Wednesday, 28 September 2022
Thank you Ceann Comhairle for the opportunity to speak on Budget 2023. I would like to share time with Ministers Damien English and Dara Calleary.
This is my third budget as Tánaiste and Minister for Enterprise, Trade and Employment. We have experienced many ups and downs in that period, from Brexit to Covid restrictions to soaring inflation. We live in interesting times.
We have not always got things right, but we have always sought to protect lives and livelihoods as best we could and protect jobs and businesses.
We understand that the cost of living is rising. It’s more expensive to do the weekly shop, to fill your car and pay your utility bills.
So, Budget 2023 is a Cost of Living Budget, designed to help you and your family, with measures for the most vulnerable and the squeezed middle.
In this Budget, we are:
- Putting more money back in your pocket by cutting income tax, increasing pensions, and increasing welfare payments for families, people with disabilities and carers, among others.
- Helping you and your family with the cost of living in areas like childcare, public transport, the cost of putting a child through school, or saving up for your first home.
- Backing business by helping companies to pay their energy bills this winter.
- Helping with the cost of going to college, by both cutting fees and raising the student grant.
- Building safer and stronger communities by providing more resources to the Gardaí and the Defence Forces who protect us.
- Ensuring the best start for every child with major investment in childcare and early education.
- Putting €2 billion aside this year and €4 billion next year in a Reserve Fund to protect Ireland from unexpected future shocks.
Understandably, businesses are very worried heading into the winter. The cost of energy and of doing business is rising. Interest rates are going up. Consumer confidence is waning.
You can rely on us to back business and jobs to ensure a strong economy.
In this Budget, we are announcing five new measures for businesses to help with energy costs.
The first of these is the Temporary Business Energy Support Scheme (T-BESS), providing qualifying businesses with relief on 40% of the increase in their electricity or gas bills up to €10,000 per month per business unit. It will help small businesses most, but also medium and larger businesses. It will be administered by the Revenue Commissioners, backdated to September, and will run until at least February 2023.
The second is a €200 million targeted Ukraine Enterprise Crisis Scheme to assist viable but vulnerable manufacturers and exporters. This is specifically for businesses competing internationally and suffering the broader effects of the war in Ukraine as well as increasing energy costs. One strand of the scheme will provide up to €2 million for energy intensive companies. Eligible businesses must produce a business plan that shows how they will manage the crisis and get their energy costs down.
In recent years, the Government has stepped in to underwrite low cost loans for business. These State-backed loans are working well – 10,000 SMEs availed of the €2bn Covid Credit Guarantee Scheme.
To assist the wider business sector with liquidity and to invest in energy efficiency, we’re introducing a €1.2 billion State-backed Ukraine Credit Guarantee Scheme. This will provide low-cost working capital to SMEs and primary producers.
We are also going to make €500 million worth of Growth, Sustainability & Investment Loans available to SMEs, including farmers and fishers. These will be long-term, low cost loans and a minimum of 30% of the lending volume will be targeted towards Environmental Sustainability purposes with the aim of helping SMEs to invest in sustainability and energy efficiency.
We’re allocating an additional €4 million in funding to the Local Enterprise Office network to include a new grant for microenterprises for energy efficiency. The Small Firms Investment in Energy Efficiency Scheme will provide a grant to companies to encourage capital investment in projects to reduce carbon emissions. Many of our schemes focus on energy audits, better information and consultancy, but this one is cash towards the cost of investment, capital.
Ceann Comhairle, I’m really pleased to see many of our Department’s tax objectives announced by Minister Donohoe in the Budget. These will help to promote entrepreneurship, innovation and job creation, as well as helping with the cost of living.
On top of the five energy measures I mentioned, there are a further 10 measures making up a 15-point plan for business:
- A substantial income tax cut, so you can earn up to €40,000, or €80,000 for a two-income couple, before having to pay any of your income at the higher rate. This will increase take home pay and help with consumer confidence and demand.
- Improvements to the Research & Development Tax Credit so smaller companies can get cash more quickly.
- A four-year extension of the Knowledge Development Box to encourage companies to develop IP in Ireland.
- Several improvements to the KEEP share option programme to help companies reward and hold on to staff.
- The extension of the Special Assignee Relief Programme – SARP – to attract more highly skilled jobs to Ireland.
- The extension of the Section 481 Film Relief to 2028 in order to stimulate the creation of indigenous films in the State.
- The doubling of the Small Benefit exemption so that employers can give up to €1,000 in vouchers or gifts to employees each year.
- A 50% reduction in the excise on Special Exemption Orders, helping businesses in the night time economy.
- An excise relief scheme for small cider and perry producers, as well as improvements to the Microbrewery relief.
- A VAT reduction for newspapers and news periodicals, including digital editions, from 9% to zero.
Turning to my own Department’s vote, Budget 2023 increased our gross allocation to to €940 million, representing a €36 million increase.
Core current funding will increase by €13 million or 3.6%. This extra funding for the Department and its agencies, including Enterprise Ireland, IDA Ireland and the Local Enterprise Offices, means we can maintain quick turnaround times on employment permits, help companies with the twin transition, digital and green, and create more jobs in all parts of Ireland.
Core capital funding of €514 million represents an increase of 4% or €20 million on our 2022 core capital allocation. The capital programmes funded by my Department have been crucial to the success of our Agencies in maintaining and indeed growing our enterprise base, creating record numbers of new jobs.
IDA Ireland’s enhanced budget will allow it to further progress the development of the Advanced Manufacturing Centre and the National Institute for Bioprocessing, Research and Technology, NIBRT.
Additional capital funding is being provided to Enterprise Ireland to bolster the Green Transition Fund, which incentivises businesses to install energy metering systems and facilitates investment in low-carbon, energy efficient equipment and processes.
The funding of EI’s Digital Transition Fund will also be increased to help more businesses to go online, export, use digital technologies to reach new markets, and improve their productivity and competitiveness.
Fiscal sustainability
As Minister Donohoe said yesterday, the pace of growth in the economy is expected to slow throughout the rest of this year as mounting inflation and higher interest rates bite.
Negative sentiment might see firms hold back on investment and, as a result, the Department of Finance has revised down its forecast for Modified Domestic Demand – the most appropriate measure of our domestic economy – to 1¼ per cent for next year.
A counter cyclical response is warranted but, crucially, we will not empty the tank now. We will keep resources in reserve so that we can respond as the situation develops and intervene again if we need to, if this crisis persists.
We are directing €2 billion into the National Reserve Fund in 2022, and €4 billion in 2023. It means we will have 'banked’ a large share of the additional corporate tax revenues and ensured that they do not fund permanent expenditure and also supplied the Exchequer with additional firepower to respond to challenges over the coming years.
I believe this budget should help restore confidence in the economy. It’s a big package but it’s being financed by a strong economy with businesses doing well and a record 2.55 million people in employment.
It’s not being funded through borrowing, unlike most countries and we are putting money aside because nobody can predict how long this cost of living and energy crisis is going to go on for.
The opposition
I want to comment briefly on the proposals coming from the other side of the House. The opposition had written their speeches well before yesterday’s Budget was announced – “not enough”, “not the right measures”, “not enough certainty”.
Sinn Féin would lump taxes on ordinary families by stealth by not adjusting income tax for inflation. Put simply, a two-income couple each earning about €40k would pay more than €2k in tax under Pearse in 2023 than under Paschal.
They would increase tax on inheriting the family home or a family business.
They would not renew the Help to Buy Scheme, which is worth up to €30,000 and has helped over 35,000 first time buyers buy or build their own home. 15k first time buyers bought their first home in the first year. That’s a 15 year high. I want it to go much higher.
They propose four separate taxes worth €1.15bn on high income earners, including employers’ PRSI, a direct tax on jobs, and a new rate of income tax. This would reduce foreign investment in growing sectors like pharma and ICT. Wealth, skills and investment would go elsewhere. The cake would shrink under Sinn Féin and the left and there’d be less for everyone.
Rather than writing blank cheques for energy companies and emptying the tank now, we are planning for the uncertainty ahead, as every good budget should be keeping some money in reserve for next year and whenever it is needed.
Conclusion
Ceann Comhairle, the main objective of this Budget is to put more money in people’s pockets and reduce the bills that people have to pay.
For any household budget, there are three elements:
There’s what you get paid
There’s how much you get to keep after taxes, and
How far the money goes.
We are helping on all three fronts.
We are ensuring incomes rise where we have influence: the national minimum wage, the public sector pay deal, increases for pensioners and for people on welfare payments like carers and people with disabilities.
We are reducing income tax, so you get to keep more of what you earn.
And we are making your money go further by helping with some of the costs like reducing the costs of childcare, healthcare and the cost of putting a child through school or college.
Some of these costs were too high in Ireland and out of kilter with European norms long before this crisis and now is an opportunity to change that. These actions are part of a comprehensive anti-inflation strategy.
Reducing the cost of childcare and extending early education will have wider benefits beyond improving household budgets. It will improve the labour market, advance equality for women, be pro-family and improve educational outcomes for children.
These measures help now but they will also help in the long term.
Ceann Comhairle, I believe this Budget strikes the right balance between helping people in the short term and planning for an uncertain future.
I commend the budget to the House.