Minister could not ‘do everything for everyone’ in Budget 2018

Landlords, pensioners and employers question Paschal Donohoe over budget measures

Finance Minister Pascal Donohoe TD speaks to Fiach Kelly of The Irish Times outside Leinster House following the delivery of his Budget 2018. Video: Bryan O'Brien

 

Minister for Finance Paschal Donohoe says he was not in a position “to do everything for everyone” in Budget 2018.

Mr Donohoe said it was not an “election budget” and that his aim was to introduce measures that brought about steady change and growth.

Delivering his first budget yesterday, Mr Donohoe said he would balance the books, provide tax relief for low- and middle-income workers and provide extra resources for welfare, education, housing and health.

He stressed that he would only increase spending by what the country could afford, and he kept the growth in public spending and the growth in expenditure announced yesterday at less than the rate of economic growth projected for next year.

All Government departments will see budget allocations increase, with significant rises for housing and health.

Answering questions from listeners on RTÉ’s Today with Sean O’Rourke show on Wednesday, the Minister told a woman who runs a group of childcare facilities that “there was a certain amount of money and I’m trying to allocate it to help as many people as possible.”

The woman had told him: “We are struggling to keep staff, we’re just not able to keep them, they’re moving to other sectors. Under this budget the most we could give staff was €1 per hour.”

Another listener criticised the decision not to increase the VAT level for the hospitality sector. He said that the industry is over heating and most hotels around the country are occupied.

However, Mr Donohoe maintained that outside Dublin the tourism sector is not growing at the same rate as Dublin. He was also concerned that Brexit would mean a reduction in short-haul visitors from the UK.

A private landlord complained to the Minister that people renting out a room were exempt from tax, while he had to pay €4,000 tax on rental income of €14,000 on an investment property he had bought from redundancy money, along with paying a mortgage.

The landlord asked why he could not write off the €100,000 loss he was going to make on the property through PAYE over the next ten years, or if he could transfer it to a pension fund.

Mr Donohoe said that if he allowed rental income not to be taxed he would end up with a smaller base from which to collect taxes.

Again he said he was not in a position to “do everything for everyone.”

Pensioners

A pensioner phoned in to ask about means tested fuel allowances. She explained that she and her husband had lost their home during the recession and would be renting for the rest of their lives, but this was not taken into consideration when they were being means tested.

While sympathetic, the Minister said there would always be people who are impacted and his hope was that the situation could change over time.

Another pensioner told how his wife was losing €35 per week on her pension because stamps she paid while in a part-time job when she was 17 in the 1960s were included in her assessment. She had also worked in the 1970s but had to stop when she got married because of the civil service marriage ban.

The Minister pointed out that it would cost hundreds of millions of euro to address this problem in a single move.

“We have to make choices with the money available,” he said.

However, he did say that it was unfair that women had to give up their jobs under the old civil service marriage barrier. “That was a bonkers law.

“The way those women were treated was wrong, we’re doing what we can to rectify that,” he said.

A listener who is on social welfare said that the Minister’s decision to defer any increases for six months was “mean spirited”. Mr Donohoe on Tuesday announced a welfare package costing almost €350 million, with a €5-a-week increase for most welfare payments.

A pensioner from Donegal made the same point and asked why civil servants and TDs will receive their pay increase in January, but social welfare recipients must wait until April.

A farmer also told the Minister that six per cent stamp duty on agricultural land was a “bombshell” to the farming community.

Eoghan Murphy: ‘We are making sure there are going to be affordable houses’. File photograph: Niall Carson/PA Wire
Eoghan Murphy: ‘We are making sure there are going to be affordable houses’. File photograph: Niall Carson/PA Wire

Construction industry labour shortages

Meanwhile, Minister for Housing Eoghan Murphy says he is not concerned about a possible labour shortage in the construction sector.

Mr Murphy said he had been in contact with the Construction Industry Federation and they had not told him “that there wouldn’t be enough people on sites.”

In May, the federation said the State was facing “an enormous challenge” and that number of new apprentices entering construction must more than double by 2020 or the State will need foreign competitors to satisfy market demand.

Speaking on Newstalk Breakfast, the Minister was adamant that the Government will meet its social housing targets saying, “Yes, those houses will be built.”

The biggest revenue-raising measure in yesterday’s budget and the one that drew the ire of the building lobby was a trebling of stamp duty on commercial property transactions from 2 per cent to 6 per cent, which is expected to net the exchequer nearly €400 million a year.

Mr Murphy said that the additional money meant the “repurposing of money” which would build more houses.

Extra money for “affordability schemes” would mean local authorities would free up land from land banks and hand it over to housing co-operatives who would then build affordable housing, he said.

This programme already works on a small scale and is going to be ramped up, he added.

Mr Murphy said that in 2015 fewer than 500 social houses were built. In 2016 that figure rose to 2,000. “The significant ramping up happened because the Government planned.

“We are meeting our commitments to social housing. We are making sure there are going to be affordable houses,” he said.

Almost 100,000 households remain on social housing waiting lists.