Follow the reaction to Donohoe's maiden budget

Minister raising more than €830m to fund total budget package of €1.2bn

Colin Gleeson,Mark Hilliard Tue, Oct 10
 
LIVE: Follow the reaction to Donohoe's maiden budget

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  • 09:59
    No fireworks, and no big bonanza, Taoiseach Leo Varadkar said on his way into Cabinet this morning.

    Boo. Perhaps he’s concerned the country’s good spirits might go into overdrive following last night’s win for the Republic against Wales last night.

    Nonetheless, it’s budget day, and we’ll be bringing you all the day’s action and reaction right here as it comes throughout the day.
  • 10:05

    My name is Colin Gleeson and I’ll be steering you through the events of the day. I’ll be joined by my colleague Mark Hilliard a little bit later.


    You can tweet me @ColinGleesonIT if you’d like to get involved.

  • 10:16

    After weeks of guessing and kite-flying, Minster for Finance Paschal Donohoe will take to his feet in the Dáil in about three hours time and put an end to all that.

    Varadkar has said the budget will give an average family with two incomes an extra €500 or €600 a year.

    There will be extra money for public services and infrastructure, as well as tax reductions.

    You can keep up to speed with all the headline measures as we get them on our Budget Main Points page, which you can find here.

  • 10:23

    Our Political Editor Pat Leahy says he has received the first of no doubt many budget-related press releases in his inbox.

    “The first press release condemning the budget has arrived in, three hours before Paschal Donohoe gets to his feet,” he says.

    “It’s embargoed until after the Budget speech, so we can’t tell you who it’s from. But let’s just say they’re not happy the old age pension increases won’t be paid from January. The government is ‘playing games with older people’s incomes’, they say. It doesn’t specify what kind of game.”

  • 10:28

    Minister for Children Katherine Zappone has described the tax cuts we’re likely to see today as “modest”.

    “I think the tax cuts are modest,” she says. “I’m going to listen to the analysis of what Minister Donohoe is going to present to us. I think that they, from what I can see, are fair and also clearly the majority of the money is coming in public services.”

  • 10:31

    In relation to the Department of Children, Zappone said she was “very satisfied” with her slice of the pie.

    We can expect approximately 20,000 three- and four-year-olds to benefit from additional free childcare, she said.

    In relation to Tusla, the child and family agency, she said there would be resources for an additional 300 workers.

  • 10:33
  • 10:44

    As you’ve probably heard, there will be just the one budget speech in Leinster House this year following the merger of the finance and public expenditure ministries.

    It’s a sign that the economy is back on the track following a tumultuous decade or so.

    You can catch up on the main points of all those budgets here if you’d like some context on today’s measures.

    We’re expecting Donohoe to announce about €1.1-€1.2 billion of new spending and tax cuts, split on a 2:1 basis in favour of spending.

  • 10:47
  • 10:50

    After the speech later, our budget calculator, in association with PwC, will tell you what it means for your pocket.

    Plus, we will have analysis from our political, business and news teams, including columnists Cliff Taylor, Miriam Lord and Chris Johns.

    We’ll bring you a flavour of all that here.

  • 11:03

    While we won’t know anything for absolutely sure until the minister’s speech later, we’re fairly sure of a number of things.

    For one thing, the threshold at which people enter the higher, 40 per cent rate of income tax will rise from its current level of €33,800 by €750 for a single person to €34,550.

    The 5 per cent rate of universal social charge, which applies on income between €18,800 and €70,000, will drop by 0.25 per cent, and the 2.5 per cent rate, which is applied between €12,200 and €18,800, will drop by a half percentage point.

    A packet of 20 cigarettes will increase by 50 cents but duties on alcohol will remain untouched.

    You can keep on top of all the main points as we get them here.

  • 11:07

    Newsflash.

    RTÉ will broadcast Home and Away at the earlier time of 11.55am with Telly Bingo at 12.25pm in order to cater for its budget coverage.

    Things just got real.

  • 11:09
  • 11:12

    Michael O’Regan of our politics team has been talking to a Fine Gael backbencher this morning.

    "How will the budget go down with voters?" he asked.

    "I don't know," he replied, "but at least we will not be taking a shilling off the old age pension like Ernest Blythe!"

    Blythe was Minister for Finance from 1923 to 1932 for those too young to remember.

    Which is most of us to be fair.

  • 11:17
    Don’t forget you can tweet me @ColinGleesonIT if you’d like to have your say. The hashtag for all budget stuff today is #budget2018.
  • 11:22
  • 11:34

    A package of increases in welfare payments was still being hammered out on Monday but is expected to include a €5-a-week increase on most welfare payments, though the rises will not kick in until the spring of 2018.

    There will also be an increase, expected to be about €400 million, in capital expenditure on housing and an increase in funding for the Housing Assistance Payments, a social welfare support for people who have a long-term housing needs, is also expected.

    To pay for all this, Donohoe is expected to announce that the rate of commercial stamp duty will increase from two per cent to six per cent. This will raise more than €400 million and will be the main revenue-raising measure of the budget.

  • 11:35

    Donohoe and his officials are scheduled to brief the Fine Gael parliamentary party on the budget at noon, before he makes his budget speech to the Dáil at 1pm.

    His contribution will be responded to by the Fianna Fáil finance spokesman Michael McGrath, and by speakers from the other parties throughout the afternoon.

    Stamp duty and excise changes will be voted on in the Dáil on Tuesday, with the Government needing Fianna Fáil TDs to abstain for the budget to pass.

  • 11:39
  • 11:47

    KBC Bank Ireland chief economist Austin Hughes isn’t one to pass up an opportunity to tap into the mood of the nation.

    He’s called for a “Martin O'Neill budget".

    That’s one that “doesn't have to be pretty, it has to be results-focused”.

    Like the Irish football team. You get it.

  • 11:49
  • 11:55

    Sinn Fein finance spokesman Pearse Doherty has been out to say that the budget leaks indicate the Government does not understand the depths of the health, housing and homelessness crises.

    “We hear from all the speculation and the leaks that are being reported in the media that they don’t get it. It appears that a large amount of the resources that are available are going to be given in tax breaks,” he said.

    Speaking on the plinth outside Leinster House this morning, Doherty said this would put very little money back in the pockets of “average” workers, with some receiving “less than a euro a week”.

    He said Sinn Fein would wait for the full detail of the budget and give its analysis then.

  • 12:04

    There is a notice in Leinster House indicating seats available in the public gallery for members of the Diplomatic Corps and guests of Ministers and TDs.

    One Minister has told Michael O’Regan of our political team that “the passes are not as plentiful as in the old days when, to use the cliché, Leinster House, particularly the bar, was packed to overflowing”.

  • 12:07
  • 12:16

    Today is also World Mental Health Day and Labour spokesman on the area Brendan Howlin has said the Government must do more to ensure services are rolled out to young people across the country.

    “Statistics from Pieta House show us that 1 in 7 Irish adults have experienced a mental health issue in the last 12 months,” he said. “Most of us have family and friends who have been through difficult periods of stress, anxiety or depression.

    “World Mental Health Day is an opportunity to reflect on how we can support each other through mental health struggles.

    “While progress has certainly been made in recent years towards improving mental health services in this country, I am concerned that services for young people in particular are still far below par.”

  • 12:17
  • 12:32

    Not everyone is calling for a spending splurge.

    Former Department of Finance adviser Alan Ahearne has said balancing the Budget is not good enough, and that the Government should be putting some money away for a “rainy day”.

    Ahearne, who is now Professor of Economics and Director of The Whitaker Institute at the National University of Ireland, Galway, said it was difficult for politicians to resist the temptation to spend when the economy is doing well.

    However, he warned “things could go wrong” in the next few years and it would be better if the public finances were robust enough to withstand any difficulties.

    “Balancing the Budget is not good enough, we need to be saving money. There could be difficult times ahead, like Brexit.

    “Some countries save money for a rainy day, we should be looking at that.”

  • 12:42
    Cliff Taylor writes: One of the interesting things to watch will be the spread of the gains.

    From what we know this will be aimed squarely at middle to higher earners. Will there be extra done to help lower earners?

    And will there be measures taken to even up the gains between two income and one income couples – for example via an increase in the home carer take credit?

  • 12:45
  • 12:50
  • 12:53

    Hi there, Mark Hilliard joining Colin Gleeson here for the live blog: ten minute countdown to Budget 2018 now underway.

     

  • 13:01
    The Dail is beginning to fill up ahead of Donohoe’s speech, which is expected to begin at any moment.
  • 13:04

    And we’re away.

    A few housekeeping bits taken care of but Donohoe is about to take to his feet.

    There is laughter in the chamber as the Ceann Comhairle tells TDs not to tweet or otherwise publicise the budget before its announced by Donohoe.

  • 13:05
    Donohoe says budget day offers the opportunity to reflect on a journey made. To recognise what we have achieved and what we want to.  
  • 13:07

    The budget will "safeguard our finances and rebalance our economy", he says.

    There will be a sustained improvement in people’s lives.

     

  • 13:07
    Economic position: economy continues to grow with 4.3 per cent in 2017 and 3.5 per cent next year.  
  • 13:08
    Unemployment is at 6.1 per cent, its lowest since 2008. Donohoe says it will fall to 5.7 per cent next year, close to the level considered to be full employment.  
  • 13:09
    Cliff Taylor: GDP growth forecast nudged up from 4.2 per cent to 4.3 per cent for 2017 and forecast for 2018 of 3.5 per cent unchanged.  
  • 13:09
    Brexit has had its first mention, while Donohoe also highlights US tax reforms as examples of “external forces” being crises the State must weather.
  • 13:10

    Our deficit is still too high. We cannot ignore what it will mean for future generations, Donohoe says. This is why careful budgeting is now so important.  

  • 13:11

    Harry McGee:  It's not Paschal Donohoe's first Budget. It's his second. He was Minister for Public Expenditure last year but shared the honours with Michael Noonan.


    As he starts his speech, he is doing so on his own for the first time.
    He is dressed soberly wearing a maroon tie.


    It's also a very sober opening. He talks about 4.3 per cent growth and 3.5 per cent in 2018.


    He now turns to the philosophical side.   The aim of the Government it to "broadly balance the books in the medium term".


    He says it is not an end to itself but will buffer us somewhat from future shocks. We now get after four minutes, the first reference to Brexit.

  • 13:11
    To “further protect the economy”, he will establish a rainy day fund of 1.5 billion euro from Ireland’s Strategic Investment Fund .
  • 13:12
    Total expenditure next year will be €60.9 billion.
  • 13:12

    Cliff Taylor : Borrowing to be 0.2 per cent of GDP next year after the Budget, meeting borrowing commitments under EU rules.


    This will mean more room for manoeuvre in future Budget from 2019 on as we will have met what the EU calls the medium term objective (MTO).


    Before the Budget, the Budget was due to be in balance next year, before Budget measures. So the Budget will as expected add a bit to borrowing – but not a lot.  

  • 13:13
    The rainy day fund will get an annual contribution of €50 million.
  • 13:14
    He says ramping up capital expenditure too much “would be a dangerous and simplistic” move that would “overheat the construction sector and in turn our economy”.
  • 13:15
    The Government is raising €830m giving a total budget day package of €1.2bn  
  • 13:15

    There will be tax reductions on income of 335 million euro.

  • 13:16
    Growth in current spending is less than the forecasted economic growth rate.  
  • 13:16

    Harry McGee:  The reference to the Rainy Day Fund marks the first departure from the policies of his predecessor Michael Noonan.


    Noonan announced last year that it would mean a payment of €1 billion per annum.



    Donohoe has already announced that it will be half that, about €500m per annum from 2019. However, the fund will be kick-started by a €1.5 billion transfer from the Irish Strategic Investment Fund.



    Another big Donohoe theme is capital spending. He has put huge emphasis on this since becoming Minister. He has said that the capital budget between now and 2021 will be €7.8 billion, making it one of the highest in Europe.

  • 13:18

    “This is about protecting our country’s economic future while investing in schools, housing, health,” he says.

    He continues that he is aware of the “corrosive impact of homelessness”.

    He says his actions to address this are "bearing fruit”, highlighting an increase in planning permissions.

  • 13:18
    Cliff Taylor : Minister says he will raise over €800 million in new revenue. That’s a bit higher than anticipated. It suggests some fund raiser we may not yet know about – or a lot raised from a few smaller measures. Watch out for the old reliables !  
  • 13:18

    There will be €1.83 billion for housing in 2018. 3,800 new social homes will be built next year.

     

    He will also increase housing assistance scheme by €149m.

  • 13:19
    There will be an additional €115 million to deliver 4,000 extra social homes next year. He will also further accelerate this delivery from 2019.  
  • 13:22

    “We must also make it easier to get funds to build homes,” he said.

    He says he is making a “significant intervention”.

    This will involve 750 million euro from the strategic investment fund for commercial investment in housing.

    The new vehicle will be called Home Building Finance Ireland.

  • 13:24

    Commercial stamp duty was lowered to 2 per cent in 2011 as a stimulus. Donohoe says “it worked”.

    Now, the “time is right” to focus resources elsewhere. Stamp duty on non-residential property will rise to 6 per cent from midnight tonight. New rate is still well below 9 per cent that was charged from 2002 to 2008.

  • 13:25
    Message to developers with vacant sites is: “You need to get on with developing your land urgently.”
  • 13:26

    Cliff Taylor: Big increase in commercial stamp duty from 2 per cent to 6 per cent, with a refund for land used for housing development. The increase is at the upper end of what was expected. Property industry won’t be happy !! That’s the first big fund-raiser. Must be more to come.  

  • 13:27

    Spending on health is already at record levels, he says.

    “But I know that our health service needs improvement,” he adds, before announcing an increase in funding for the department of 685 million euro.

    This brings the total department budget to 15.3bn euro.

  • 13:28
    There is to be 1,800 more staff across the health sector. €90 million is allocated for new access plan to ensure patients can avail of medical care in the “most appropriate setting to them”, particularly aimed at vulnerable patients.  
  • 13:28

    Fiona Reddan: A bit of good news for boom time property buyers, as the Minister announces, as expected, a tapered extension of mortgage interest relief.


    The relief was due to expire at the end of this year, but will now run until 2020, although will fall to 25 per cent in that year.


    The relief currently benefits those who purchased a home between 2004 and 2012, and is worth about €850 on average a year.


    According to the Revenue Commissioners, some 292,448 homeowners currently claim the benefit.

     

  • 13:29

    Harry McGee:  Donohoe has moved very early to the crux of the Budget and the predictions in The Irish Times this morning were spot on.


    While the 'fiscal space' was only €320 million when the water rebates were taken into account, he has augmented that with almost €830 million in new taxes, bringing total spend to €1.2 billion.



    Most of this will come from higher stamp duty on commercial developments. It will allow €900 million for expenditure, and €335 in tax reductions.


    Now he has moved to another crucial political theme, that of housing.
    Figures are impressive but will need to be parsed.
    Over €1.8 billion for social housing in 2018 will result in 3,800 houses, he says.


    He has also announced an off-balance sheet fund of €750 million to set up a separate housing financing agency,
    And now some of the details of how he is going to pay for it.


    There will be 6 per cent stamp duties on commercial building.
    Also there is a steep raking in the vacant home levy. It will be 3 per cent for the first year it is levied in 2018 and will then double to 6 per cent in 2020.
    That will mean that anyone paying the levy will find it increasingly less attractive to hold onto land.
    How will these measures impact on housing? There have been many announcements so far and few have had a massive effect.


    Now he has also announced a limited tax deduction for those with vacant properties who incur pre-letting expenses.
    It sounds good, but will it really make any dent into the housing crisis?

  • 13:30

    Continued investment at primary care will require a multi-annual approach.

    Donohoe says he is making an extra 471 million euro available for the period 2018-2021.

    This will allow for investment in critical infrastructure such as the National Children’s Hospital.

  • 13:30
    Still smoking? Cigarettes up by 50 cents bringing them to €12.  
  • 13:31
    There will be a 30 cent per litre charge on all drinks with over 8 grams of sugar per 100 ml.  
  • 13:31

    Education is the bedrock of our society, he says.

    Mentions Brexit again in this context.

  • 13:32

    Spending on education next year will reach over €10 billion, a new peak for the sector.

    That represents 16.6 per cent of total spending. 1,300 more posts in schools in 2018.

    As part of that pupil to teacher ratio will reduce to 26 to one. “This is the lowest level it has ever been,” says Donohoe.

     

  • 13:34

    Harry McGee: We have had some very inspirational and dramatic Budgets before and this is not one of them.


    So far, it has been like the treasurer of a committee reading out his annual report on income and expenditure.


    It's full of detail and figures. The problem is that it's all been pre-announced besides the reference just there to an increase in the rate of VAT for sunbeds, because of the link between sunbeds and skin cancer.


    We have had no summoning of the troops, or appeal to the nation, or any real political layering of the figures.


    We don't want to prejudge - perhaps he's building up to a massive crescendo and finale!

     

  • 13:34
    Continued State investment in higher education in the years to come will help safeguard our economic growth in the coming years.
  • 13:35

    Cliff Taylor : Well that’s a new one – a tax on tans. VAT on sunbed services to be increased from 13.5 per cent to 23 per cent on health grounds.


    Sugary drink   tax introduced as expected - and 50 cent on a packet of cigarettes for the third year in a row, bringing the price to €12. That’s another chunk of money raised – but there must be more to come.  


    No word yet on booze. Suspect it would have been announced by now if there was going to be a rise....

  • 13:36
    There will be an additional 800 gardai next year. Another 500 civilians will also be hired. There will be €63 million more for Justice to develop a “modern police force”.  
  • 13:38

    Brexit will bring permanent changes to our trade patterns and small and medium businesses will need to change.

    So a Brexit loan scheme will see up to €300 million available to SMEs including food businesses “given their unique exposure” to Brexit, to help with their short term investment needs.

    It will give them time, Donohoe says, to make the necessary changes.

  • 13:39

    A clear impact of Brexit has been the devaluation of sterling. Prices in Dublin continue to rise but VAT cannot be decided on one location, Donohoe says.  

    So, VAT has not been changed on tourism and services sector.

    €2bn for the Department of Transport, Tourism and Sport to help with the tourism sector.

  • 13:40
    Total allocation of 111 million euro for sport.
  • 13:41
    Additional funding of €9 million in current funding and €4 million in capital funding for the country’s cultural institutions.  
  • 13:41
    Just to recap on education, he said spending will top 10 billion euro next year, which will help to bring about a reduction in teacher pupil ratios.
  • 13:43

    Agriculture: An increase of €64 million for the Department of Agriculture, Food and Marine brining total investment to over €1.5 billion next year. This will also help protect against Brexit, Donohoe says.

    There will be increased supports to Bord Bia given its role in answering the Brexit challenge.

  • 13:43
    There will be a further 25 million euro loan scheme for the agri-food sector dealing with Brexit.
  • 13:44

    Harry McGee: In fairness to Donohoe, he has been constricted by circumstance.


    You have to go back to Brian Cowen in late 2007 to find a Minister for Finance who was completely unfettered in terms of framing a Budget.


    His successor Brian Lenihan faced an economy "grinding to a shuddering halt" and had to bring forward an emergency Budget (that included the infamous removal of medical cards for over 70s), that was the first of eight in a row.


    By the time Michael Noonan and Brendan Howlin came along they were monitored firstly by the Troika, and then by the new fiscal rules that sets very strict limits on spending.


    Neither does Donohoe have a free hand. He is subject to the fiscal rules, which prevent him from over-expansionary budgets. He has also to adhere to the Confidence and Supply agreement with Fianna Fáil - the decrease in Universal Social Charge is a direct result of that.


    Politics is so immediate. What Donohoe has tried to do with his limited resources is to set out medium and long-term plans to ensure continuity and predictability.
    We have seen a few examples of it in the Budget speech already.


    He has talked about incremental increases in the training fund for example, up each year by 0.1 per cent, as well as a tapering off on mortgage interest relief to 2020.


    No more is this obvious than in capital investments where he is laying the foundation (metaphorically) for long-term projects (particularly public transport) that he considers vital for the continued growth to the economy.

  • 13:46

    Additional €40 million goes to Tusla.


    This will be used for the introduction of mandatory reporting under the Children First Act, among other things.

  • 13:47
    He says climate change is the “global challenge fort the generation, a nd it must be met for the sake of our children”.
  • 13:47

    €20 million more for childcare measures including a further extension of two years free pre-school years.

  • 13:48
    He has asked the ESRI asked to carry out a review of carbon tax.
  • 13:49

    €36 million more for the expansion of energy efficiency programmes across public and residential sectors.

    Donohoe says there will be zero benefit in kind to incentivise the take up of electric cars.

  • 13:52
    Fiona Reddan: Parents of young children will be disappointed that the Minister didn’t allocate more of a budget to the single childcare affordable scheme, with only a moderate extension of the ECCE to a full two years scheme announced.
  • 13:52

    On social welfare: the disabled, carers, and the unemployed, “must continue to be supported in meeting the challenges they face on a day to day basis”, he says.

    Working families and loan parents must be encouraged to take part in the labour market, Donohoe says.

    All weekly social welfare payments to increase by 5 euro. These will take effect in the last week of March.

    85 per cent Christmas bonus will be paid this year.

  • 13:52
    New telephone support of €2.50 per week for those on the living alone and fuel allowance.  
  • 13:54
    We cannot protect our most vulnerable citizens unless we reward work, he says.
  • 13:54

    Ireland is at the centre of the world, Donohoe says, quoting the Taoiseach.

    There will be €23 million more for Foreign Affairs and Trade to “grow our global footprint” of staff.

  • 13:55

    Little detail on equality and gender proofing measures:

    “Concrete steps” have been taken, including the examination of international best practice. A document is due to be published today.

  • 13:56
    As reported in the Irish Times today, the point at which the higher 40 per cent rate for income tax kicks in will rise by €750 from €33,800 to €34,550.
  • 13:56

    Harry McGee: What was the Fine Gael slogan again. Let's Make the Recovery Work.


    There is a recovery but as we can see here it is slow. There are no cuts and some increases but all are modest.


    We have a €5 increase in pensions and social welfare but that will not cut in until March.


    He has also allotted an additional €36 million to climate change, including investments in alternative energy.


    There is also a new incentive for electric vehicles, albeit modest. There will be a zero rate of Benefit-in-Kind for one year only, 2018. The entry prices for EVs remains very high and it remains to be seen if this will increase the uptake.


    The Irish language gets a welcome €2.5 million for the 20 year-strategy. It is modest but better than anything we have seen in recent years.
    Michael Ring's new Department, Rural Development, also gets a 12 per cent increae in funding.


    More than once, he has referred to future Budgets.
    If the predictions for growth are borne out, he will have far more leeway this time next year and in subsequent years.


    And given all the political signs in the past few months, it is very likely that he will be still in situ for Budget 2019.

  • 13:58

    The Irish Tourism Industry Confederation (ITIC) welcomes the retention of the tourism Vat rate of 9 per cent.  

    Chief executive Eoghan O’Mara Walsh said: “Tourism is at a key juncture with our biggest source market, that of Britain, in sharp decline as a result of Brexit.


    "In this context it was essential that the tourism Vat rate was maintained in order to help the sector retain competitiveness and support jobs, and regional growth”.  

  • 13:59

    Corporation tax has seen “unprecedented change and reform in recent years”.

    “We have a stable and competitive corporate tax regime that is one of the most transparent schemes in the world,” he adds.

    Needless to say, the 12.5 per cent rate will remain.

  • 14:01

    Harry McGee: Every single syllable of what he has announced on tax was leaked in advance of the Budget.


    The Irish Times was on the button on the USC reductions and the €750 increase in the higher threshold.


    This is a key political goal for Fine Gael. Donohoe himself phrased it that he wanted to ensure that people on the average wage did not pay income tax at the higher rates.


    USC was a Fianna Fáil demand and he ceded to it. The lowest rate was dropped from 2.5 per cent to 2 per cent and the upper rate entry point was raised to €19,372.


    Politically, this rowed into a consensus view among most parties that those on minimum wage (€9.59 an hour) should not e subject to a higher USC rate.


    Now he is moving onto a core issue for Fine Gael and that is the corporate tax rate. Like every Minister for Finance ad infinitum he has stood behind the 12.5 per cent rate but he has also said he will implement some of the adjustments (to close loopholes) that were recommended by a recent report, authored by a group chaired by economist Seamus Coffey.

  • 14:02

    “This Government looks to renew opportunity in our republic and create new opportunities for our Republic,” he says.

    “This budget achieves sustainable and affordable tax reform.

    “We’re broadening our tax base to make it more resilient and secure on the future.”

  • 14:02
    With that, Minister for Finance Paschal Donohoe has commended his first budget to the Dail.
  • 14:02

    Current spending is increasing in line with economic growth so that “sustainable improvements for all” can be achieved, Donohoe tells the House.

    “Our national horizons are now different. Yes there are risks, yes there are challenges. But we have achieved so much and we can and we will achieve more.”

  • 14:04
    With little regard for live bloggers, Fianna Fail finance spokesman Michael McGrath is already on his feet to respond.
  • 14:04

    Cliff Taylor: Tax changes were as expected. Standard rate band extended by €750 to €34,550. This is worth €150 a year to those who earn enough to benefit.


    The main 5 per cent USC rate is cut by 0.25 of a point to 4.75 per cent.


    The lower 2.5 per cent rate is cut to 2 per cent and the band of income to which this applies is widened to €19,372 from €18,772.


    The bottom line of these changes is an extra €5 a week or so for single middle earners.


    The home carers tax credit is increased by €100 to €1,200, giving extra cash to households where one partner stays at home to mind a dependent child or older person.

  • 14:05
    We’ll bring you more bits from Donohoe’s speech as we catch up.
  • 14:06

    McGrath says “deep uncertainty about what lies around the corner”.

    Among them, Brexit, and “what impact a Trump presidency may have on inward investment”.

  • 14:08

    Minister for Housing Eoghan Murphy looks unimpressed as McGrath calls for an end to the press releases and glossy brochures on how to solve the housing crisis.

    “Just get on with it,” he says. “Build the houses that people in our country need.”

  • 14:09
    McGrath warns of “blistering” Sinn Fein attack on the budget and on Fianna Fail itself. “You had your chance to influence this Government when the opportunity was there but you bottled it,” he tells them, heading off their pending criticism.
  • 14:10

    Fiona Reddan; By deciding not to increase the level at which workers start paying USC, at €13,000, Mr Donohoe did not take any more people out of the tax net.


    It’s a policy the government has pursued in budgets of recent years, and means that about a third of income earners currently don’t pay income tax.


    Of surprise also perhaps, is that Mr Donohoe did not signal any change to the much vaunted merger of USC and PRSI.

  • 14:11
    You can also stay up to date with the main points of the budget with our special round-up here.
  • 14:11
  • 14:11
    Harry McGee:  

    And so right at the end Paschal Donohoe sets out his stall and defends his politics.

    It is from a classic Fine Gael perspective arguing for "renewing opportunities and "creating opportunities".

    If you are looking for a comparison, I think the nearest is not an Irish politician but the former Chancellor of the Exchequer and Labour politician Gordon Brown.

    Like Brown's obsession with prudence, Donohoe's, politically, was all about proportionality and incremental change.

    In a series of passages he talked about sustainability and affordablity, about tax reform, about improvement of services, about broadening the tax base (a big Donohoe interest) and building infrastructure (another big interest).

    He is saying prudence but also calling for patience, as the money will not be available this year but rather next year.

    And his closing two sentence gave a fair summary of what Paschal Donohoe is all about.

    "We are increasing current spending so that can can change, step-by-step, to deliver sustainable improvements for all, a secure and a productive and a fairer future...

    "Yes there are risks and challenges. We have achieved so much and we will achive more."

  • 14:12
  • 14:13
    Fianna Fail are determined to head off anticipated Sinn Fein attack in the Chamber.  
  • 14:13
  • 14:14
    Construction Industry Federation chief Tom Parlon is responding and has welcomed the absence of a mention of the Help to Buy scheme, pointing out that it will therefore be remaining as is despite some suggestions it could be axed in the build up.
  • 14:14
  • 14:15
    Cliff Taylor: One extra point on tax. The self-employed will get an extra €200 from a rise in the earned income tax credit. They might have hoped for a bit more as pre-Budget documents had suggested it would rise by €350 at least. Still, in a Budget of small gains it means they are among the bigger winners.  
  • 14:15

    Harry McGee: And so right at the end Paschal Donohoe sets out his stall and defends his politics.


    It is from a classic Fine Gael perspective arguing for "renewing opportunities and "creating opportunities".


    If you are looking for a comparison, I think the nearest is not an Irish politician but the former Chancellor of the Exchequer and Labour politician Gordon Brown.


    Like Brown's obsession with prudence, Donohoe's, politically, was all about proportionality and incremental change.


    In a series of passages he talked about sustainability and affordablity, about tax reform, about improvement of services, about broadening the tax base (a big Donohoe interest) and building infrastructure (another big interest).


    He is saying prudence but also calling for patience, as the money will not be available this year but rather next year.


    And his closing two sentence gave a fair summary of what Paschal Donohoe is all about.


    "We are increasing current spending so that can can change, step-by-step, to deliver sustainable improvements for all, a secure and a productive and a fairer future...


    "Yes there are risks and challenges. We have achieved so much and we will achive more."

     

  • 14:17
  • 14:22

    Fergus Finlay of Barnardos has told RTE it was an “ultimately unsatisfying” budget with measures that don’t go far enough.

    While welcoming the bump in Tusla funding, he was critical of the €20 million in additional money for childcare measures.

    “There is a childcare sector in Ireland which desperately needs very, very significant investment. €20 million is not going to go a very long way at all. I thought that was very disappointing," he said.  

  • 14:22
    The Minister also announced cuts to the Universal Social Charge, with the 5 per cent rate coming down to 4.75 per cent, and the 2.5 per cent rate coming down to 2 per cent.
  • 14:24
  • 14:24
  • 14:25
  • 14:28

    Harry Magee: The main Opposition responses to the Budget speeches tend to be better because a Minister for Finance is always constrained by the formal necessity to read out all the changes - even the laboriously boring ones.


    Michael Noonan spent forever in Opposition as Fine Gael finance spokesman and one of the highlights of Budget Days were his cutting and very witty speeches, with homely references abounding.


    Michael McGrath is a very fluid speaker and his speech is overtly political. What assists him (and we will also see this with Pearse Doherty when he gets to his feet) is that he is technically very proficient and is in command of the details of his brief.


    Donohoe's speech lacked political context and it suffered for it.
    McGrath is laying context on thick...

  • 14:29

    ...Already he has scored a few goals. He has reminded the Government of its mediocre record so far on housing (3,000 homeless children is a chilling statistic, irrespective of what your political background is) and health (the continuing difficulties with admissions and waiting lists).


    He makes a very good point of the new 6 per cent stamp duties on commercial developments. He says if there is a fall in the volume of such developments, "there will be a hole in the Budgetary arithmetic."


    There is a comfort for Opposition in that they don't have to cost their criticisms. Yep, Fianna Fáíl can also be a hurler on the ditch.


    Still, there were valid criticisms of the tardiness of the Government in collecting the Apple tax monies, as well as to the way in which a Revenue Commissioners report on the border - which raised doubt about an open frictionless border - was "stood down" by the Government.

  • 14:29
    Leo Varadkar’s Strategic Communications Unit is to cost €5 million next year.
  • 14:31
  • 14:32

    The British Irish Chamber of Commerce has said further work is needed if Ireland is to survive the uncertain period ahead.

    It’s president Eoin O’Neill said: “We are facing one of the biggest economic challenges of this generation and while some prudence is necessary, we must also be brave and put forward big ideas to help best protect our future”.

     

    He said greater funding for State agencies will go some way towards supporting businesses exposed to Brexit.

     

     

     

  • 14:34
  • 14:38

    The Irish Council for Social Housing has said this year’s housing budget “demonstrates that the Government is investing in social housing”.

    However, the housing association membership body is “concerned that diverting significant funds to supporting the private rental sector represents bad value for money”.

    “Social housing is an essential public service, and new spending should be used to rebuild the country’s depleted social housing stock,” it added.

  • 14:38

    Harry McGee: Now Michael McGrath is going into the details as he winds up his speech.


    We get a a rare welcome on the new initiative for construction of homes for private developers.


    He neglects to mention the suggestion by his colleague Barry Cowen that there be a temporary decrease in VAT for construction projects.


    That met such a barrage of criticism that it was effectively quietly dropped by Fianna Fáíl.


    And he passes the baton onto Dara Calleary.
    He is looking at the public expenditure side.
    Here is where he will outline where, he claims, Fianna Fáil had an "imprint" on the Budget.


    Like McGrath he claims the two-to-one ratio between spending and tax cuts as a Fianna Fáil win.
    As it happens it is well over two-to-one, unless my own sums are totally wrong.


    Dara Calleary now listing out a list of things achieved by Fianna Fáil in this Budget.
    His speech is sounding suspiciously like... Paschal Donohoe's!

  • 14:39
  • 14:40
  • 14:41
    The minimum wage is to increase to €9.55 from January 2018.
  • 14:42
  • 14:43
    Sinn Fein's contribution will be interesting: their Twitter feed has already focused on attacking Fianna Fail (who attacked them), and Fine Gael for Donohoe's refusal to debate their finance spokesman Pearse Doherty.  
  • 14:44
  • 14:46
  • 14:46
    The Irish Human Rights and Equality Commission has said that, for the first time, there has been progress in setting out a “focused approach to equality budgeting”.
  • 14:47
    Other bits we might have missed include the introduction of a share-based incentive scheme for SMEs.
  • 14:50

    Irish Heart head of advocacy Chris Macey said the introduction of a sugar sweetened drinks levy is “probably the single most important action Government can take to tackle Ireland’s obesity crisis”.

    “This is a landmark day in the fight against what is now recognised as perhaps the biggest threat to the health of the nation,” he said in a statement.

    The tax on sugary drinks is attracting a lot of reaction and debate.

  • 14:50

    Donohoe also announced a new scheme to compensate charities for VAT paid in 2018.

    On climate change, the carbon tax reform has been long-fingered to Budget 2019.

  • 14:52
  • 14:58

    SIPTU president Jack O’Connor isn’t happy with the budget.

    He said it was “a slick piece of political presentation but morally indefensible”.

    “In the midst of a housing and homeless crisis the government has chosen to deploy 335 million on token tax cuts, 461 million on continuing the VAT give away to bad employers in the hospitality sector and 1.5 billion on a totally unnecessary ‘pet project’ rainy day fund.

    “It is the first time since the great collapse of 2008 that we had a chance to transform our grossly unequal society. Instead, Fine Gael and Fianna Fail, backed by a coterie of right wing independents, have chosen to take us back to the old value system that precipitated the economic and financial crash in the first place.”

    So there.

  • 14:59
    Cliff Taylor: A full   Irish Times investigation reveals that the "shock" increase in VAT on sunbeds from 13.5 per cent to 20 per cent is going to raise nothing. Zippo. Presumably officials believe that the higher price will discourage use.
  • 15:00
  • 15:01
  • 15:02

    Labour leader Brendan Howlin said it was a “stand still” budget for the two main policy areas of health and housing, with no real vision outlined by Fine Gael.

    “Most people will give a shrug and say there is nothing in this,” he told RTE.

    On the rise of stamp duty on commercial property he said this was based on the assumption there would be more transactions next year. It is the sort of speculation, he said, that landed Ireland in trouble before.

  • 15:04

    The Residential Landlords Association of Ireland has called the budget “extremely disappointing”, and one which will do little to tackle the shortage of rented accommodation.

    “When draconian rent control was introduced in December 2016, promises were made to review the penal tax regime applying to rental income in the budget but nothing has been done in this regard,” it said.

    “While penal taxes will continue to prevent the private rented sector from functioning properly and growing, they are however only part of the problem. The regulatory framework is seriously deficient and must be reviewed.”

  • 15:05

    The Small Firms Association (SFA) welcomed the employee share options scheme (KEEP) for small business.

    It said it has the potential to deliver improved management capacity, staff retention and productivity.

    “Currently, only 6 per cent of employees in Ireland are shareholders in the company where they work, compared to the EU average of 22 per cent,” it said. “Our members are keen to see the detail of the scheme and to start using it to help their businesses to grow and reward their key employees.”

  • 15:13

    Sinn Fein finance spokesman Pierce Doherty begins his Dail address by admonishing the record of the health service. And then Fine Gael’s tax cutting measures will “return us to the boom and bust” approach of the past.

     

  • 15:13

    Harry McGee on Fianna Fail spokesman for public expenditure Dara Calleary’s post-budget speech:

    Dara Calleary is obviously more confident now than last year and delivered a solid if unspectacular speech.

    His best political point was in relation to the arts budget. He pointed out that Taoiseach Leo Varakdar had promised to double spending on the arts.

    The outcome was a paltry 4 per cent increase or an overall figure of €9 million for Heather Humphreys Department. And that includes Irish, which gets a welcome €.2.5 million.

    At the same time, Calleary points out that the new Strategic Communications Unit in the Department of the Toaiseach (the so-called Government "Spin Department") will cost €5 million to set up.

    If true, this will provide a bit of a political embarrassment for the Government as Varadkar said the unit would be cost neutral.

    Calleary also finished his speech with an interesting criticism of commentators and a condemnation of the "game" where there is endless speculation as to what is in, and what is out, of the budget.

    I write this as Pearse Doherty speaks. He has also identified that the "spin" unit will cost €5 million per year and is also drawing attention to the Taoiseach's claim it would be cost neutral.
    That area will be one of the big controversies of this Budget.

  • 15:14

    “What does it mean for the parents who have watch their children in pain” because of the crumbling health services, Doherty said.  

  • 15:15
  • 15:15
    Sinn Fein finance spokesman Pierce Doherty used his Dail address to admonish the record of the health service - and Fine Gael’s tax cutting measures which will “return us to the boom and bust” approach of the past.  
  • 15:17

    Irish Times Education Editor Carl O'Brien: There is some good news for education.

    Extra funding to hire teachers will help tackle overcrowding in primary school classrooms. It means the pupil-teacher ratio is set to reach the lowest ever level recorded of 26:1.


    Right now, Ireland has some of the largest class sizes in Europe, with more than 100,000 children being taught in "supersize" classrooms of between 30 and 40 students.


    Higher education and training is also set to get a boost. It will get an additional €64.5 million. The bulk of this is from an increase in a payroll levy on employers.

    While welcome, third-level colleges are likely to say is still falls short of what's needed to tackle a funding crisis.

  • 15:18

    The Irish National Teachers Organisation (Into) said the additional teachers will help tackle Ireland’s overcrowded classes in primary schools and give some valuable context to the move.

    It will see more than 300 additional primary teachers appointed.

    “Currently Irish classes at primary level are among the largest in the EU, second only to the UK,” the Into said.

    “Irish classes have an average of 25 pupils compared to an EU average of 20 per class. Around 100,000 pupils in Ireland are in supersized classes of 30 or more.”

     

  • 15:24

    In a string of tweets Solidarity has criticised today’s announcements on the basis of measures benefitting builders and landowners, with nothing for young people.

     

  • 15:25

    Harry McGee has more analysis on the speeches.

    Next up is Sinn Fein finance spokesman Pearse Doherty:

    Pearse Doherty is also a great speaker and his bellowing has been gradually mellowing over the years.

    He has gone from shouty to controlled indignation and it makes a difference.

    He has succeeded in portraying a clear ideological gulf between Sinn Féin and the Government parties.

    Primarily, this has manifested itself as an attack on the Government's tax cuts of €335 million, which, he says, was unnecessary given the exigencies of housing and homelessness.

    He scores a couple of good points with examples of how the cuts in income tax bands and USC will impact on people's lives.

    For example, he says, those on incomes of €20,000 will benefit to a miserly €53 per annum while those on €30,000 will get an extra €78 per annum, or about €1.50 per week. Doherty describes this, sarcastically, as "life-changing".

    In contrast, he argues, those earning €70,000 or more will get an extra €328 per annum.

    It's all very modest, but Doherty has made a strong argument that the changes have not been proportionate.

  • 15:25
  • 15:25
  • 15:27

    Age Action has welcomed the increase in the State Pension and other incomes supports for older people announced in today’s budget.

    Justin Moran, head of advocacy, said: “An increase in the State Pension was the top priority for our members in Budget 2018.

    “After years of cuts, new taxes and rising prices we’re very pleased the Government is delivering on the commitments it made to restore the incomes of Ireland’s pensioners.”

    However, the organisation expressed its disappointment at the decision to delay the pension increase to the end of March and the failure to reverse the 2012 pension cuts.

    “It is disappointing the pension increase is again delayed, especially when it is needed in January and February to help pay heating bills.

    “We had also hoped to see progress on reversing the 2012 cut to the State Pension which punished tens of thousands of older people for taking time out of the workforce to care for their families.”

  • 15:31
    Fianna Fail's finance spokesman Michael McGrath giving his reaction to the budget in the Dail earlier.
    Fianna Fail's finance spokesman Michael McGrath giving his reaction to the budget in the Dail earlier.
  • 15:34

    Rehab, the disability charity, has welcomed the increase in welfare payments and reduction in prescription charges but has raised the issue of Ireland still having not ratified the UN Convention on the Rights of Persons with Disabilities.

    “The Government must recognise the higher cost of living for people with disabilities and must continue to increase disability payments into the future,” it said.

    “It is past time the Government delivered on commitments made to the 600,000 people with disabilities and their families in Ireland if they are to improve the quality of life of people who comprise more than 13 per cent of the population.”

    The charity has also said improvements need to be made in ensuring a greater take up of employment among those with disabilities.

     

  • 15:36
  • 15:40

    The Free Legal Advice Centres (FLAC) have expressed disappointment that no funds were allocated for the abolition of civil legal aid fees for victims of domestic violence.

    FLAC has long campaigned for civil legal aid fees to be automatically waived for victims of domestic violence when seeking safety, protection or barring orders.

    It had also campaigned for a comprehensive and realistic review of the budgetary requirements of the Legal Aid Board so that it could deal with the waiting times for legal aid. It had hoped that these issues would be addressed in Budget 2018.

    “However, the Legal Aid Board has received an increase of just over 3 per cent, in comparison to last year when the Legal Aid Board received an increase of 12 per cent,” FLAC said.

    “These figures are disappointing. We had hoped that the Legal Aid Board would be sufficiently resourced to allow for the abolition of the requirement on victims of domestic violence to pay a charge for legal aid.

    “We are concerned that the 3 per cent increase will not allow the abolition of legal aid fees in domestic violence cases. We are further concerned that the allocation will not have any significant impact on the waiting list.”

  • 15:41

    Although of scant surprise to anybody, the Government’s decision to hike up the price of cigarettes has provoked the ire of the “Retailers Against Smuggling” organisation, which claims 3,000 small and medium sized business members across the country.

    “Retailers are angry at the Government’s decision to impose yet another excise increase of 50 cent on tobacco, bringing the total cost of a packet of cigarettes to €12,” it said.

    “The move comes despite the Tax Strategy Group clearly stating in July that an increase in excise on tobacco would not generate any additional revenue, given the resultant levels of smuggling and money lost to the Exchequer.”

     

  • 15:42

    Harry McGee on Fianna Fail finance spokesman Michael McGrath a bit earlier:

    Now Michael McGrath is going into the details as he winds up his speech.

    We get a rare welcome on the new initiative for construction of homes for private developers.

    He neglects to mention the suggestion by his colleague Barry Cowen that there be a temporary decrease in VAT for construction projects.

    That met such a barrage of criticism that it was effectively quietly dropped by Fianna Fáíl.

    And he passes the baton onto Dara Calleary.

    He is looking at the public expenditure side.

    Here is where he will outline where, he claims, Fianna Fáil had an "imprint" on the Budget.

    Like McGrath he claims the two-to-one ratio between spending and tax cuts as a Fianna Fáil win.

    As it happens it is well over two-to-one, unless my own sums are totally wrong.

    Dara Calleary now listing out a list of things achieved by Fianna Fáil in this Budget.

    His speech is sounding suspiciously like... Paschal Donohoe's!

  • 15:42
  • 15:44
  • 15:49
  • 15:57
    Not sure what Budget 2018 means for you? You can join our in-house experts Dominic Coyle and Fiona Reddan along with PWC tax consultants Beryl Power and Alanna O’Doherty who will be answering your budget questions live here from 7.30am tomorrow. You can submit your queries now.
  • 16:01
  • 16:04

    The organisation representing Irish students has said it is concerned by a lack of “meaningful” investment in education access through increased SUSI grant thresholds or to improving on-campus mental health services.

    “No income-contingent student loans were announced today, but neither was any meaningful new funding model on how third-level education should be funded,” said Michael Kerrigan, president of the Union of Students Ireland (USI).

    “A €250 decrease in fee level would come at a relatively small cost to the State, and alleviated pressure on the payment of fees that have doubled over a period of six years.”

    The body welcomed €310 million made available to 2021 for infrastructure needs and an increase in National Training Fund levy to add €47.5m of additional investment next year.

  • 16:12
  • 16:14

    Solidarity TD Ruth Coppinger has criticised the Government’s approach to funding housing, saying there was a crucial need for local authorities and housing agencies to take control of supply.

    “Fianna Fail backed them [Fine Gael] up all the way and were involved in writing this budget,” she told RTE. “They won’t give us a recovery.”

    She described the vacant site levy, which can rise to 7 per cent, as being “extremely low”.

    On the issue of childcare, she said the Government had made a big deal of it last year but there was very little delivered in Budget 2018.

    While there was an increase in the free pre-school funding, Coppinger said “if you don’t have a child aged three or four you get nothing in terms of support”.

    Families who are struggling with rents will be disappointed by this, she said.

     

  • 16:20

    Property Industry Ireland (PII), the Ibec group for businesses working in the property sector, has said that a focus on housing is welcome, further steps could have been taken help the viability of homebuilding.

    PII director David Duffy said: “The commitment to increase spending on housing infrastructure and the establishment of the Home Building Finance Ireland should stimulate some additional supply.”

    “PII had urged Government to retain the help-to-buy scheme. The decision to leave it unchanged in today’s budget will help bring certainty to the new homes market.

    “Viability remains a key constraint. We feel that the budget missed the opportunity to implement measures to improve the viability of homebuilding, for example a reduction in the VAT rate for construction.”

  • 16:31
  • 16:34

    Marian Finnegan, chief economist with estate agents Sherry FitzGerald, said the budget was “relatively positive from a property perspective”.

    “However, disappointedly, it failed to address key issues relating to the residential rental market,” she added.

    “One of the most significant announcements in today’s budget, with regard to property, was the increase in commercial stamp duty rates from 2 per cent to 6 per cent.

    “This measure is an attempt to broaden the tax base, however, it is unlikely to raise as significant a quantum of funds as some estimates have suggested.”

  • 16:42

    More from Harry McGee.

    He’s looking at the overall picture that has emerged from the budget:

    Are there any big message, or big booby traps in today's Budget?

    There are a few hostages to fortune but nothing major like the 'Dirty Dozen' social welfare cuts that were identified in a Charlie McCreevy Budget in the early 2000s.

    The €5 million budget for the supposedly 'cost neutral' Strategic Communications Unit will attract some criticism.

    As will the failed promise by Leo Varadkar in terms of spending on the arts. He promised a doubling of the budget but the increase here has been very modest indeed.

    There are some eye-cacthing omissions too. Fine Gael TDs lobbied very hard to increase the threshold at which inheritance tax kicked in for direct relatives. It stands at €310,000 after being increased from €280,000 last year. Yet, Paschal Donohoe left it untouched.

    There was also no mention of child benefit. After being cut for years it has experienced a modest increase in recent years. Joan Burton of Labour claimed that arising from it that families with children had done worst out of the budget.

    Another area that suffered big cuts during the recession was Overseas Development Aid. Donohoe did mention an increase but it is very modest indeed.

    Another potential pitfall is the decision to increase the stamp duty on non-residential property from 2 per cent to 6 per cent.

    This could come back to bite the Government on two fronts.

    The first is if there is a dip in commercial developments, which will result in the Government failing to get a €400 million yield.

    The second is a corollary of that: many Opposition spokespeople have accused the Government of returning to the "boom and bust" policies of Fianna Fáil, by relying on once-off, transactional and unreliable property taxes to finance permanent spending.

  • 16:50
  • 17:01

    So there you have it.

    Plenty of happy campers and some not so happy campers, but at least the guesswork is now over and we can begin to digest what it all means.

    To help with that, Cliff Taylor has cast an eye over the whole thing, and his analysis is here.

    We’re going to wrap up the live blog now, but keep an eye on irishtimes.com throughout the evening for more news and analysis.

    Also, don’t forget to join us here in the morning from 7.30am when our crack team of experts will be dealing with all your budget-related queries.

    Thanks for reading.