Monday 21 January 2019

'I think you have forgotten the people who can only get as far as their knees' - Paschal Donohoe answers questions from the public on Budget 2018

Paschal Donohoe is in studio with Sean O'Rourke this morning
Paschal Donohoe is in studio with Sean O'Rourke this morning
Paschal Donohoe is in studio with Sean O'Rourke this morning
Paschal Donohoe is in studio with Sean O'Rourke this morning Newsdesk Newsdesk

Finance Minister Paschal Donohoe has fielded a number of questions on his first Budget, insisting it is not an election budget.

The Fine Gael minister was in studio with Sean O'Rourke on RTE Radio One, where he repeated his mantra that the Budget was based on "steady" increases for people and that he could only make the available funds stretch so far.

On social housing Mr Donohoe defended the Government's social housing policy announced on Tuesday.

Planning permission and construction processes are the "nub of the challenge" for bringing additional houses on stream he said. That is why the Government has focused on Housing Assistance Payment next year he said.

"I know there are people asking questions why don't we announce more new homes to be built...the difficulty we re planning permissions, tendering," he said.

"The nub of the challenge is we still have to go through planning permission - and we still have to build it [the house].

Members of the public from across the country called the show to speak with the minister directly.


One caller, Teresa Murphy, who owns a Galway childcare business, said she viewed the Budget with disappointment as it didn't address issues in the childcare sector including low wages and staff shortages.

Ms Murphy said her business, which employs 58 staff, is struggling to hold staff.

In response Mr Donohoe said that his job was to use the money available across a number of sectors in a way which could benefit the most people.

"This is a very clear example of the choices i need to make," he said, praising his Cabinet colleague Katherine Zappone.

Paschal Donohoe is in studio with Sean O'Rourke this morning


Meanwhile, in relation to the tourism sector, the Government opted not to change the 9pc VAT rate in the sector, saying that policy could not be dictated on Dublin alone.

Niall, a caller to the show, said prices in Dublin hotels were costing around €259 per night on a room.

Minister Donohoe said he agreed prices were too high in the capital but said that supply is coming down the line which will add more hotel rooms, lowering prices.

"I'd rather make a further decision on the VAT rate when I'm clearer on what is going to happen with the British tourism sector," Mr Donohoe said.

A regional difference on VAT rates for the sector is not possible due to the way VAT law is constructed he said.


Private landlord Ciaran "who looks after his tenants" feels like he has been unfairly taxed in comparison to some tenants.

However, Minister Donohoe said that if he were to allow rental income not to be taxed he would end up with a "smaller and smaller base".

Ciaran is considering leaving the rental sector, which will leave him with a loss of €100k, which he will not be able to write off against his future earnings.

"I have a broader duty to make sure that we have a tax base and a tax code that is resilient,"Mr Donohoe said.

"I'm not in a position to do everything for everybody," he said.

Vacant site levy

Mel Gannon, from Galway, had a question about a vacant site which has planning permission for a block of apartments. He questioned why the vacant tax levy was not introduced at the same time as the property tax scheme.

"We were dealing with a completely different situtaion.. a situation of ghost estates, of having far more houses built than were needed at the time," Minister Donohoe said.

The vacant site levy is to increase from 3pc to 7pc.

Fuel allowance

Marian, a pensioner who is renting having lost her home, said she and her husband are €22 over the income threshold for the fuel allowance.

"I'm sure there are more people than ourselves in this situation - how many people lost their home and will be renting? We can't afford to buy a home again at this stage in our lives," she said.

"We're handing out for rent every month and this isn't taken into account with our fuel allowance. It doesn't make sense Minister," she added.

The Minister acknowledged that Marian and her husband are in a difficult situation.

"We have construct our means test so it is fair to everybody. I'm afraid you're in a very difficult situation. Many people just qualify. Of course, I acknowledge there are people who don't," he said.

"I hope over time we can make progress in both the level of payment and how we means test it."

Commercial stamp duty

On commercial stamp duty one caller, Enda in Carrick-on-Shannon, said he is left needing to find €40,000 extra to purchase his business property.

"We rent our premises on a long term lease and have a option to buy at the end of this year," he said.

"With the stroke of his pen the minister has added €40k to the cost of us doing it."


Eamon Tynan, a pensioner from Co Longford, explained his wife's predicament which is costing her €35 per week in her pension payments.

Mr Tynan's wife worked a summer job in the sixties when she was a secondary school student before joining the civil service.

"Her contributions are now averaged out and divided by 50," as a result he said.

The problem was a "huge issue for women retiring around now in their sixties", Mr Tynan said.

"it just seems incredible that we did live in a country that required women to leave their jobs and what we are living with now is the consequences of that," Minister Donohoe said.

"As always my challenge is how can I fix something like this in one go.

"The advice I have available to me that if we were to look to try to rectify this issue in one move in a single Budget would cost hundreds of millions of euro for me to do.

"I have to make choices with the money we do have available," he said.

"Over the next few years going to try to move to a pension system which takes into account the entirety of people's contributions. We're aiming to do that for around 2021."

Social welfare increases

Malcom Murphy from Tramore said his rent has increased by €100 but his Social Welfare benefit will not increase until March, which he said seems "mean-spirited".

"I think you have done a lot to get the country up off the floor but I think you have forgotten the people who can only get as far as their knees," he said.

The HAP payment is "of no use" to people on Social Welfare he added as landlords do not want to accept tenants who are not working.

A delayed introduction of the increases allowed payments such as the Family Income Supplement to also be increased the Minister said.

The Minister also defended sugar tax to non drinker and pioneer Pat who doesn't understand why 'clean living is being penalised'.

Paddy McGoldrick, a pensioner from Donegal, questioned why the rise in payments for pensioners and welfare recipients is not coming into effect until March, while TDs and senior civil servants will have their pay partially restored in January.

Following the questions from the public the minister said the Budget generally is not one of "pre-election measures".

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