic commentary for summer 2016, states that economic growth in GNP terms will be 4.8% in 2016 and 4.3% in 2017. The ESRI has reported an indicative slowdown in global trade and pointed to the uncertainty surrounding the outcome of the Brexit referendum as having an adverse impact on the trade sector of the Irish economy. The ESRI is pointing to "domestic sources of growth, investment and consumption [as] the main determinants of the increase expected in Irish economic activity."

We argued at the last election for a ratio of 2:1 between investment and tax reductions. This seems to be what is being outlined in the summer economic statement. However, one could argue for a better ratio in order to deliver on the indexation of welfare payments, smaller class sizes, transport infrastructure, health care and so on. Consider also capital investment for productive purposes, be they broadband, schools or roads. If the Government sets up a rainy day fund for economic downturns or externalities over which we have no control, the question arises as to whether we are being risk-averse. Should we consider investing in infrastructure to fund economic growth instead of simply leaving money on deposit? Also, the 2:1 ratio only applies after the rainy day fund has been created. We need a closer interrogation of what the fund is about and what it will mean. A more detailed analysis of the issues is required. If we understand the proposal of the rainy day fund correctly, it will commit €1 billion per annum between 2019 and 2021. When will proposals be tabled in the Dáil for the fund's creation?

On Tuesday, the Taoiseach told us that the total amount available to the Government over the next five years was an estimated cumulative of €11.3 billion. The space for 2017 has increased to approximately €1 billion, with €1.2 billion available in 2018. This is the supposed logic for bringing forward spending in 2017 for "infrastructure and social issues", to quote the Taoiseach from Tuesday. I do not want to spend too much time discussing the projections beyond 2017, but we welcome those relating to the increase in capital expenditure. We wonder whether we could be more ambitious in that regard with a view to expansionary economic activity.

Since my colleague has discussed the public sector pay elements and the Lansdowne Road agreement, I do not want to dwell too much on them, but we in the committee debated the 2016 Estimates yesterday and it is our view that, if the promise of a new budgetary architecture is to mean anything in terms of a truly collaborative approach to governance where the primacy of this House supersedes that of the Executive, there must be a better consultative process for budget 2017. If the House rises in July and returns in the autumn, the space for such a discussion is limited. We want to interrogate further whether there is common ground to be had between parties on budget 2017, particularly regarding the taxation on work side.

We feel that there is greater scope for more capital expenditure. Although we acknowledge the increases, there is a positive multiplier effect. The programme for Government includes clear commitments on regional economic growth and targets for the number of jobs that it seeks to create outside of the Dublin area. If one is realistic about that job creation, though, one needs an Atlantic corridor strategy that links the three main cities beyond Dublin, namely, Cork, Limerick and Galway. Issues of connectivity between the three must be considered, including capital expenditure on roads infrastructure, if the job creation target of 130,000 plus outside of Dublin is to be achieved during the lifetime of this Government.

We need to get away from the anachronistic policy provision whereby there is an increase in expenditure every year via a Revised Estimate presented to the House relating to, for instance, health. We are all of the view that, if a Department is allocated an amount of money for a year, justifying a Revised Estimate for same should be difficult if the people within the Department have already made spending projections. We go through this choreography and pageantry around Revised Estimates every year. If we are to examine performance and reform within the public sector, we must determine how to move away from the architecture of Revised Estimates. If we are considering budgetary arithmetic in a truly collaborative fashion, we should seek to ensure that Departments have enough money to do the jobs that they need to do. We must be a bit more lateral in our thinking.

The summer economic statement is a point-in-time assessment of where we stand now and speaks to the challenges ahead. We must devote more time in committee to delving into how the multi-annual expenditure ceilings will operate, how the publication of the updated public spending code will operate and what the establishment of the Irish Government Economic and Evaluation Service, IGEES, means to the allocation of public money in terms of greater levels of transparency and efficiency. Evidence-based decision making so as to ensure that we spend public money in ways that will be of maximum benefit to the people of Ireland is vital.

The summer economic statement makes reference to the increase in the minimum wage. It is proposed that the minimum wage be increased to €10.50 per hour over the next five years. I hope that we could have a further discussion about this proposal in committee. For example, how is the Low Pay Commission proposed to operate? The Labour Party has argued for a living wage and has clear proposals on how this can be achieved. To our minds, the sum of €10.50 after five years is not where we want to go, given that the House passed a motion on 1 June that supported the call for a programme of incremental increases in the national minimum wage until it was pegged at 60% of median earnings and for a living wage of €11.50 per hour to be adopted throughout the public sector. There was a clear statement by the House, agreed by all parties, that contradicts the summer economic statement. If we are in the paradigm of new politics, we must respect the fact that there was a clear motion that was the majority view.

I want to return to the question of the Low Pay Commission. The Minister, Deputy Donohoe, made a very specific reference to public service pay. He reminded the House that "the programme for Government contains a specific commitment to establish a public service pay commission to examine pay levels across the public service, including entry levels of pay." We welcome that proposal. We await the details of the establishment of the Low Pay Commission. It is fair to ask when the commission will be established. What will its exact remit be? How will it be constituted? Will it include members of the trade union movement? How is it proposed to deal with entry levels of pay? I echo the points made by Deputy Calleary earlier with regard to the statement made today by gardaí on restoration of pay for new entrants. It is important that we deal with this issue and find a mechanism through which a positive outcome can be achieved for new entrants.

I would welcome a further discussion on the local investment fund at the relevant line committee. We need a further interrogation of what this €200 million fund will deliver in 2017. It is not entirely clear how individual local authorities will compete for this remarkable pot of money.

I think we have to acknowledge the increases in capital expenditure. We would like to interrogate further with the line Ministers each of the points raised here today. Perhaps that can happen on a cross-party basis as part of an iterative process. We need to move beyond the tribes. If the paradigm shift in relation to how we do business in this House is to be meaningful, we must take a collaborative approach to reaching consensus on policy provisions.

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