From Department of Public Expenditure, NDP Delivery and Reform
By: Minister for Public Expenditure, NDP Delivery and Reform; Michael McGrath
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A Cheann Comhairle,
The backdrop for Budget 2021 is a truly remarkable one.
At the same time, our country and our people are confronted with a once in a century global pandemic and a generational shift in our relationship with our nearest neighbour, the United Kingdom.
COVID-19 has changed completely the way we live our lives. While the damage to our economy has been immense, the ultimate cost of this virus is in the lives it continues to take.
COVID-19 has also brought out the best in us. I think of course of the staff across our health service, of our Gardaí, of all those providing the frontline services we need when things go wrong, and I think too of our cleaners, our shop workers, our care assistants, our hospitality staff, and so many other essential workers, and I think of the thousands of volunteers in communities across the country who have reached out to help others.
The essential task of Minister Donohoe and I today is to give our people hope. Hope based on realism. Hope based on a plan. Hope backed up with a commitment to invest a record amount of public resources to support our economy and our society. The exceptional strength and resilience of our nation means we will get through this.
As our Taoiseach has said on many occasions, we need to protect lives and to protect livelihoods. This is our mission.
These are the guiding principles that shape our approach to Budget 2021.
This is why we are investing a record amount in our health service to ensure it can cope with COVID-19 but also to make permanent improvements that will be here long after the virus is gone.
This is why we are providing more than ever before to build the homes our people need.
This is why we are introducing the largest and most ambitious Budget in the history of our State to support our economy, businesses, and households.
The day will come when COVID-19 is behind us. The day will come when there is no more talk of Brexit. Everything will not go back to the way it was before, nor do we want it to, because we are committed to making things better.
A new economy, a Green economy will emerge, so too will be a greater understanding of how much we all really rely on each other, and so will a greater appreciation of the many simple things that perhaps we too often take for granted.
The task for this government is to guide the country through one of the most difficult periods in our history.
We won’t always get it right, but our sole motivation at all times will be to act in the best interests of the people we are privileged to serve.
A Cheann Comhairle, I will shortly outline our Budget plans for 2021. However, I believe there are immediate measures that we need to take this year to protect our economy and our society.
For this reason, I am providing €500 million in additional expenditure measures to support our businesses and our communities. This is in addition to the tax measures announced by Minister Donohoe which come into effect in 2020.
I am announcing a further commercial rates waiver for the final quarter of this year at a cost of €300 million. This will provide significant relief for businesses, and brings to €900 million the total amount of local authority rates waived in 2020.
In refunding 100% of this amount to local authorities, the government is ensuring that Councils are supported to deliver key services to our local communities.
The services delivered by Irish Water are critical to unlocking housing supply across our country. The government is therefore investing an additional €44 million in Irish Water over the remainder of this year to deliver a range of infrastructure improvements.
I am also immediately providing an additional €80 million to the Department of Education to support its school building programme, ICT and minor works schemes.
A Cheann Comhairle, so many families throughout our country rely on the invaluable services provided by a range of voluntary disability service providers. Today, I am very pleased to announce an additional €20 million in current year funding for voluntary disability service providers to support the Transforming Lives Programme.
We are all aware of the extraordinary support provided by voluntary hospices to families in their darkest hour. In recognition of this and given the particular fundraising challenges they have faced in the past six months, I am providing €10 million in current year funding to voluntary hospices.
Our Budget for 2021 is prepared on the basis that we will continue to live with COVID-19 into next year and that a free trade agreement between the EU and UK will not be agreed.
Given the uncertainty on both fronts, this is a prudent approach.
It means making available additional resources for our health service and for income and business supports. It means providing the necessary funding to deal with all Brexit scenarios.
But our priorities extend beyond this.
We are determined to deliver on Programme for Government commitments – implementing Sláintecare, building more houses, greening our economy, and supporting labour market activation and training.
Delivering across all of these areas requires an unparalleled response from Government. Therefore, I am committing to a budget in 2021 that will see public expenditure increase by €17.4 billion over and above the planned expenditure for 2020 pre-COVID.
€8.5 billion is being provided for COVID-19 supports. Of this, €6.4 billion will be allocated to departments in 2021 to:
In addition, the remaining €2.1 billion will be held in contingency and will be made available as needed to respond to the challenges posed by COVID-19.
As we address the challenges of this pandemic, I am fully conscious of the need to continue to deliver vital day-to-day public services and improve them where we can. Therefore, I am allocating an additional €3.8 billion in core current expenditure across departments in 2021.
Further, around €340 million of voted expenditure will be spent on Brexit supports in 2021. This includes an additional allocation for compliance expenditure in 2021 to finalise work at our ports and airports and provides for around an additional 500 staff bringing the total provision for approximately 1,500 for operationalising checks ahead of January 1st.
I am adding a further €600 million to our capital budget in addition to a planned increase of €1 billion for 2021 under the National Development Plan. Taking into account capital expenditure related to Brexit and COVID measures, this will bring the total Exchequer investment in capital to over €10 billion for the first time ever and will deliver key projects in the areas of climate, healthcare, public housing, transport and education.
Finally, as highlighted by Minister Donohoe, a €3.4bn Recovery Fund is being provided to address specific economic needs as they arise.
A Cheann Comhairle, the scale of this Budget package is unprecedented but is the right response given the gravity of the challenges we face on multiple fronts.
Our experience of COVID-19 has reminded us all that our health service is a core public good, important not only for medical services but a bedrock of the nation’s social and economic wellbeing.
To support the health system through this crisis, Government has already moved quickly to deliver additional capacity in our hospitals, to develop the testing and contact tracing system, and for the purchase of PPE. We have also provided in full for the HSE’s 2020 / 2021 Winter Initiative.
I can also confirm that Ireland has signed up to EU advance purchase agreements in respect of potential COVID-19 vaccines so that when a medically approved vaccine becomes available, we will be in a position to benefit from it.
A Ceann Comhairle, even before COVID-19 arrived to our country, our health service faced deep-seated and systemic challenges, and for too long the resources we have allocated have failed to resolve them. Addressing these challenges requires a step-change in our approach. We must grasp the nettle, implement Sláintecare and re-double our commitment to a publicly funded, universally accessible health service.
In 2021, I am making available an unprecedented extra €4 billion for our health service. These resources will provide capacity for 100,000 tests a week, supply PPE where needed and continue into 2021 all of the necessary COVID-19 Action Plan measures which have been put in place since March.
As well as dealing with COVID-19, we must build up permanent capacity and resilience in the health service in line with the Health Service Capacity Review and the funding I am making available today will allow significant progress in this direction.
With these resources, the Department of Health and the HSE will deliver the following changes next year:
The funding we are providing will support immediate actions to address waiting lists with approximately 100,000 additional inpatient and day care procedures through investment in public hospitals and utilisation of spare capacity in Private Hospitals and via the National Treatment Purchase Fund.
A Cheann Comhairle, I am delighted that mental health services are being prioritised in this Budget, especially given the very difficult year we are experiencing. €38 million will be available to implement Sharing the Vision, our national mental health strategy.
Another priority area for the government is the area of disability services. For this reason, €100 million is being provided for new disability measures next year. This will provide supports for approximately 1,700 school leavers, deliver the resumption of day services, promote disability integration and deliver respite services, de-congregation and increase personal assistant hours.
Importantly, these measures will be supported by up to 16,000 additional posts across the health sector.
The professionalism and spirit of our healthcare and frontline workers has been inspiring. Our rapid move to telephone triages, online prescribing, shorter hospital stays and innovative community care measures, have also unlocked a path forward for us in modernising our public health system, and we must move forward along this path in 2021 and over future years.
Our investment in capital projects will be a key part of moving our economy forward in the years ahead.
This is the right time to invest in improving infrastructure across the country.
This makes clear economic sense for so many reasons.
In direct response to COVID-19, €500 million was provided as part of the July Stimulus to accelerate capital works and to generate jobs and economic activity across all regions of the country.
Together with the additional €600 million I am providing for core capital investment in 2021, the State will, for the first time in our history, deliver over €10 billion in Exchequer resources for critical projects across all regions of our country.
These projects include:
The government is committed to supporting investment in our ports and airports, including at Dublin Port and Rosslare Euro-port. In addition, a €10 million provision is being made to address challenges facing Cork and Shannon Airports.
Government looks forward to working with our EU colleagues to deliver a common approach to aviation travel during the COVID-19 crisis.
To ensure our capital spending supports regional development, and to align with Programme for Government priorities, a review of the National Development Plan will be launched shortly. This will result in a revised National Development Plan for the next decade.
A Cheann Comhairle, twenty two years ago, the Good Friday Agreement helped to bring peace to our island. This government is committed to practical measures to increase cooperation North and South, and to help deliver the full potential of the all island economy.
Building a Shared Island is a key commitment in the Programme for Government, and to this end, we have established a Shared Island Unit in the Department of the Taoiseach. Today, I am announcing new multi-annual capital funding for the Shared Island Initiative of €500 million over 5 years.
This will foster new investment and development opportunities on a North / South basis and support the delivery of key cross border projects as set out in the Programme for Government.
A Cheann Comhairle, a basic need in life is to have a secure place to live. Regrettably, for too many in Ireland, that need remains unfulfilled.
Too many of our people are homeless, on social housing lists and caught in an affordability trap.
For years now, supply has failed to keep pace with demand. Rising rents and house prices have pushed home ownership out of reach for many.
We need a radical reappraisal of how we deliver housing.
When our country was much poorer than it is today, we were able to deliver public housing in very significant numbers. We can and will do this again.
While a mix of supply channels is required, including units built by the private sector, the State needs to place a much greater emphasis on directly building new social and affordable housing.
What is required is a sustained, multi-annual large scale building programme that adds to the overall stock of housing. Doing this will increase supply, alleviate price pressures in the market and make housing more affordable for families.
Today, I am providing €5.2 billion to the Department of Housing, Local Government and Heritage in 2021. This is an increase of €773 million on 2020 and a record level of funding.
An extra €500 million will be directed towards capital expenditure and will facilitate the construction of 9,500 new social housing units in 2021. A total of 12,750 units will be added to the social housing stock including leased units. There will also be a total of €65 million available to fund deep retrofitting of social housing stock.
The current expenditure allocation of €2.4 billion in 2021 will support an additional 15,000 Housing Assistance Payment tenancies and 800 Rental Accommodation Scheme tenancies. This means that approximately 85,000 tenancies will be supported through these schemes next year.
I am providing an additional €22 million to support homelessness programmes including additional beds and the introduction of a Cold Weather initiative. Funding of €13 million will ensure that social housing stock is brought back into use quickly. The result of the recent “Call for Housing” initiative will increase the number of one bed units available for the Housing First Scheme. Tackling homelessness is a top priority for this government and we will do all we can to make urgent and tangible progress on this critical issue.
A Cheann Comhairle, the delivery of affordable housing is a key objective of this government. Thousands of individuals, couples and families find themselves locked out of the property market by high rents and an inability to save a deposit. I am allocating an affordability package of €110 million for 2021 to provide for affordable housing and cost rental schemes. Both the Serviced Sites Fund and the Local Infrastructure Housing Activation Fund will progress the delivery of over 2,000 affordable homes on both private and public land next year.
The Land Development Agency will play a major role in the government’s Affordable Housing Strategy in 2021 and beyond. Upon enactment of the legislation, the agency will have over €1.2 billion of funding available to it to progress a range of projects already underway. This funding, matched with other financing arrangements, will deliver nearly 9,000 affordable housing and cost rental units in the coming years.
€210 million is being made available for lending under the Rebuilding Ireland Home Loan Scheme.
To build social, affordable and private residential units, we need land to be made available in key strategic locations and for that land to be serviced.
The increased capital funding will also allow for an additional €90 million investment in critical water infrastructure projects, including wastewater services, water quality and leakage reduction, as well as playing a critical role in facilitating housing delivery and delivering environmental compliance.
The government is also conscious of the importance of maintaining our Heritage sites and protecting our biodiversity and today I am providing for an additional €29 million in funding. This will be spread across Built Heritage, the National Parks and Wildlife Service and Peatlands Restoration, and will allow for the implementation of a number of Programme for Government commitments in this area.
Turning now to the issue of labour market supports. At the peak, the State was supporting the incomes of well over a million people of working age. Young people and people on modest incomes have been most affected by the economic impact of COVID-19. To support them, the July Stimulus provided:
I am acutely aware of the huge impact that COVID-19 has had on the lives of our young people. Many have had their careers and their lives put on hold. Those entering our labour market from our schools and universities face real uncertainty.
The need to respond has never been more urgent.
Funding for the Department of Employment Affairs and Social Protection will support the incomes of at least 370,000 jobseekers in 2021 and a further 350,000 individuals on the Employment Wage Subsidy Scheme.
Additional funding through the Department of Further and Higher Education will support:
Enterprise Supports
2020 has been a devastating year for many businesses throughout the country. In responding to COVID-19, Government provided an unprecedented level of support through the July Stimulus which included:
As we continue to live with COVID-19 restrictions, the onus is on Government to provide supports to help sustainable enterprises survive.
The Minister for Finance has already set out important tax measures. In addition to these, I am allocating €1.1 billion to the Department of Enterprise, Trade and Employment to deliver:
Additional current expenditure will also be provided to Enterprise agencies and regulatory bodies to meet the increase in the demand for their services arising from COVID-19 and Brexit.
High insurance cost is a critical issue for businesses. This government is determined to make progress in this area. A Cabinet sub-committee, chaired by the Tanáiste, has been established and I look forward to working with Minister Donohoe and Cabinet colleagues to deliver the insurance reforms outlined in the Programme for Government.
With employment pre-COVID of 260,000, the tourism and hospitality industry is hugely important in cities, towns and villages throughout the country. Given its reliance on overseas visitors and the ongoing restrictions on activities, our tourism industry has been hit very hard by the pandemic. Alongside the extensive tax measures announced by Minister Donohoe, I am providing an additional €55 million for a Tourism Business Support Scheme and €5 million for Tourism Product Development. These schemes will also be a vital support for the wider hospitality sector.
I am also pleased to announce that additional funding of €14 million will be provided for the Gaeltacht and Irish language sector next year, bringing its funding allocation to over €78 million. €8 million will be provided for Údarás na Gaeltachta, €2.8 million for Irish Language & Gaeltacht Support Schemes €1.7 million for An Foras Teanga and €1.3 million for the 20 Year Strategy for the Irish Language.
COVID-19 has had a devastating impact on arts, cultural and sporting activities. The spaces that brought us together, often in celebration of some of our most talented people, for now, lie empty and silent.
As they do, it is the responsibility of Government to ensure that the thousands of people working in these industries are supported.
Therefore, I am providing €50 million in Live Entertainment Supports and arts council funding is increasing to €130 million, which is a €50 million increase on last year's allocation. I am also providing an increase of €36 million in funding for Sport Ireland, €7 million for large-scale sports infrastructure and €2 million for major sporting events.
Finally, I am providing an additional €3.5 million for Teilifís na Gaeilge next year.
While managing COVID is uppermost in our priorities this year and next, the climate emergency represents a threat that will be with us long after COVID-19 has gone. It threatens nothing less than our safe future on this planet.
The Programme for Government commits to a transformative approach in how Ireland deals with climate change and it is vital that all of Government and all our policies point in the one direction.
Publication of the new Climate Action Bill is an important step, committing us to ambitious, binding targets to achieve climate neutrality in just thirty years.
As the Minister for Finance has announced, the carbon tax will be increased in this budget. However, we have always been clear that the carbon tax is not designed to raise revenue for the government.
Every single additional euro raised by the increase will be returned to citizens through a package of supports to protect vulnerable people, to secure a just transition, and to reduce our carbon footprint.
While I will set out the social welfare changes shortly, I can confirm that an additional €100 million of carbon tax revenues will be provided for investment in the energy efficiency of our homes. This is an 82 per cent increase in funding compared with 2020, and will greatly expand existing grant schemes including the Warmer Homes scheme where we recognise that waiting lists are too long.
Additional funding will also provide for new energy efficiency schemes including the National Home Retrofit Scheme which will support homeowners who want to upgrade the energy efficiency of their home to a B2 rating. This will lower greenhouse gas emissions while also supporting thousands of additional jobs in the construction sector.
Further resources are being provided to the department and SEAI to implement these changes.
Investment in public transport is an essential part of our climate transition and our green recovery, and I am allocating an additional €1 billion in this area in 2021. The significant increase in allocation will fund:
The Programme for Government commitment in relation to the purchase of electronic vehicles is an important milestone in green public procurement. This will enable increased deployment of electric vehicles across the public service fleet, combating climate change while also delivering value for money.
The climate crisis is no longer on the horizon. It is the great challenge of our generation. We must act now to climate proof our economy and society for future generations.
An investment in education is an investment in our children’s future and is also a wise investment in the future of our country.
While recent months have presented extraordinary challenges for our education system, many of us have witnessed the huge efforts of our teachers, SNAs, principals, and many more working across the sector.
Without their support and commitment, we would not have been able to see the return of almost 1 million pupils to schools this autumn.
The 2021 allocation for the Department of Education is €8.9 billion.
The funding will allow Government to invest €2 billion, a record allocation, to support children with special education needs. This will allow for the hiring of 990 additional SNAs and 403 additional teaching posts. This will mean that, at 18,000, we have more SNAs in schools than ever before and over 17,500 Special Education Teachers. This will support additional special classes and the further rollout of the School Inclusion Model from September 2021.
A Cheann Comhairle, I am delighted to announce today a further reduction in the staffing schedule at primary level by 1 point to 25:1 by providing for over 300 mainstream teaching posts. This is in addition to over 265 posts I am providing to meet demographic pressures across primary and post-primary levels.
I am also providing funding for teacher education to address the shortage of post-primary teachers in Maths, Physics and Spanish.
For the past 50 years, significant investment in education has led to national economic and societal development and wellbeing. The Ireland of today has a flexible, skilled, well educated workforce which has helped the country’s economy diversify successfully in areas such as life sciences, environmental technology, ICT, financial services and agri-food. This investment has also brought greater equality, social mobility and participation in civil society.
With the emergence of the high-technology and information economy, education has been pivotal to Ireland’s success in attracting foreign direct investment. The growth and success of indigenous firms – both those exporting and those serving the domestic market – has depended in significant respects on the availability of a highly skilled and educated workforce.
In acknowledgment of the additional potential of this area, the government has established the Department of Further and Higher Education, Research, Innovation and Science.
The €3.3 billion allocation to the department in 2021 will provide for a range of initiatives, including:
I am also increasing the SUSI fee grant for postgraduate study by €1,500 to €3,500 and adjusting the income eligibility threshold for the grant. Finally, an additional 200 places will be supported in third level through the 1916 Bursary Fund.
Government recognises the particular difficulties caused by COVID-19 for full time third level students and will work to provide additional supports in respect of the current academic year.
As we face the challenges of the future, I believe that this significant investment will deliver long-term benefits for our society and our economy.
Over a long period, our social welfare system has successfully reduced inequality and poverty in our society. Now more than ever, it must continue to protect our most vulnerable citizens.
Therefore, I am announcing a social welfare package of €520 million and committing to maintaining headline rates of social welfare in 2021. I am also committing to a number of targeted improvements in our social welfare code.
I can confirm to the House that, in line with the Programme for Government commitment, the planned increase in the pension age to 67 on January 1st 2021 will not proceed. A Pensions Commission will be established and the government will consider the Commission’s report in due course.
Deputies will be aware that the Christmas bonus is traditionally paid each year to those who at the start of December are in receipt of a long term social welfare payment and to jobseekers who have been supported by payments for longer than 15 months. Given the unprecedented circumstances and for this year only, I am reducing the 15 month requirement to 4 months. The vast majority of persons currently on the pandemic unemployment payment will receive the Christmas bonus if they remain out of work at the start of December. Payment will be made to all qualifying recipients in the first weekend of December.
A Cheann Comhairle, supporting our farmers and rural communities as they respond to COVID-19 and Brexit is an important policy objective for this government.
To support the sector, I am allocating €1.8 billion to the Department of Agriculture, Food and the Marine in 2021. This is an increase of €179 million on the 2020 Budget allocation and will provide:
I am also allocating €341 million to the Department of Rural and Community Development in 2021. This is a 7 per cent increase and provides for an additional €15 million in capital funding to support:
Under the Town and Village Renewal Scheme, there will be a €5 million investment in facilities for digital hubs and broadband connection points across rural Ireland, aimed at enhancing remote working capability and remote access for students.
The remaining capital funding will support increased investment in the Islands and in the LEADER, Local Improvement and CLÁR schemes.
Turning to Justice, I would like to acknowledge the very important role played by our Gardaí and other emergency services in recent months. We have all witnessed at first-hand their invaluable work in protecting our most vulnerable people and supporting communities.
As part of the additional 2020 measures I referred to earlier, an extra €7.5 million is being provided for the Garda fleet. This will provide for the purchase of additional Garda vehicles, the continuation of hired community vehicles and increased telecommunications and vehicle fit out costs.
To further support An Garda Síochána in 2021, I am allocating an additional €147 million to the Justice sector, an increase of almost 6 per cent. Over €27 million will go towards COVID-19 supports with the balance of additional funds providing:
I am also increasing capital investment across the justice sector by over €50 million next year. This means that in excess of €258 million will be available to support:
This government is continuing its commitment to support Children and Young People and those persons who come to this country seeking International Protection.
I am therefore pleased to announce an additional allocation of €120 million for the Department of Children, Equality, Disability, Integration and Youth, a 6 per cent increase on 2020.
This allocation provides:
The provision to the department maintains a €638 million investment in early years and gives continued support for both universal and targeted subsidies under the National Childcare Scheme in 2021.
The government is playing its role in the international community. Therefore, I am providing an additional €30 million to the Department of Foreign Affairs in 2021. This funding will see our official development aid package increase to €867 million. Together with our participation on the UN Security Council, where we are now at the heart of decision-making on matters of vital importance, our continued investment in overseas aid will enhance and strengthen our presence internationally.
Looking ahead, we must be agile in our response to the many challenges we face and I believe that this Budget delivers on that.
However, the resources available to Government are not limitless. Over the medium term, we will have to ensure that our approach to public expenditure is sustainable.
Now more than ever, taxpayers’ money needs to be focussed on outcomes. The money we spend must lead to better services for our people and every part of Government will need to ensure value for money is achieved.
This will be delivered through reforms to the public spending code, particularly around how we manage larger capital projects. Initiatives such as the spending review process, performance budgeting and equality budgeting will also have an important role to play.
Economic progress is about more than just GDP or indeed the scale of resources allocated on budget day. It is about how successful we are in improving public services, how we care for and provide for one another, and about the quality of life in our communities and in our environment. I am therefore committed to developing a well-being budget framework to present a balanced picture of how Irish society is progressing, and to guide how we allocate resources in future.
Further details of this and other initiatives are outlined in the Expenditure Report and in the the Citizen’s Guide to the Budget, both of which are published today.
A Cheann Comhairle, we do not have to look far into our history to see moments of great uncertainty for our country.
We have faced what have often seemed like insurmountable challenges.
However, what is common across these periods of great difficulty is that we have always come back stronger.
While there is no doubting that the weeks and months ahead will be difficult. Of course the journey ahead is uncertain.
We must not lose faith in ourselves, our communities and our country to meet these challenges as we have done so in the past.
I want to reassure the Irish people that this government will do everything in its power to protect our people.
Ireland will get through this. We will stand together and we will persevere.
This Budget puts in place the foundations for our economic recovery and a brighter future for all our people.
In 1963, President Kennedy stood in our national parliament and said:
‘It is that quality of the Irish - that remarkable combination of hope, confidence and imagination - that is needed more than ever today.’
Let all of us who share this island – from wherever we come – now move forward with a renewed and shared sense of confidence in the hope of a better tomorrow.
I commend this Budget to the House.
ENDS