Fianna Fáil Pre Budget Submission 2016 by Fianna Fáil Galway

Securing Growth and Fairness Pre-Budget Proposals 2016

OCTOBER 2015

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Table of Contents

EXECUTIVE SUMMARY

1. State of the economy

2. The Governmentâ&#x20AC;&#x2122;s track record

3. Standing up for mortgage customers

4. Reforming the tax system

5. Ending the scandal of Irish Water

6. Promoting an enterprise agenda

7. Tackling the national housing crisis

8. Rebuilding the health service

9. Protecting families and older people

10. Expanding childcare provisions

11. Investing in Education

12. Maximising the potential of the agri-food sector 30 13. Meeting our infrastructure needs

Appendix: Summary of measures

Executive Summary

The principles underpinning our budget proposals are:  Ireland must adhere rigidly to the fiscal rules we have signed up to and are incorporated in to national law. We propose a combined tax and expenditure package of €1,445m for 2015.  The USC should be reformed in a way that spreads the benefits of economic recovery.  Greater recognition of the ability to pay is needed in taxes and charges levied by the State.  Taxes on savings and capital tax should be reduced as resources allow.  Citizens are entitled to quality affordable accommodation. We are in the midst of a major housing crisis which demands a radical set of policy responses.  Childcare is placing a huge burden on family budgets. A targeted tax credit is needed to assist low to middle income households with this expense.  A multi-year rebuilding of the health service is required. The priority areas in year one should be hospital waiting lists, mental health services and home care supports.  Ireland’s enterprise policies need a radical shake up. Domestic entrepreneurs should be incentivised and given the same priority afforded to foreign direct investment.  Greater savings and efficiencies for the taxpayer through better public procurement and shared public services.  As well as defending our autonomy to set our own corporation tax rules, we need to improve our offering as a destination for mobile foreign direct investment.

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Achoimre

Tá ár dtograí buiséid bunaithe ar na prionsabail seo a leanas:

 Ní mór d’Éirinn cloí go docht leis na rialacha fioscacha a dtoilímid leo agus a bhfuil mar chuid den dlí náisiúnta. Molaimid comhphacáiste cánach agus caiteachais €1,445m le haghaidh 2015.  Ba chóir athchóiriú a dhéanamh ar an Muirear Sóisialta Uilíoch (MSU) sa chaoi is go scaiptear buntáistí an téarnaimh gheilleagraigh.  Tá géarghá ann níos mó aitheantais a thabhairt d’acmhainn an duine le híoc i gcás cánacha agus táillí a thobhaíonn an stát.  Ba chóir cánacha ar choigilteas agus ar cháin chaipitil a laghdú de réir na n-acmhainní a bheidh ar fáil.  Tá saoránaigh i dteideal tithíocht inacmhainne atá ar ardchaighdeán. Táimid i lár mór-ghéarchéim tithíochta ina n-éilítear freagairtí radacha beartais.  Tá cúram leanaí ag cur ualach trom ar bhuiséid teaghlach. Tá creidmheas cánach sonraithe de dhíth chun cúnamh a thabhairt do theaghlaigh atá ar mheánioncam a bhfuil an costas sin orthu.  Tá atógáil ilbhlianta den tseirbhís sláinte de dhíth. Ba chóir tús áite a thabhairt do liostaí feithimh sna hospidéil, do sheirbhísí meabhairshláinte agus do thacaíochtaí cúram baile sa chéad bhliain.  Tá athruithe móra i mbeartais fiontraíochta na hÉireann de dhíth. Ba chóir fiontraithe baile a dhreasú agus an tosaíocht chéanna a thabhairt dóibh agus a thugtar d’infheistíocht dhíreach eachtrach.  Breis coigiltis agus éifeachtúlachtaí le haghaidh an cháiníocóra trí thógáil i seilbh phoiblí níos fearr agus trí chomhsheirbhísí poiblí níos fearr.  Ina theannta le cosaint a dhéanamh ar ár n-uathriail um rialacha maidir le cáin chorparáide a leagan síos, ní mór dúinn ár nimtharrainteacht mar cheann scríbe d’infheistíocht dhíreach eachtrach shoghluaiste a fheabhsú. 

Executive summary Since January, hardly a day has gone by without a selective leak from government as to various pre-election giveaways that are in the offing. These have ranged from paid paternity leave, to income tax cuts, a “rates holiday” for small business, tax incentives for landlords and even a free ipad for every child over five. What the public actually want to see is action on the major issues of concern in their lives: the housing crisis, excessive mortgage interest rates, long-term mortgage arrears, the squeeze on household budgets and hospital waiting lists. People are not interested in hearing a draft election manifesto from two parties who have refused to listen to advice for four years and waited for a crisis to develop in most areas before reacting. Budget 2016 is being framed in the context of fevered speculation about potential election giveaways. This is unlikely to produce long-term strategic planning to deal with the many serious social issues that face the country. We believe now is not the time to take risks with the economy. Tax and expenditure measures for 2016 should be carefully constructed to ensure that the improvement in the public finances is not put in jeopardy. We also need to protect public services for those who need them most. Fianna Fáil believes there is a need to set out clear principles in relation to the type of society we want and the policies to bring that about. We are proposing a modest reduction in income tax for working people as the start of a multi-year programme of tax reform combined with a commitment to address the social problems the country faces. The package we are proposing for 2016 is affordable, economically sensible and socially just. The overall adjustment we are proposing is €1.445bn based on €557m of tax reductions, and €888m in targeted expenditure commitments. This is a split of 39% reduction in taxes and charges and 61% expenditure. Separately we are proposing a special interim dividend from NAMA to fund social housing needs subject to compliance with overall EU expenditure rules. Our key proposals are: Reducing the tax burden 

An increase in the range of income covered by the lower rates of USC by €3,500 and an increase the personal tax credit by €100 (€200 for married couples / civil partners). This combination will focus the greatest benefit from tax reductions on low to middle income earners. This would be worth €293 to most single earners, or €586 to a dual earning married / civil partner couple.



Implement a phased introduction of an Earned Income Tax Credit for the Selfemployed equal to the value of the PAYE tax credit, beginning with a credit of €500 in 2016.

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A 1% reduction in the rate of DIRT tax to 40%. 4

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A reduction in the Capital Gains Tax and Capital Acquisitions Tax rates to 32%.

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Marginal rate relief for pension contributions should be maintained. We are proposing a modest reduction in the maximum allowable contribution to pensions for tax relief purposes. We would reduce the ceiling from €115,000 to €95,000.

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A new levy on sugar sweetened drinks to tackle childhood obesity to raise €75m.

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Excise duty on tobacco should be increased by 75c as part of the drive to make Ireland smoke free by 2025.

Tackling the housing crisis 

Increase the rent ceiling by between 5 and 15% (average 10%) for rent supplement recipients in areas where pressure on rents is putting families at risk of homelessness.



An additional exchequer allocation of €150m for social housing to tackle emergency areas such as completion of unfinished estates, homelessness and refurbishment of vacant local authority units.

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There is €2.3bn in cash sitting in the Ireland Strategic Investment Fund. We are proposing an investment of €1bn in 2016 to build 6,500 social housing units which will be available to local authorities and voluntary housing partnerships on a long-term lease arrangement.

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A ring-fenced €200m special dividend from NAMA to fund housing provision in recognition of the slow progress to date in delivering NAMA’s targets on social housing subject to overall expenditure limit rules.

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Provide increased resources for the Housing Adaptation Grant for people with a disability, Housing Aid for Older Persons and Mobility Aid schemes.

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Implement a national strategy to tackle homelessness.

Investing in services for our citizens 

The re-establishment of the National Treatment Purchase Fund and additional cash to tackle hospital waiting lists.

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A new tax credit for childcare costs.

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A reduction of 1 point in the pupil teacher ratio at primary level and a reversal of the cuts to small rural schools.

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Prioritising of mental health and suicide prevention.

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Increased resource hours for special needs pupils.

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The recruitment of 500 additional Gardaí.

Supporting families and older people 

An end to water charges.

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An increase in the old age pension rates by €5 a week and child benefit by €5 a month.

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The Local Property Tax revaluation due for November 2016 should be scrapped.

Pro enterprise policies 

Incentivise entrepreneurs to set up new businesses by providing tapered relief from capital gains tax. A reduced rate of CGT of 15% should apply to entrepreneurs who subsequently sell their business.



Address the lack of credit which is holding back many businesses from expanding, through the introduction of tax relief for individuals making loan capital investments to SMEs.

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Extend PRSI benefits to the self-employed on a voluntary basis.

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As a matter of urgency require energy firms to implement measures to reduce energy costs for business and domestic users.

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Within the existing €1bn budget for job support, re-allocate resources to support progressive relief from Employer PRSI. This should be linked to growth in employee headcount.



Ensure enterprise policy tackles the disparity in employment opportunities between Dublin and areas outside the capital.



Reform the commercial rates structure to align it more closely to the economic reality facing businesses.

Capital expenditure 

In government Fianna Fáil would seek to accelerate the most jobs friendly aspects of the capital plan and achieve better regional balance. As resources allow in keeping with overall budget constraints, we would seek to expand capital investment to meet ongoing social infrastructure requirements.



Establish a target for 98% of all capital expenditure to be spent on goods and services provided by domestic Irish contractors.

State of the economy

While GDP levels have returned to those enjoyed in 2008, the actual composition of the Irish economy today is very different. We have seen a boom in exports to record levels helped by a very favourable international environment and a weak euro. The domestic elements of the economy are still below peak levels. In particular, both public and private investment has a long way to recover. Ireland remains vulnerable to a change in international factors. We have benefitted in particular from the weak euro, low interest rates, falling energy prices and the ECB’s quantitative easing programme. The reversal of any or all of these factors could hit Ireland particularly hard. The economic turmoil in China during the summer was a stark reminder of the unstable nature of the global economy. There is no room for complacency in relation to employment levels. Unemployment in Ireland has fallen in recent years but the broad jobless rate is 18% when account is taken of the official number of unemployed people, together with the number of people on activation schemes and part-time workers who would like to work full-time. The overall number of people in work is still 200,000 below peak levels and the employment rate of all persons aged 15-64 is 63% compared to the UK rate of 73%. Long-term unemployment remains a particular cause for concern. Average earnings have not fully recovered. This reflects a fall in the average hourly rate of pay and a reduction in the average number of hours worked per week. When this is combined with increases in personal taxation, the overall impact is that disposable income for the economy remains 10% below peak levels. Despite improving in recent years, the government debt / deficit situation is significantly worse than either the 1990s or 2000s. Assuming growth will continue at a healthy pace over the coming years, a budget surplus should be targeted, thus putting downward pressure on Ireland’s high debt level and preparing for the coming costs of an aging population. At the end of this year Ireland is likely to have a deficit of 2% or below and debt / GDP ratio of 100%. However we still have a massive stock of debt which will constrain public policy for many years. Now that we are set to be below the 3% deficit target, a new set of rules kick in: 

The structural deficit must be reduced by a minimum of 0.5% from the previous year outturn.



The debt / GDP ratio must be brought down by at least 1/20th of the difference between the current level and 60%.

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Expenditure cannot grow by more than the long term potential growth of the economy.

Fianna Fáil fully accepts these constraints as reflected in European and national law. We want to see an early return to a budget surplus, ideally by 2017 to strengthen Ireland’s long-term economic prospects. 7

The Government’s track record

While GDP figures are growing strongly, international factors such as the weak Euro, record low interest rates and falling energy prices have had a disproportionate impact an open economy such as Ireland. These may not last. According to economist Colm McCarthy the improvement in growth “is largely down to good luck, rather than good management. Ireland's main trading partners are not in the sluggish common currency area and the recent weakness of the euro has been a real blessing.” Government policies over the last four years have hit consumers with tax increases such as the abolition of the PRSI allowance and property and water charges. €1.8bn in social protection cuts have been introduced by Minister Joan Burton. Despite the Taoiseach telling Greece to follow Ireland’s example by staying away from tax increases, this government have actually introduced 45 separate tax increases, in addition to numerous stealth taxes. This government’s record in four key domestic issues, housing, healthcare, mortgages and water, has been abysmal. Their actions and inactions have been the key determinant of the outcomes. In relation to housing the government has implemented a succession of policies which favour investors over families, resulting in soaring rents and homelessness. Through a combination of indifference and bad policy choices it has managed to create a huge housing shortage, something that seemed unthinkable four years ago. The plight of mortgage holders has worsened year by year. This government ignored legislation brought forward by Fianna Fáil as far back as 2011 to ease the mortgage crisis. Long-term arrears have soared and limited action to tackle high variable rates has only been taken following sustained Dáil pressure from Fianna Fáil. The government have made blunder after blunder in relation to health services. The removal of discretionary medical cards was an act of unprecedented callousness. Universal Health Insurance has been put on the back burner. There has been a serious brain drain as consultants, nurses and midwives choose to work abroad where there are better working conditions. Waiting times have doubled and the number of patients being treated on trollies is unprecedented. Irish Water has been an unmitigated disaster. Despite massive set-up costs and millions spend on consultancy, the overall amount of investment in water infrastructure continues to be well below the levels needed. Failing the Eurostat test has defeated the very purpose of the establishment of Irish Water; and, as a result of the water conservation grant, this government is in the unique position of introducing a tax that actually costs rather than raises money. When it comes to domestic policy choices within its own control, the government have demonstrated why they do not deserve re-election. The irony of their election slogan of ‘stability versus chaos’ is not lost. 8

Standing up for mortgage customers

Fianna Fáil has led the campaign for fair treatment of mortgage holders over the last four years. We have consistently put forward practical proposals for both those in mortgage arrears and those suffering from high variable interest rates. Owner-occupier long-term arrears (>720 days) have increased for the past four years in a row. There are now 38,000 mortgages more than two years in arrears, with average arrears of €53,503. A total of 940 repossession orders were granted by the courts between January and June of this year, an increase of nearly 200% on equivalent 2014 figures. 616 were for primary residential homes and 284 were for buy-to-let properties. Our Family Home Mortgage Settlement Arrangement Bill 2014 would adapt the under-utilised infrastructure of the personal insolvency system to allow for a restructuring arrangement solely in respect of the family home. In particular, it would favour the use of solutions with proven success such as split mortgages. There are at least 300,000 households who are on standard variable rate mortgages. These families have benefited least from the current low interest rate environment in Europe. For a typical €200,000 mortgage, a standard variable rate customer will pay approximately €3,500 a year more in interest than a comparable borrower in Northern Ireland or other European countries. Fianna Fáil has repeatedly said this is totally unfair, but the government have refused to direct the banks to correct this anomaly. The banks’ response to the public outcry on the subject has been totally inadequate. Despite the fact that variable rates in Ireland are up to 2% higher than the euro area average, reductions have been minimal. Reduced fixed rate offers are not suitable for large numbers of customers. They would not be able to benefit from future rate reductions or lower rates from new market entrants. Mortgage holders who want to sell their home while on a fixed rate mortgage would have to pay a penalty for breaking the fixed term early. If you have a variable rate mortgage, you can overpay without penalty at any time. If you fix your interest rate, depending on the lender you may not be able to pay lump sums off your mortgage without a penalty. We have introduced a private members bill on the subject. The Central Bank (Variable Rate Mortgages) Bill 2015 is balanced between the commercial position of lenders and the right of consumers to be treated fairly. The Central Bank would be given responsibility for monitoring the level of competition in the mortgage market and the fairness of rates charged. It would be given a range of tools to influence the standard variable rates charged by banks where the evidence points to a clear market failure. This would act as a strong deterrent to discourage banks from charging excessive rates.

Reforming the Taxation system

While claiming not to raise tax rates, Fine Gael and Labour have made 45 separate increases in tax including 13 individual increases in tax on income. Budget 2015 skewed tax reductions towards higher earners. A minimum wage worker on €17,500 pays €174 less tax and USC this year while employee on the average wage of €36,000 will pay €406 less. By contrast an employee on €70K or more gets €746 more. When the Minister for Finance was raising taxes he decided to introduce flat rate increases. The abolition of the PRSI allowance took €264 from the pocket of a worker regardless of income. Water and property tax are also not related to ability to pay. Prior to Budget 2015 we outlined a series of six priority areas for tax reform      

Simplify the tax code Recognise the importance of ability to pay Reform the Universal Social Charge Increase tax credits Address the anomaly where the self-employed are taxed more harshly Increase the threshold for inheritance tax

We are again proposing a fairer and more progressive tax regime for 2016: Income tax & Universal Social Charge Fianna Fáil is committed to reforming income tax generally and the Universal Social Charge (USC) which was introduced as an emergency tax measure in 2011. The total income tax take in 2015 will be over one third higher than 2007, while other taxes have not yet recovered to peak levels. This demonstrates the extent to which correcting the public finances has fallen on employees. It is unrealistic to think that the USC can be abolished in the short term given that it generates over €4bn in revenue annually and represents a quarter of the income tax base. If it was agreed to abolish the USC it would have to happen over an extended period of time. One of the more controversial aspects of the Universal Social Charge is that the main 7% USC rate kicks in at a relatively low level of income. An employee on €17,576 pays the same marginal rate of USC as someone earning four times as much. This is totally unfair and must be changed in the short term. The government added to the already complicated nature of the tax in 2015 by creating an additional rate of USC. There are now four rates of USC for PAYE workers and five for the self-employed. Clearly there is a need for a multi-year reform and simplification of USC.

The first element of the income tax package we are proposing for 2016 is an increase in the personal tax credit of €100 for a single person (€200 for jointly assessed married / civil partner couples.) According to the ready reckoner produced by Revenue, the first year cost of this would be €152m with a subsequent full year cost of €208m. We propose to combine this with a substantial increase in the range of income covered by the lower USC bands. Currently the first €12,012 is subject to USC at 1.5%, with income between €12,012 and €17,576 at 3.5%. Income between €17,576 and €70,044 is subject to USC at 7%. We are proposing a €3,500 widening of the bands so that the first €15,512 is taxed at 1.5% with €15,512 to €21,076 at 3.5% and €21,076 to €70,044 at 7% at a cost of €399m in 2016 and €550m in a full year. The cost of these measures is broadly similar to the impact of a 2% reduction in the 7% rate (€528m in 2016 and €728m in a full year) which appears to be favoured by the government. The impact of our proposals is shown in the chart below:

PRSI

15,000 -

20,000 800

30,000 1,200

35,000 1,400

40,000 1,600

50,000 2,000

Total USC Income Tax 20% Income Tax 40% Tax credit Total income tax

225 3,000 3,400 -

390 4,000 3,400 600

1,052 6,000 3,400 2,600

1,402 6,760 480 3,400 3,840

1,752 6,760 2,480 3,400 5,840

2,452 6,760 6,480 3,400 9,840

Net income Change from 2015 % Increase in net income

14,775 60 0.4%

18,210 255 1.4%

25,148 293 1.2%

28,358 293 1.0%

30,808 293 0.9%

35,708 293 0.8%

75,000 3,000

100,000 4,000

4,252 6,760 16,480 3,400 19,840

6,252 6,760 26,480 3,400 29,840

47,908 293 0.6%

59,908 293 0.5%

www.revenue.ie/en/about/statistics/ready-reckoner.pdf In this budget we propose to reduce the earnings cap for pension contributions from €115,000 to €95,000 while maintaining marginal rate relief. We believe that this strikes a balance between the need to encourage employees to make provision for their future income needs without unduly depriving the State of income tax revenue. The yield from this is €37m.

Earned income tax credit for self-employed Insofar as possible, the tax system should treat people in an equitable manner. Selfemployed people lose under the current regime because, while they receive the personal tax credit, they cannot claim the PAYE allowance, both of which are currently worth €1,650 per annum. This is a significant sum of money. This has a particularly stark impact at lower levels of income. For example a selfemployed single person on an income of €15,000 pays almost 8 times as much tax and PRSI as an employee on the same income. There is a strong case for addressing the unfair treatment of self-employed taxpayers, particularly those with lower incomes. This should be done by means of an earned income tax credit as suggested by the Commission on Taxation. We propose introducing this at a rate of €500 in 2016 at a cost of €41m with the aim of equalising the treatment of the self-employed and PAYE workers within 3 years. According to Revenue the full cost of an earned income tax credit of €1,650 for selfemployed people would be €137m for “cases identified to be in receipt of Trading or Professional (Case I or Case II) income, and not currently in receipt of the PAYE credit. The estimate does not take into account the ability of the credit to be fully absorbed.” DIRT tax In delivering Budget 2014, Minister Noonan made a commitment to an Ireland that "plays fair" and always acts with integrity in the conduct of its international tax policy. However the same does appear to apply to domestic savers. The current government have increased the tax on deposit savings by a massive 14% with an additional 4% PRSI also applying. This is a punishing tax on people who have prudently saved money. The Department of Finance appears to believe engineering an environment of low returns on savings will prompt consumers to increase spending. However, this strategy severely penalises people who are putting money aside for expected future expenses including children’s education, medical costs and nursing home care. The increased DIRT rates take no account of people’s income level. Low income earners who have put aside some savings pay the same rate of DIRT tax as millionaires. Fianna Fáil will bring begin the reform of DIRT tax by reducing the rate to 40% in 2016 at a cost of €8m. Capital Gains Tax and Capital Acquisitions Tax rates The taxation rate applied to capital gains and gifts / inheritances has been substantially increased in recent years. This was done to preserve the yield but there is evidence that this comes at a price of suppressing economic activity and in some cases driving it overseas. We propose beginning the process of reforming capital taxes by reducing the rate of CGT and CAT by 1% in 2016 at a cost of €27m. 12

Inheritance tax Recent increases in property values mean that significantly more families are now being drawn in to the inheritance tax net. In many areas, a modest family home could no longer be passed from parent to child without triggering a large inheritance tax liability. This can often result in the forced sale of the property to pay the inheritance tax due. In effect inheritance tax penalises those who have prudently saved their already taxed income during their working life and want to pass it on to their children. Inheritance tax has been a bonanza for the government coffers. The number of people brought in to the inheritance tax net has increased by 34% since 2010 and the amount raised has more than doubled. This year the government expects to take in €400m in tax on gifts and inheritances. It is easy to see why they have been reluctant to ease the burden in how the tax is applied. It has proven to be the ultimate stealth tax. We accept it was appropriate for successive governments to reduce tax thresholds while property prices were dropping. However, prices across the country have risen sharply since the last change to thresholds in 2013. There is now an urgent need to review the manner in which Capital Acquisitions Tax applies. We propose to increase the current Category A (parent to child) threshold by €75,000 to €300,000 with pro rata increases in other categories at a cost of €80m. We intend that this would be further reviewed in Budget 2017. Local Property Tax Even if there is a slowing in the current rate of growth in property prices, it is likely that the November 2016 revaluation will see homeowners having to revise the basis for their property tax declaration by 30% or more. For some Dublin residents it could be over 50%. For most properties, the effect of moving up one valuation band is an extra €90 per year. Homeowners could see their home rise by three or four valuation bands adding up to €360 to their bill. The Government made considerable play about what it described as providing certainty on water charge bills but the potential impact on families from increased property tax is multiples of what they will pay for water. The same principle should apply in relation to the Local Property Tax. There has been enough delay in relation to clarification of plans for the Local Property Tax. Budget 2016 represents an opportunity to end this uncertainty by scrapping the forthcoming revaluation. The government should use the opportunity to also deal with legacy issues surrounding homes affected by pyrite which are currently liable for local property tax.

Ending the scandal of Irish Water

It has become all too clear that Irish Water has been a financial black hole. €540m has been squandered on water meters. €80m was spent on consultants as part of the €172m establishment cost of Irish Water. €45m is spent on administrative costs by Irish Water every year. At current payment rates Irish Water will leave the tax payer a total of €785m worse off this year than if it had never been set up. Given Irish Water’s precarious financial position it may struggle to borrow the money necessary to invest in the water infrastructure. The total amount available to upgrade the water network is likely to be less than the average €550m that was invested by the previous Fianna Fáil led government, despite the huge cost of setting up Irish Water. Irish Water remains seriously behind its revenue forecast while staff will now receive back paid bonuses despite government promises to the contrary. This jeopardises the entire financial model of Irish Water and undermines the whole basis for the government’s water charges regime. Interest payments on the money borrowed to pay for water meters and the cost of the water conservation grant further dilute the net revenue Irish Water generates. The accounting trick of taking water off the national balance sheet has backfired, with Irish Water failing the Eurostat test. The whole purpose for setting it up has now been defeated and not an extra cent will be invested in our water infrastructure. Irish Water calculated it should take in €271m from domestic billing in a full year of operation, meaning it should collect €66.8m in its first quarterly billing cycle of January, February and March – with bills sent out from April onwards. The money collected for the first three months stands at only €30.5m, or 46%. After substantial delays in stating how many homes had paid their bills, Irish Water finally revealed the abysmal rate of bill payments. After two months, some 57% of households had not paid their bills to date, dealing a serious blow to the long-term financial future of Irish Water. This has now reached 51%, but the numbers who have paid their second bill is not clear. Payment rates may actually have fallen in the second quarter. Fianna Fáil’s view is that it is time to stop water charges and abolish Irish Water. The botched implementation of the water charges regime by the government has shaken public trust in the tariff system, evident in the fact up to 57% of homes have not paid. Fianna Fáil would ensure there are no charges in the lifetime of the next government. We estimate the net loss of revenue from the abolition of water charges and the Water Conservation Grant would be €51m in 2016. In addition, a €7m voluntary redundancy and staff movement scheme will be established as part of our commitment to abolish Irish Water. The total cost would be €58m.

Promoting an enterprise agenda

Ireland is acknowledged as a world leader in attracting foreign direct investment. No country can match what we have achieved over many decades. 175,000 people are employed by foreign multinationals in Ireland and the sector rightly commands significant attention in political debate. By contrast we give far less prominence to the role of Irish entrepreneurs in the economy despite the enormous potential for risk takers with new ideas to lead Irelandâ&#x20AC;&#x2122;s recovery. There is no shortage of individuals with good ideas for products and services that people would be willing to purchase, but often the obstacles in their way prove too great. Setting up your own business is a daunting undertaking, negotiating a minefield of regulatory and financial hurdles. There are many factors that may hold back an entrepreneur. Lack of access to finance is an obvious one which may prevent a business from getting off the ground. This lack of finance is often associated with the perceived riskiness of new ventures. Banks may be unwilling to lend to entrepreneurs at reasonable rates, or even at all. To address this, the tax system can be a very important mechanism to give investors an increased return for the level of risk they have taken on. It opens up a range of new sources of funds for entrepreneurs and, combined with advances in technology, can facilitate funding which would not otherwise be available to firms. We firmly support the use of taxation-based incentives to both encourage entrepreneurs to take the risk of setting up a new venture and facilitate those who wish to act as investors, and we believe that such incentives can deliver good value to the taxpayer. There are a number of barriers to enterprise in the current taxation system: 1.

Income tax

As already stated we propose introducing an earned income tax credit for the selfemployed and proprietary directors at a rate of â&#x201A;Ź500 in 2016. 2.

Self-employed PRSI

PRSI is regarded as equivalent to an income tax by self-employed people due to the tenuous link between benefits derived and the amount paid. It operates as a significant barrier to people setting up their own business. The self-employed currently pay Class S PRSI at a rate of 4%. This entitles them to a reduced range of benefits when compared to PAYE workers. To be eligible for Jobseekers Assistance, a self-employed person must undergo a means test. This can be time consuming with waiting periods of up to eight months. Inaccurate media reports have led some people to believe that they are entitled to nothing because they have no automatic entitlement to Jobseekers Benefit. This has caused unnecessary confusion among the self-employed. Furthermore, self-employed people have no entitlement to an invalidity pension and occupational injuries benefits, which employees can avail of from contributions made 15

at the PRSI Class A rate. Currently, Class S PRSI contributions do not count towards social insurance contributions required for eligibility under schemes such as jobseeker’s benefit, illness benefit and invalidity pension. Extending social welfare protection to self-employed people achieves a measure of social equality. In addition, it reduces the risk for those entrepreneurs who wish to start up their own businesses by providing a safety net. To facilitate this, we propose to allow the self-employed to opt into PRSI Class A. They would pay an extra 4% PRSI under Class A, in addition to their existing Class S contribution. The same terms and conditions would then apply for the unemployed self-employed as they do for the unemployed PAYE employee. Supporting start-up enterprises There is a vibrant emerging start-up scene in Ireland with start-up weekends, bootcamps and incubators, particularly in the technology sector. Fianna Fáil wants to nurture and expand this activity to other high-potential enterprises. The energy and drive present in this sector has great potential to generate future economic growth. Our aim would be to open the start-up investment landscape to smaller investors, spread knowledge of and involvement in the technology start-up market more widely and begin to solidify Ireland’s position as a world leading start-up location. We propose the following enhancements of current tax incentives for enterprise together with the roll out of new incentives: 1.

Reform Capital Gains Tax relief for entrepreneurs

There is a globally competitive market for start-up enterprises. Currently relief from Capital Gains Tax for entrepreneurs works by offering relief to individuals who have recently paid Capital Gains Tax (CGT) and subsequently invest in a new business, before selling that new interest no earlier than three years after the investment date. The CGT due on this sale is reduced by the lower of either the CGT paid on the original disposal or by half of the CGT due on the new sale. If the second venture succeeds and the entrepreneur can make a successful exit, the absolute best case scenario is that their overall effective CGT rate across the two investments drops to 22%. This is excessively restrictive and the fact that the second company must be involved in an activity "not previously carried on" by the entrepreneur or an associate dilutes the incentive even further. We propose a more general relief from CGT for entrepreneurial investors regardless of whether they invested in a new business. This would create a clear distinction between enterprise and passive investment. It would involve a lower rate of 15% CGT rate applying for people who establish and subsequently sell their own business. This would be limited to relief on the first €10m of chargeable gains. 2.

Incentivise crowdfunding of SMEs

Crowdfunding of SME loans is a rapidly growing sector across the EU and US. Already a number of platforms are operating in Ireland. Given the weakening of 16

banks’ traditional role as a business lender and given the low deposit rates available for savers there is a natural synergy in an approach that links small-scale investors to SMEs in need of finance. It also leverages the wisdom of crowds, which are often very accurate predictors of outcomes when people’s own money is on the line. As with all investments there is risk, but experiences with crowdfunding to date have been largely positive and as investors can research and even visit a business looking for funding. They can get a feel for it and feel engaged with their investment choice. Nevertheless diversification is desirable. Fianna Fáil wants to make Ireland an exemplar of business innovation and growth. Currently the interest on crowdfunding loans is subject to income tax, USC and PRSI as unearned income. This compares to DIRT (and potentially PRSI) on the (low) interest earned if an investor left their money in the bank. To incentivise crowdfunding, we propose waiving the PRSI and USC on the interest on any such investment up to €20k. The interest earned would also be subject to tax at the standard rate of 20% rather than the investor’s marginal rate. Investors would be required to invest in a minimum of three loans to qualify for the tax incentive, in order to ensure they have achieved diversification. On the other side of the investment, for a SME to qualify it must meet the Revenue definition of 'a small company' (<50 staff; <€10m turnover). By offering such incentives we aim to expand this sector in Ireland and encourage more crowdfunding platforms to set up here. 3.

Provide progressive relief from Employers’ PRSI

When an entrepreneur makes their first hire, they are taking a huge risk. This is a vital moment in a company’s development with the entrepreneur being forced to take on board significant personal, financial and regulatory burdens. The state should seek to reduce the upfront financial burden of taking on first employees. We need a scheme that focuses on early stage companies and rewards growth by offering exemptions from and reductions in Employers’ PRSI relative to the number of staff employed or the company’s wage bill. For example, the first additional employee taken on should be exempt from Employers’ PRSI for a period of 2 years and the next 5 employees subject to a reduction of 50% on the first €50,000 of salary. 4.

Enhance the Employment and Investment Incentive scheme

The announcement that the Employment and Investment Incentive scheme is being extended to 2020 is on the face of it welcome. However, it had never actually been indicated that the scheme would expire at a particular date. By putting in place an end date the government may inadvertently create doubt about the attractiveness of the scheme. The current scheme could be made more attractive by allowing full tax relief when the investment is made in a start-up company would facilitate raising capital for SMEs.

Tackling the national housing crisis

Unfortunately Ireland now has what can only be described as an abnormal housing market due to this government’s inaction. Transactions are at historically low levels and there are a number of outstanding issues around supply, reluctance of people on tracker mortgages to move home, credit availability, mortgage arrears and negative equity. In addition, social housing waiting lists continue to soar. According to FOI material received by Fianna Fáil, over 130,000 households are now on waiting lists. This issue is made worse as there is massive pressure on the private rental sector. Ireland is falling well behind the estimated 25,000 housing units needed per year. The failure to accelerate the transfer of NAMA units has also exacerbated social housing waiting list. Only 10% of homes earmarked by NAMA for social housing have actually been transferred to local authorities. The state can no longer depend on out-sourcing social housing provision to the private rented sector. One of our greatest achievements historically as a country was the large scale provisions of housing to meet the needs of the community. This was done at times of even greater economic constraint than we face today. €150 million

Local Authority housing provision

There is a need for increased provision of social housing through the local authorities themselves. The recent Comptroller and Auditor General report shows the massive reduction in social housing spending under this government. We are proposing an additional €150m be allocated for social housing through the local authorities capital programme in 2016. We also recommend a new tenant purchase scheme be initiated. Any revenue raised by local councils from this source should be deployed in new house construction and renovation of vacant properties for re-letting. €22 million

Rent supplement

In many areas rents have risen considerably above market levels. This is putting many families in danger of losing their home. It is important that a balance is struck between ensuring that short term housing needs are met and the risk of the state assisting in driving up private rents. We are proposing an upward revision of the rent cap of between 5 and 15% in the areas of greatest pressure on the system. This increase will be subject to an ongoing rolling review every three months to gauge its impact on the rental market. If problems arise in other areas, the Department of Social Protection should be willing to intervene and review rent caps. €23 million

Housing grants

There are three vital grants schemes which assist people with housing adaption, the Housing Adaptation Grant for people with a disability, Housing Aid for Older Persons 18

and Mobility Aid schemes. An additional €23m is required to restore these to previous levels and to tackle a significant backlog in claims. NAMA special dividend According to evidence given to the Public Account Committee in October, NAMA is on track to make an overall profit of €1.75bn by the time it is wound up in 2018. It is already ahead of schedule to redeem its bonds with €20bn likely to have been repaid by the end of 2016. While the agency has had many successes to date, it has largely failed to deliver in relation to social housing. The public should not have to wait until 2018 or possibly later to see a social dividend from NAMA. Last year the government instructed ESB and Ervia to pay a combined special dividend of €250m to fund social housing. NAMA has the capacity to make an immediate cash contribution to the social housing needs of the State. We are proposing that a special interim dividend of €200m be paid in 2016 with the specific purpose of funding the completion of unfinished housing units and the improvement of the overall housing supply. We believe this should be supplemented by an additional €100m in dividends from the profitable commercial semi-state sector and specifically ring fenced to deal with housing issues subject to confirmation that this is within overall expenditure rules. Strategic Investment Fund Fianna Fáil is proposing that €1bn of the current €2.3bn in cash that the Ireland Strategic Investment Fund is sitting on be immediately allocated for the construction of social housing. Data provided in the Dáil indicates that the average cost of construction of social housing units is €152,000. This indicates that upwards of 6,500 units could be made available under this proposal. The Strategic Investment Fund operates to a commercial mandate in that it must achieve an appropriate return on investment. This condition can be fully met by local authorities entering into long term lease arrangements with the ISIF for the houses constructed. The Fund would be in a positon to earn a return of 4-5%, considerably greater than it is getting at the moment from sitting on a large amount of cash, while the local authorities would have an additional stock of housing to tackle chronic waiting lists provided to it at a fair price. From the State’s point of view, it would be maintaining a valuable asset rather than simply paying rent to private landlords while at the same time getting to grips with providing much needed homes to families across the country.

Rebuilding our health service

Fianna Fáil believes in a publicly funded, publicly delivered health care service that emphasises patient care above structures. While our health services did receive a funding increase in 2015, the ongoing deficit in our hospitals and primary care service point to a service that is still under-resourced. While we believe it is essential that the health service continues to look for the most effective way to use resources, there is also a clear need for additional funding to be provided to meet many urgent patient needs. In April 2015 Fianna Fáil published a comprehensive Health strategy: “Putting Patients and Services First”. Our intention is to implement this over a five year period in government. For Budget 2016 we are emphasising eight areas of immediate priority. Further initiatives outlined in our Health policy would be undertaken as resources allow. Tackling waiting lists and overcrowding

€150 million

Hospital waiting lists continue to soar. At the same time, despite a further increase in funding announced last April, the numbers on trolleys in acute hospitals is significantly ahead of the same period in 2014. A sustained effort is required to address this crisis and resources will be required for acute hospitals. In government in 2002, Fianna Fáil established the National Treatment Purchase Fund (NTPF) to source spare capacity from the private sector in order to reduce the number of public patients waiting for treatment in public hospitals. In 2010 it had a budget of €90m. We propose that this fund be re-activated as well as providing additional funding for general hospital budgets. €25 million

Reduce prescription charges

In Budget 2013, the government trebled the 50c prescription charge that in opposition they had pledged to abolish. However, in Budget 2014 they compounded this hypocrisy and added another €1 to the charge. This as Age Action have pointed out, has had a particular impact on older people in that ageing leads to a greater need for medication. Fianna Fáil believes that these charges should be phased out and we propose a €1 reduction from July 1 st 2016. We also believe it is important to progressively reduce the €25 monthly maximum charge for prescription medicines per household. €35 million

Invest in Mental Health Services

The country’s mental health services are at breaking point, suffering from a lack of frontline staff and starved of resources by the Government. Information released to Fianna Fáil by the HSE during the summer revealed that staffing for the Mental Health Division is 2,900 below what was recommended in A Vision for Change. This is unacceptable and must be rectified. We propose making a substantial start on that in 2016 by investing a further €35m. 20

Personal Assistant Hours for People with Disabilities

€15 million

Fianna Fáil believes Ireland has a duty to support people with disabilities so that they can enjoy fulfilling lives and careers. To allow this Personal Assistant Hours are enormously important. They are a crucial way to allow people with a disability to enjoy equal and independent lives as other citizens. We propose an increase of around 170,000 hours in 2016 at a cost of €15 million. €21 million

Home Care and Home Helps

Funding allocated to enable older people to remain at home provides not only the best value for money but also the most humane result for older people. We would propose an increase of 800 home care packages next year. We also need to increase the total home help hours to better meet demand and to give the recipients an allocation of hours per week to be meaningful for the recipient and the helper in terms of effectiveness. We propose an additional 1 million hours at a cost of €21m. €13 million

Dementia Supports

A major increase in numbers of people with dementia will occur in this country over the next quarter of a century. The numbers with the condition are likely to grow from less than 50,000 at present to more than 140,000. Additional supports must be put in place and a suite of measures involving intensive home care packages, a dementia adviser service and case workers should be considered. We would allocate and ringfence a total of €13m for these vital supports in 2016 with €10m for the purposes of intensive home care packages. Nursing Home Support Scheme (Fair Deal)

€27 million

The recently published government review of the Nursing Home Support Scheme estimates that in the region of 9,000 extra places will be required by the end of 2024. Fianna Fáil believes that the 2016 HSE Service Plan should provide for an immediate increase of 800 residential places. €10 million

Ambulance Service

While there have been many positive developments in our ambulance services over the past ten years, the 2014 HIQA review of pre-hospital care emergency services gave cause for great concern. While Fianna Fáil does not believe that additional resources are the exclusive solution to the shortcomings in the ambulance service, it is clear that there needs to be greater investment. Much of the fleet is ageing and needs or will need to be replaced. We would allocate an additional €10m in 2016 for this and other service improvements. €7 million

Recruitment of additional therapists

Waiting times for both assessments and services for essential therapies continue to be unacceptable. This covers a wide range of groups including children with speech and language needs, physical therapists for stroke victims and occupational therapists for people with life challenging conditions. The recruitment of another 200 therapy staff should commence in 2016 at a first year cost of €7m. 21

€5 million

Congregated Settings

It is taking far too long to implement the HSE’s report “Time to Move on from Congregated Settings – A Strategy for Community Inclusion” which proposes to move people from institutional settings to the community, over a seven year time frame. The HSE has "prioritised" the transition of just 150 people from congregated settings in 2015 with €1m allocated. We propose a fivefold increase in 2016. Supporting the health budget There are a number of practical and long overdue actions which can be undertaken to make savings within the health budget. Recoup overdue fees from private health insurers

€75 million

Publicly-funded hospitals are owed nearly €300m by health insurance companies arising from treatment provided to their subscribers according to the Comptroller and Auditor General (C&AG). The C&AG’s report says delays in collecting income from private health insurers means the exchequer is “effectively meeting the funding gap at hospitals until payment is made”. The C&AG sets out a clear mechanism to improve this urging the HSE to develop management reports which measure individual consultant’s compliance with the target times for sign off of insurance claims: “Such reports would allow the HSE and the hospitals to monitor performance more accurately and to take action, where required.” It also states “The HSE should agree clearly defined terms of payment and payment processes with the insurance companies. This will ensure that the claims being submitted by the hospitals are complete and can be processed efficiently by the insurance companies with a minimum of queries arising post submission. We estimate that a minimum of an additional €75m can be collection in 2016 from the huge amount of outstanding fees. Cutting the cost of prescription medicines

€50 million

The Irish Fiscal Advisory Council in a report in August of this year stated that targeted net savings in relation to drugs costs not have fully materialised. Separately in February the European Commission found Irish public spending on pharmaceuticals remained well above the EU average. A further commission study in July noted that €40m budgeted savings on patented medicines will not materialise this year. This was attributed to deadlock in a mid-term review of the State’s deal with the Irish Pharmaceutical Healthcare Association, which set supply terms for patented medicines between 2012 and October 2015 In some cases, the HSE appears to be paying more for individual drugs than private patients would pay over the counter. Certain items cost multiples of the price that applies in the UK or Northern Ireland. A large proportion of the reimbursement costs for generic medicines appear to go to the distribution chain. 22

Healthcare Enterprise Alliance, which is campaigning to have the law changed to facilitate interchangeability between the new wave of biological drugs and “biosimilar” products claims €129m in savings can be made in the State's drugs bill if medicine procurement processes are reformed. €30 million

Reduction in the use of agency staff

The HSE’s annual plan allocated €164.94m for agency staff in 2015. However €138.2m (82%) was spent by the end of May indicating that spending could top €330m this year. This is symptomatic of the mis-management of the health budget and the HSE is clearly burning through cash on agency staff to try to keep the health service ticking over. Examples highlighted at the Public Accounts Committee indicate that a full time consultant could be hired for a year for the same cost of hiring someone through an agency for 3 months. Hiring staff on an agency basis is not just expensive, it also undermines consistency in patient care. The escalation of the bill for agency staff must be reversed and the cost substantially reduced through direct hiring of staff as determined by patient need. This will both save money and improve the quality of care provided. We believe that a minimum of 10% can be knocked off the bill next year by more efficient planning, saving the HSE €30m. €75 million

Tax on sugar sweetened drinks

Sugar sweetened drinks contribute to obesity among children in particular. These drinks have both a high calorie content and very low, if any, nutritional value. France, Hungary and Finland all impose volumetric taxes on sugar sweetened drinks. A volumetric tax is imposed as a specific amount per litre of product, as opposed to an ad valorem rate imposed on the final retail price of product. As such, it is easier to administer and impose. It would also have a greater price impact on multipacks, large volume bottles and cheaper ‘own-brand’ products. Then yield at €14.36 per hectolitre would be €75m. It would add 6c to a 330ml can of premium cola and 6c to a 380 ml energy drink according to estimates prepared by the Department of Finance.

Protecting families and older people

Ireland can be justifiably proud of a social protection system which does a considerable amount to reduce income inequality. Fianna Fail is strongly committed to social inclusion and protecting the less well-off in our society. We must also help families with children. We believe that Budget 2016 must deliver on these fronts. We propose increases in a number of areas. €154 million

Increase in all pension age payments

Despite claims by the government that older people have been protected from cuts and tax increases, the reality is that they have been particularly hard hit by a range of measures which has had a huge impact on their household income. The fuel allowance has been cut, free electricity and gas units have been reduced, the telephone allowance has been scrapped and households have been hit with property tax and water charges. Many families are also hurting from cuts to the respite care grant. On top of these cuts a range of new stealth taxes have hit older people making it hard for them to get by from week to week. It is seven years since social welfare pensions were increased. We propose a €5 increase in the weekly rate of all pension age payments. These costs also include proportionate increases for qualified adults, where applicable. €72 million

Increase in Child Benefit

To support families with children we propose a €5 increase in the monthly rate of child benefit from €135 to €140. This is an essential support for many families that are struggling to make ends meet. It is also significant in that it is paid to the mother and it is especially important for mothers in the home. Increase the Respite Care Grant to €1,700

€30 million

Carers play an essential role in society, but their work receives minimal recognition. Every euro invested by the State in people in caring roles is returned four fold in the services received. The cut to the Respite Care Grant was one of the cruellest moves by the current government. It is a lifeline for over 77,000 families who as a result of the care they provide, save the state four billion euro each year. Fianna Fáil commits to restoring this grant to €1,700 per annum at a cost of €30m according to the Department of Social Protection. €33 million

One Parent Supports

Fianna Fáil believes that it is time to support one parent families, not punish them. As a first step on this road we would increase the maximum child age of the oneparent family payment (OFP) scheme from its current threshold of seven years to fourteen. The government’s changes were a direct attack on poorer mothers and on the welfare of children as 98% of those on the one-parent family payment are women. They were also introduced without any assessment of their social impact.

10.

Expanding Childcare provision

The current costs of childcare pose an unbearable burden on families. Across the European Union, childcare costs on average 12% of a family's monthly income, while in Ireland it accounts for 35%. For many families pre-school care can work out more expensive than their mortgage. These costs are disproportionately impacting on working mothers, forcing many to reduce their working hours to limit their childcare bills. This has a knock-on effect for their pay and career progression. It is reflected in the low labour market participation rates for mothers with pre-school aged children. Fianna Fáil believes that prioritising investment in early childhood care and education will yield a significant long run benefit for Irish society. Our proposed investment in childcare supports serves a multi-dimensional function, ensuring the well-being and personal development of children from an early age as well as encouraging equal labour force participation of men and women and reducing the cost of childcare for working families. In April 2015 Fianna Fáil published its childcare document “Accessible, flexible, affordable childcare in Ireland” which serves as the blueprint to guide our childcare initiatives over the next five years. Childcare Tax Credit €90 million Fianna Fáil proposes the introduction a progressive childcare tax credit (‘Childcare Support Credit’) for working parents, which aims to cover 20 to 40% of a family’s costs of childcare that is undertaken with a registered childcare provider. The amount of the credit received will depend on the primary carer’s income and will be up to a ceiling limit of €5,000. Under this scheme, a parent earning up to €40,000 will be eligible to receive 40% of their childcare costs via a tax credit, parents earning between €40,000 and €50,000 per annum would be eligible for 30% support while parents earning between €50,000 and €60,000 would be eligible for 20% support. For a person not paying enough tax to fully utilise the tax credit we would provide a cash subsidy so they receive the full benefit. Anyone working more than 25 hours per week and paying for childcare with a registered provider would be eligible to claim the tax credit. This does not mean than childcare has to be undertaken in a formal (crèche) setting, childcare undertaken by a childminder or relative is also eligible once they go through a simple registration to be established and operated by Tusla. We estimate that 66,500 families would benefit in the first year at a cost of €90m. The average benefit would be €1,384 per annum.

Access Supports for Children with SEN in ECCE

€10 million

At present, children with special educational needs face a huge challenge in participating in pre-school education. Mainstream early childhood services do not have appropriate funding or supports to provide equality for children with special needs. Fianna Fáil proposes a Special Education Needs Support Fund for ECCE providers to enable early childhood services to provide fully inclusive opportunities for all children. This will assist providers in providing inclusive ECCE for children with SEN, giving them adequately resources to support children to access both longer periods of pre-school education (maximum 2 years) and to access for Special Needs Assistant supports. Expansion of Community Childcare Subvention Scheme

€10 million

Fianna Fáil believe that increased investment in early education is required to overcome the skills gap between the most deprived and the most advantaged children before they start school. We propose to increase the number of quality preschool places for children from disadvantaged families. To accelerate the accessibility of childcare for low-income families, we also propose that participants on the CCS scheme should be able to take up care places in private provider facilities which have a much wider geographic coverage than community providers. We propose investment be put in place to expand the current programme by 22%, covering an additional 5,500 children from low-income families. Increased Capitation Rates for ECCE Providers

€12 million

Service providers are struggling to cover the costs of delivering high quality early childhood education, putting in doubt the sector’s future sustainability. The governance, funding and regulation responsibilities of managing an early childhood service in Ireland have changed dramatically over the past ten years, which have not been matched with increased investment. Fianna Fáil supports a 4% increase in the capitation grant paid to providers of the ECCE year, aligning funding to the real cost of operating a quality childcare service (cost €7m). In conjunction with this, we believe that an additional funding stream should be made available to providers, conditional on continuing to improve quality of delivery. We support an increase in the higher capitation rate (currently €73) by 6% to incentivise providers to increase the level of qualifications and training among their staff (cost €5m).

11.

Investing more in Education

Our schools, colleges and universities have a sustained record of delivering for Irish society. Ireland consistently rates as one of the most productive and competitive economies in the world, the direct result of an education system which has produced enormous benefits for our country. Fianna Fáil is proud of its role in the development of education and has been to the forefront in the dramatic expansion at every level of the education system. Our intention is to continue this proud tradition of investing in schools and universities. We have a number of key initiatives to guide future investment and development of our education system. Reduction in primary pupil teacher ratio to 27:1

€4 million

The issue of overcrowded classes at primary level must be addressed. As a first step, Fianna Fáil proposes a reduction in the pupil-teacher ratio at primary level from 28:1 to 27:1 with effect from 2016/17. According to a parliamentary reply “each one point adjustment to the current 28:1 schedule at primary level is estimated to cost of the order of 250 posts”. This equates to €15m in a full year or an average of €60,000 per post. As the appointments would be in place from September 2016 the cost next year would be in the order of €4m initially. We are committed to reducing the pupil teacher ratio to 25:1 as resources allow. Restoring pre-Budget 2012 staffing ratio

€8 million

As part of the Budget 2012 decisions, the number of pupils required to gain and retain a classroom teaching post in small primary schools was gradually increased between September 2012 and September 2014. According to a parliamentary reply “The cumulative savings achieved to date from the 2012 small schools budget measure are of the order of €23m.” This would represent an increase of approximately 400 posts. The implementation of these cuts has massively impacted on the viability of small rural schools. We would reverse this with the recruitment 400 additional teachers in September 2016 at a first year cost of €8m. Increasing capitation funding for primary schools

€19 million

At present primary school parents are being expected to make up the funding shortfall, regardless of whether they can afford a voluntary contribution or not. The bottom line is that the government does not adequately fund primary schools to allow them to function properly. According to a parliamentary reply each 1% increase in the capitation fee for primary schools costs €1.9m. For Budget 2016, we are proposing a 10% increase in capitation funding for primary schools, at a cost of €19m, payable in full in September 2016 as the initial part of a multi-year improvement in funding for primary schools. 27

€16 million

Increase in resource teaching hours

The National Council for Special Education (NCSE) has indicated that there will be 6,454 resource teacher posts to schools for September 2015. While this represents an increase on the level which applied in 2014, it is still below the level which applied in 2012. According to the Department of Education the average annual cost of recruiting an additional resource teacher is €73,339 in a full year. Increasing the number of resource teachers by 10% (645 posts) from September 2016 would cost €16m (€24,200 per post). The full year cost of this would be €47m. €4 million

School Leadership

The current situation with regards to leadership in schools is unsustainable. Due to cutbacks, principals have very little time to fulfil their administration responsibilities and practically zero time to engage in future strategic planning. Under current departmental arrangements a substitute teacher can be employed by a school to facilitate administrative functions to be undertaken by the teaching principal with the maximum number of days ranging between 14 and 22 annually depending on the size of the school. Improving these arrangements so as to enable teaching principals to have one release day per week would cost of the order of €10m per annum according to the Department of Education, equivalent to €4m from September 2016. Restoring guidance counselling to all schools

€5 million

Since the drastic 2012 decision to remove funding for guidance counselling from schools, there has been an estimated 51% reduction in one-on-one counselling supports in secondary schools. The reduction has been even greater in disadvantaged areas. The net reduction in guidance provision as a consequence of this budget measure was of the order of 500 posts. Costings from the Department of Education indicate that “the annual budget saving from this measure is over €30m”, an average of €60,000 per post. The budget measure that required schools to manage the provision of guidance from within their standard staffing allocation was “the equivalent of a 0.6 change in the staffing schedule”. The comprehensive ESRI Leaving School in Ireland Report (2014) has shown that the removal of guidance counsellors disproportionately affects the prospects of disadvantaged students. We believe that there has to be a gradual reinstatement of ex quota guidance provision and propose, as a start, that half of the number of posts lost would be restored from September 2016, costing €15m in a full year or €5m in 2016. €7 million

Increasing Student Assistance Fund

The objective of the Student Assistance Fund is to assist students in a sensitive and compassionate manner who might otherwise, because of financial reasons, suffer 28

severe hardship or be unable to continue their third-level studies. The average grant under this fund has fallen from €650 in 2009 / 10 to €550 in 2013/14, the most recent year for which detailed figures are available. In addition the Fund for Students with Disabilities provides grants towards the provision of services, purchase of equipment and provision of academic supports for students with disabilities attending full time courses in Third Level Institutions and Post Leaving Certificate centres. The average grant available has fallen from €2,247 in 2010 / 11 to €1,028 this year. According to the Department of Education the combined total funding for these funds amounted to €19.9m in 2014/15. We propose an overall increase in the funding for the schemes of one third in 2015/16 at a cost of €7m. This will allow more people to benefit from the schemes as well as increasing the average annual grant. Restoring Postgraduate Maintenance Grants

€16 million

A decision in Budget 2012 has meant that new students entering postgraduate courses from the 2012/13 academic year onwards are not entitled to maintenance payments under the Student Grant Scheme, although they may qualify in some circumstances for limited fee support. The removal of grants for postgraduate education in 2012 was inconsistent with the government’s stated policy that it was building a high skill, ‘smart’ economy. With the cost of paying for a postgraduate course being prohibitive without any financial assistance – especially for students from disadvantaged backgrounds – the removal of grants seems to have had a substantial negative effect on participation in postgraduate education. Fianna Fáil is committed to re-introducing postgraduate maintenance grants and we propose lowering income thresholds for postgraduate maintenance support to bring them in line with those for undergraduate students. According to the Department of Education “If the Budget 2012 decision was reversed and the income thresholds increased to bring them into line with those for undergraduate students, then the potential cost is estimated to be in the region of €47m. This costing assumes that the number of post-graduate grant holders will increase to the level prior to the introduction of this Budget measure.” The grant is payable in 3 stages throughout the academic year. The cost of restoration from September 2016 would be €16m.

12.

Maximising the potential of the Agri-food sector

Fianna Fáil is committed to protecting and developing agriculture for the 140,000 farming families in Ireland as the main driver of the rural economy. Farm Taxation measures Fianna Fáil will introduce a number of a number of reforms to how farm incomes are taxed subject to confirmation from Revenue that the costs are not excessive and the measures proposed can be implemented in an efficient manner. Simplification of tax returns We support amending the tax code so that farmers whose gross income from farm payments and sales is less than €30,000 would have the option of making a detailed tax return, or choosing a system of based on average gross margin on declared income for different types of farming as assessed by Teagasc each year. This has the potential to considerably reduce the burden of paper work and red-tape that is imposed on small farmers without any consequent loss of revenue to the State. Stamp duty relief for young farmers Stamp duty relief applies to farm transfers of land and buildings to young trained farmers. This relief is a vital mechanism to incentivise the transfer of farms from an early age, without placing a hefty tax burden on young farmers. Without this relief, farms would only be transferred through inheritance in most cases. CAP regulations define a young farmer as no more than 40 years of age. We believe that the current stamp duty exemption threshold for young farmers should be extended to 40 years of age to bring it in line with the current payments age structure. We also propose that stamp duty relief for young trained farmers be prolonged beyond December 2015 (current expiry date); due to the salient role it plays in land transfers and succession. Exempting forestry income from the high earners restriction When a forestry plantation matures, typically once every 35-40 years, owners of even a small forest will be deemed as a high income earner. Such owners would be liable to tax on profits accruing after the period when the crop was growing. For most forest growers, the final harvest is a once off event. Exempting forestry income from the high earners rule would be a significant attraction to invest in forestry. Allowing investment in co-op shares to be exempt from income tax Co-operatives are an extension of a farmers’ business. When a farmer invests in their co-operative, they are essentially making an investment in their own future livelihood. We believe that when a co-op makes a compulsory call on its members to purchase shares, this income should not be taxed up front. Instead, the tax should fall due on sale of the shares or the conversion of the co-op into any other type of business structure. This is similar to the way a contribution to a pension fund is exempt at the time it is made and taxed when it is drawn down as income subsequently. 30

Strengthening schemes to sustain rural communities €21 million

LEADER

The LEADER programme supports small rural business, providing supports across a wide range of areas such as childcare, rural recreation and youth development. These programmes form a central part of the fabric of rural communities across Ireland providing core services that would otherwise be unavailable to these areas. Under this government, LEADER rural development funding has seen a massive cut of over 40%. Fianna Fáil is committed to restoring LEADER funding for this vital rural development facility. We propose allocating an additional €21m to LEADER funding in 2016. €2 million

Rural Social Scheme

The rural social scheme is vitally important in sustaining low income farmers. In government, Fianna Fáil would double rural social scheme farmer numbers from 2,500 to 5,000, which would cost the exchequer an additional €10m over the medium term allowing for the fact that recipients are currently in receipt of certain social protection payments. In 2016, we are proposing that €2m be allocated to commence rolling out an enhanced scheme. €10 million

Farm Assist

Comparing Farm Assist with Family Income Supplement, farmers are being treated more severely. Means-testing rules should be adjusted so that irrespective of the source of farm income the first €3,000 is disregarded and the balance is means tested at 50%. This will encourage more enterprise and increased production from small farmers. This would cost an estimated €10m. €7 million

Beef genomics

The suckler cow sector has been historically subject to low profit margins and requires additional support to keep farmers in the industry. Increasing the genomics payment to €200 per cow in 2016 will help to bolster beef farmers’ income in the short term while an enhanced framework is put in place to protect a sustainable beef industry. This special payment will be drawn from the rural development programme with an additional 2016 top up of €7m to the scheme.

13.

Meeting our Infrastructure needs

The launch of the Capital Plan was a last minute attempt by the Government to play catch up after presiding over years of under investment in domestic infrastructure. Capital plans are normally five years in duration, but the addition of a sixth year, taking it out to well after the second next election is purely to create the appearance of a substantially increased allocation. According to the IMD’s World Competitiveness yearbook 2015 Ireland dropped 4 places to 24th in 2015. Competitively priced world class infrastructure such as telecoms, energy, transport, broadband and water is vital to support national competitiveness and employment. While there appears to have been a multitude of reasons why the Web Summit moved to Lisbon the quality of infrastructure available is undoubtedly one. IBEC estimate 90% to 95% of capital expenditure is now simply on maintenance. The Government have proceeded with the sale of Bord Gais and Aer Lingus, massively undervaluing them while projects such as the new Childrens’ Hospital which were to be funded from the sale of assets have stalled. The Comptroller & Auditor General has highlighted significant waste in public projects. Irish Water, the centre piece of the Government’s investment strategy for water and waste facilities, has been disastrously managed. €9bn a year was invested in capital projects in 2008. The Capital Plan only returns capital expenditure to half than level by 2019. The average annual increase in public investment will be less than €250m. Just €1.5bn is allocated for new road projects over six years, while not a single ticket will be sold for Metro North for at least 11 years. DART underground which would have provided for far more effective integration of the public transport network has been scrapped. According to the Capital Plan the government is to spend €275m on an “initial stimulus” for the National Broadband Plan, just over half the initially stated plan to spend up to €510m on the project. In government Fianna Fáil would seek to accelerate the most jobs friendly aspects of the capital plan and seek to achieve better regional balance. As resources allow, in keeping with overall budget constraints we would seek to expand capital investment to meet on going social infrastructure requirements. We would also establish a target for 98% of all capital expenditure to be spent on goods and services provided by domestic Irish contractors. We would establish a system to communicate the status of all projects under the capital plan and the costs incurred to date. Clear deadlines would be published and the public would be able to see for themselves exactly how their money is being spent and when they can expect projects to be completed.

Appendix Summary of Budget 2016 measures Taxation Increase lower USC bands by €3,500 Increase personal tax credit by €100 (€200 married / civil partners) Introduce Earned Income Tax Credit for self-employed of €500 Reduce DIRT tax by 1% to 40% Reduce CGT and CAT rates by 1% to 32% Increase inheritance tax thresholds by 33% to €300,000 Net revenue loss from ending water charges Introduce sugar sweetened drink volumetric tax €14.36 / hectolitre Limit tax relief on pension contributions up to income of €95,000 Increase tobacco excise duty by 75c per packet of 20 cigarettes Total

€m 399 152 41 8 27 80 58 (75) (37) (96) 557

Housing Local Authority housing provision Rent supplement Housing grants Total

€m 150 22 23 195

Health Acute Hospitals/EDs/Waiting Lists Reduce prescription charges by €1 from July 1st Improve Mental health services Increase personal assistant hours for people with disabilities Home Helps & Home Care Dementia supports Nursing Home Support Scheme (Fair Deal) Investment in Ambulance Service Recruitment of additional therapists Congregated settings Total

€m 150 25 35 15 21 13 27 10 7 5 308

Social Protection Increase in all pension age payments Increase in Child Benefit Increase the Respite Care Grant to €1,700 One Parent Supports Total

€m 154 72 30 33 289

Childcare Childcare Tax Credit Access Supports for Children with SEN in ECCE Expansion of Community Childcare Subvention Scheme Increased Capitation Rates for ECCE Providers Total

€m 90 10 10 12 122

Education Reduction in PTR to 27:1 Restoring pre-Budget 2012 staffing ratio in small schools Increasing capitation funding for primary Schools Increase in resource teaching hours School leadership Restoring guidance counselling to all schools Increasing student assistance funds Restoration of postgraduate maintenance grants from Sept 2016 Total

€m 4 8 19 16 4 5 7 16 79

Agriculture LEADER funding Rural Social Scheme Farm Assist Beef genomics Total

€m 21 2 10 7 40

Justice Increase in Garda numbers

€m 10

Expenditure savings Recouping of fees owed by private medical insurers Reduction in HSE agency staff costs Reduction in HSE Drugs budget Total

Net Expenditure commitments

€m 75 30 50 (155)

888

Total Tax & Expenditure

1,445