OCTOBER 2015 Young Fine Gael
PRE BUDGET SUBMISSION 2016 ‘A BRIGHT FUTURE FOR YOUNG IRELAND’
FOREWORD
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s we approach the 100th anniversary of the 1916 Rising, we can once more envisage a bright future for young Ireland. We are living in the fastest growing economy in Europe, with our domestic economy growing by more than 6% over the course of 2015. The size of the Irish economy now exceeds its pre-crisis peak, and unemployment has dropped from a peak of 15% to 9.5%. This change in our economic fortunes may look as if it was inevitable now, but it has only come about because the right course of action has been taken by Fine Gael and Labour in government. We need only look to the political and economic chaos that has befallen Greece for an insight into how Ireland would look if the reckless policies espoused by opposition parties were introduced here. Instead, our government are in a position to decrease taxation and increase expenditure by â‚Ź1.5 billion in the 2016 budget. This budget presents an opportunity to reduce unnecessary taxation on business, give something back to hard pressed workers, and tackle issues affecting young people such as unemployment, mental health and third level accommodation. The budget is also the last opportunity before the election to bring further reforms to our system of governance, including changes to the overall budgetary process. Young Fine Gael are proposing a set of measures which we feel can address these concerns and provide a bright future for young Ireland. I would like to thank those who assisted in putting together this document and contributed to the ideas put forward in the pre-budget submission.
Padraig O’Sullivan President of Young Fine Gael
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Young Fine Gael PRE BUDGET SUBMISSION
KEY RECOMMENDATIONS 1
Increase Mental Health Funding
- The Department of Finance should ring fence additional money to the Department of Health for Mental Health.
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Address the lack of Student Accommodation
- Incentivise 9 month contracts for third level students to encourage landlords to rent to students.
- Encourage the building of more purpose built student accommodation by introducing a tax relief scheme to incentivise the building of purpose built student accommodation (similar to the premise of the Section 50 tax relief scheme without its weaknesses and avoiding the situations that lead to the property bubble).
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Introduction of an Independent Budgetary Office
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- Amend the Minimum Wage Act to bridge the parity between the minimum wage afforded to experienced adults and those under 18.
Removal of Carbon Tax for commercial enterprises
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- Mandatory Work Placements for third-level students
Standard Minimum Wage for all age groups
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- An Independent Budgetary Office (IBO) should be established to cost pre-budget submissions put forward by opposition groupings in the Oireachtas and by lobby groups.
Increasing employment among third level graduates
- Remove carbon tax for agricultural purposes as well as for haulage and transport companies.
Introduction of a Recycling Levy on bottles and cans
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- The Department of Health should increase the overall budget allocation to mental health from 6% to 10%.
- Introduce a small refundable recycling levy to bottles and cans.
OUR PROPOSALS 1. INCREASE FUNDING FOR MENTAL HEALTH Background: Non-capital expenditure on mental health services has fallen significantly since the economic crash. This expenditure has fallen from €1.1billion in 2008 to €770million in 2009, and further to €711million in 2012. While we welcome the estimated provision in 2015 of €791.8million, this falls far below the required funding for mental health services (8.4% of health budget as outlined in A Vision for Change1). In Ireland, spending on mental health has dropped from 13% of the overall health budget in 1986 to 6.4% in 2009 and 5.3% in 2010. While A Vision for Change recommends 8.4%, the equivalent rate in other countries is significantly higher at 12% in England and 18% in Scotland; and other European countries allocate over 20% of their total health spend on mental health service and support. 2 Addressing this funding shortage will ensure that the direct economic cost of annual poor mental health is reduced and we have better quality and access to mental health services.
Recommendation: The Department of Finance should ring fence additional money to the Department of Health for Mental Health. The Department of Health should increase the overall budget allocation to mental health from 6% to 10%.
Sources: 1) HSE (2006) available: http://www.hse.ie/eng/services/Publications/Mentalhealth/VisionforChange.html. 2) Mental Health Reform (2015) available: https://www.mentalhealthreform.ie/home/mental-health-in-ireland/
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Young Fine Gael PRE BUDGET SUBMISSION
2. ADDRESSING THE LACK OF STUDENT ACCOMMODATION Background: This summer saw the full extent of the lack of student accommodation in Ireland with the problem at an acute and critical level in Dublin. The difficulties in securing student accommodation can be attributed to a combination of rental market conditions (e.g. increase in demand & landlords choosing young professionals over students) and a lack of purpose built student accommodation. It is estimated that there is an unmet demand of 25,000 bed spaces nationally1. The recently published HEA report projected that this will still be a problem in 2024 unless the government tackles it immediately. Young Fine Gael believes there are a number of measures which should be taken to remedy the current situation and have outlined further proposals in our policy document ‘Building a Better Future’.
Recommendation: Incentivise 9 month contracts for third level students to encourage landlords to rent to students. Encourage the building of more purpose built student accommodation by introducing a tax relief scheme to incentivise the building of purpose built student accommodation (similar to the premise of the Section 50 tax relief scheme without its weaknesses and avoiding the situations that lead to the property bubble).
Sources 1) HEA (2015) available: www.hea.ie/sites/default/.../student_accommodation_report_310815.pdf
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3. INTRODUCTION OF AN INDEPENDENT BUDGETARY OFFICE Background: At present pre-budget submissions produced by lobby groups and opposition parties are not costed through a structured mechanism.The current process by which opposition proposals are costed through the Department of Finance lacks transparency and does not take account of second round, or economic effects.1In the Spring Economic Statement for 2015, the government announced plans to establish an Independent Budgetary Office (IBO) to cost alternative budgets put forward by opposition groupings. This should be included to encompass pre-budget submissions put forward by lobby groups, recognising the unique role these organisations play in the social partnership process. This process could encompass measures of best practice which have been utilised by the Central Planning Bureau (CPB) in the Netherlands. Using economic modelling, the CPB costs proposals put forward by opposition parties in advance of elections.2 This accounts for the economic effects of such measures, ensuring that the political parties are held accountable for the measures put forward.
Recommendation: An Independent Budgetary Office (IBO) should be established to cost pre-budget submissions put forward by opposition groupings in the Oireachtas and by lobby groups. •
This IBO should first focus on enacting measures suggested by the Director of the CPB, such as producing four years forecasts which form the basis of future costings. Overtime, this will allow the IBO to build up experience, expertise and a solid reputation for costing pre-budget submissions.
Sources 1) Coakley, J., Gallagher, M. (2010), Politics in the Republic of Ireland, 5th ed., London: Routledge. 2) Bos, F. and Teulings, C.N. (2011) “Evaluating Election Platforms: a Task for Fiscal Councils? Scope and Rules of the Game in View of 25 years of Dutch Practice”, available: http://www.voxeu.org/taxonomy/term/2913?qt-tabbed_recent_articles_block=1/. 3) Van Geest, L. (2015) ‘Costing Election Manifestos: The Dutch Experience’, available: http://www.iiea.com/events/costing-election-manifestos-the-dutch-experience.
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Young Fine Gael PRE BUDGET SUBMISSION
4. INCREASING EMPLOYMENT AMONG THIRD LEVEL GRADUATES Background: One of the major concerns amongst foreign business owners who have invested in Ireland, along with domestic employers is the lack of work experience among students upon exiting third level education. In a survey by GradIreland 52.3% of employers believed that applicants for graduate positions did not have the right skills for these positions.1 Mandatory work placements exist for all courses through the University of Limerick’s (UL) Co-operative work placement programmes and for many courses under Dublin City University’s (DCU) INTRA work placement programme. However, such programmes are only in their infancy in most other Irish universities. In today’s competitive job market it is imperative that students gain practical experience in order to compete with experienced workers and gain employment relative to their degree. Work placement is the first experience many students have of working full-time within an organisation. This experience is vital in gaining employment after finishing third level education. Work placements bring a clear benefit for the employment prospects of third-level students. This is clear given that UL has an employment rate which is 22% higher than the national average at undergraduate level.2
Recommendations: The government should work towards the introduction of mandatory work placements as a means of increasing employment among third level graduates, •
These work placements should last between 6 - 9 months, and would effectively be considered a semester at third level. As this is an essential part of the students’ course, payment would be at the discretion of the employer.
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A dedicated work placement office should exist in third level institutes with the sole purpose of assisting and securing work placements for students, both in Ireland and abroad. Students would also have the option to find their own placement if they so choose. It would be the onus of the institute to send out an individual to assess the student in their place of work. The work placement should be a mandatory requirement in the completion of a degree and should be marked on a pass/ fail basis.
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To assist in the development of work placements, the government should introduce financial incentives for the development of dedicated offices within the universities. These offices should follow the model set out by UL’s Co-operative Education Office and DCU’s INTRA office.
Sources: 1) G radIreland (2015) ‘Graduate salary and graduate recruitments trend survey 2015’, available: http://cdn.thejournal.ie/media/2015/06/salary-survey-2015-0406.pdf. 2) U niversity of Limerick (2015)’ UL Graduates are 22% more likely than others to be employed after Graduation’, available: www.ul.ie/news-centre/news/ul-graduates-are-22-more-likely-than-others-to-be-employed-after-graduation.
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5. STANDARD MINIMUM WAGE FOR ALL AGE GROUPS Background: Under the National Minimum Wage Act 2000, the minimum wage for an experienced adult is currently €8.65 an hour. An experienced adult is an employee who has an employment of any kind in any two years over the age of 18. An employee who is under 18 must be paid at least €6.06 per hour. An employee who is in the first year of employment since the age of 18 is entitled to €6.92 per hour. An employee who is in the second year of employment since the date of first employment over the age of 18 is entitled to €7.79 per hour. 1
Recommendation: Amend the Minimum Wage Act to bridge the parity between the minimum wage afforded to experienced adults and those under 18. Benefit If an individual - who works 2 eight hour shifts per week like many part time working young people - were to be granted the minimum wage of their adult co-workers, they would incur the following increases: •
€20.80 Daily
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€41.60 Weekly
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€166.40 Monthly
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€1,996.80 Yearly
Over two years this sum just shy of €4,000 could be used to reduce the burden on parents for college fees and would increase the incentives to work rather than receive funding from the Government through the tax-payer.
Sources: 1) Citizens Information (2015) available: http://www.citizensinformation.ie/en/employment/employment_rights_and_conditions/pay_and_employment/pay_inc_min_wage.html.
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Young Fine Gael PRE BUDGET SUBMISSION
6. REMOVAL OF CARBON TAX FOR COMMERCIAL ENTERPRISES Background Solid Fuel Carbon is an excise duty introduced in Ireland in 2010, and applied on solid fuel supplied in the state since 2013.1 The rate of tax, with effect from May 2014, is quantified through a charge of €20 per tonne of CO2 emitted by the fuel concerned, having risen from €10 in 2013. This means that the following charges apply:2 •
Coal
€52.67 per tonne
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Peat briquettes
€36.67 per tonne
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Milled peat
€17.99 per tonne
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Other peat
€27.25 per tonne
Recommendation: Remove carbon tax for agricultural purposes as well as for haulage and transport companies. Sources: 1) Citizens Information (2015) available: www.citizensinformation.ie/en/money_and_tax/tax/motor_carbon_other_taxes/carbon_tax.html. 2) Revenue (2015) available: www.revenue.ie/en/tax/excise/leaflets/solid-fuel-carbon-tax-guidance.
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7. INTRODUCTION OF A RECYCLING LEVY ON BOTTLES AND CANS Background Container-deposit legislation, or a recycling levy, requires collection of a monetary deposit on reusable packaging such as bottles and cans at the point of sale. When such containers are returned to an authorised centre or the original seller, this deposit is either partially or fully refunded to the redeemer. This system exists in countries such as Germany, Denmark and Canada among others.1 This arrangement encourages recycling, and reduces litter, therefore providing a positive environmental impact.
Recommendation Introduce a small refundable recycling levy to bottles and cans. This levy is based on similar systems in Germany, Denmark and most of Canada and would help keep our streets and public areas clean as well as increasing the levels of recycling in the country. This forms part of YFG’s commitment to the protection of the environment. We propose that a small refundable levy be added to bottles and cans which would be redeemable upon the correct recycling of the item. Proposed rates:
- Large glass bottles: €0.50
- Small glass bottle/jar and large plastic bottle: €0.20
- Cans and small plastic bottles: €0.10
Sources: 1) MS2 (2011) Preliminary Report: Best Practice International Packaging Approaches’, available: http://www.scew.gov.au/system/files/ consultations/c299407e-3cdf-8fd4-d94d-6181f096abc8/files/att-b-appendix-b-best-practice-intl-packaging-approaches.pdf.
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Fine Gael National Headquarters, 51 Upper Mount Street, Dublin 2 Phone: 01 619 8444 Fax: 01 662 5046 Email: yfg@yfg.ie Web: www.yfg.ie