Taoiseach: my budget plans
As he concludes his whistlestop tour of fellow EU states, Leo Varadkar tells the Mail about his Brexit strategy, his general election plans – and what he’ll do for the people who get up early...
Q :In relation to Brexit, both yourself and the Tánaiste have now said you would be open to an extension in the negotiations. We believe Theresa May is not going to seek this, because she has repeatedly said that March 29, 2019 is the departure date. So if it came to it, would you be prepared to put it forward as a suggestion?
A
:‘No... it is totally hypothetical and what I think we should focus on is getting a deal done, getting it done by the end of October so that we can have it ratified by March. And you know, deadlines focus the mind, and forcing people to make decisions and politicians compromise.
So, the only scenario under which I think extending Article 50 would make sense would be if we didn’t come to an agreement and we are facing the prospect of a hard deal, or no-deal, hard Brexit, which would be bad for absolutely everyone: UK, Ireland and Europe, and if the UK requested an extension. I don’t think that it would be feasible to try and impose that on them, so it’s kind of a double hypothetical.’
Q :So even in the event then that we are trundling towards the deadline, it looks like we are not getting anywhere, you wouldn’t be prepared to go forward and suggest that the EU would put it to Britain: do you want to take more time on this?
A :‘No, I really think that would have to come from them. I think it would. You know the prime minister and the British government have been very clear and very blunt that they are leaving at the end of March and that’s it. Only they are the ones who can decide that they are willing to stay in a bit longer… it’s not really for us to make those decisions for them. And I think that it would backfire. I think it would be seen as interference or bossiness or bullying from another country.’
Q :When you campaigned for your leadership, one of the things you campaigned for was the ‘people who get up early in the morning’. In this budget, what can the people who get up early in the morning expect to get? What are you going to do for them?
A :‘You are right, and I am trying to make it a hallmark of my time in office, that what I want Government to do is to reward work and to recognise the millions of people in Ireland who get up early in the morning, work late at night, work shift, work very hard, don’t expect very much from the Government except that the Government helps them out every now and then. And that is very much what I want to do.
So in short, there can be three things in this budget that I believe can proof the budget, if you like, for hard-working people and families who are just about managing.
The first is to make sure it is prudent, that we broadly balance the books and start reducing the debt, because if we repeat the mistakes of the past, the people who will suffer the most are working people, because they are the ones who may lose their jobs.
They are the ones who may see their pay cut again. And I never want to ever experience that in Ireland ever again. So, the first thing is to make sure it is prudent, that we broadly balance the books and keep paying down the debt.
The second is on tax, I think there is a real unfairness in the Irish tax system. We are a low-tax country, but there is one anomaly, one exception and that is people on very modest incomes hit the highest rate of income tax far too quickly.
So, the average person, you know working full-time – leaving out people working part-time, students – the average person working full-time in Ireland, earns about €44,000, €45,000. And they pay the highest rate of income tax on some of their income. And that’s not the norm in other European countries.
So just like we did in the last budget, I want to raise the threshold, raise the point at which people pay that highest rate of income tax, you know the 40%.
So, fewer people pay it, and those who do pay less of their income on it, and that is something I am determined to see in the budget.’
QWhat threshold are we talking about?
A :‘That’s the variable, and that’s what we have to figure out between now and budget day. Because there are competing priorities. And then the third area – and I think this is really important – is around reducing the cost of access to services, and that is one way you can really help people out.
And in the last budget, we reduced prescription charges, both for people with medical cards and people who don’t. We brought in subsidies for childcare. And then in previous budgets, for example, we have brought in paid paternity benefit for fathers – so we are looking at a few things in that space.
None of it is decided yet, but the kind of things that, if you like, that are in the mix is improving subsidies for childcare, which obviously would help families who face childcare bills.
The other is the possibility of bringing in parental leave – additional parental leave benefit so that parents could have more time off with their kids when their kids are born and share that among them...
But at the moment there is no what we call ‘parental leave’, which would be in addition to that [maternity and paternity leave] and a couple could share amongst themselves as they see fit.
I will be thinking of trying to extend free GP care to some more low-income families
And then the other area again was around access to the cost of medicines, prescriptions charges and access to GPs – because that €50 or €60 is an enormous bill for people who are on modest incomes, for people who are budgeting, and potentially run out of money at the end of the week or the end of the month – the fear of that bill is a huge one.
And we have just passed the legislation to bring in the free GP care for carers. So that will happen anyway, but we will be looking to see what we can do in 2019. And again, I will be thinking of trying to extend free GP care to some more low-income families.
So, these are people, and everyone knows them – they earn too much to qualify for anything under a means test, but earn enough to pay tax, and I’d like to do something for them in particular.
And I think the free GP care for under-sixes helped, and one of the things we will be looking at anyway is raising that income threshold so that more working people who are just below the limit now for free GP care and might move into it.
But none of those things are… nailed down yet.’
Q: But you are looking to prioritise those or certainly work on those?
A: ‘Yes.’Q: In other fields when supply is needed, we lower tax rates. There is a massive shortage of rental properties, so would you consider or are you creating an incentive for landlords to make properties available, in the area of a tax break for them or some kind of tax reduction, some tax relief for them?
A: ‘There are a lot of incentives already: there is the rent-aroom, for example. I think you can earn up to €12,000 a year without paying any tax on it, that’s where you rent a room in your property, so there are some already.
One of the things we are doing as well is on mortgage interest relief, you know, if you buy a rental property you can offset the cost of the mortgage interest from the rental income.
And during the recession, instead of being able to knock 100% off, that was reduced to 75% and we are increasing that back up towards 100%. But the overriding thing is supply though, and it’s actually the most important thing is to build them.’ Q : So just for argument’s sake, say there is a family who inherited a house and it’s sitting there. And it is not in their favour to rent it out financially, because they’ll have to pay tax on it, and it just won’t work for them, because it will be another income… How can you incentivise those because there are properties there like that?
A: ‘The important thing is that they be used, so whether they rent it out or sell it on, it’s a good thing. And while there are a lot of people looking to rent, there are also a lot of people looking for somewhere to buy and would love to be able to buy their first home or upgrade.
So I think the most important thing is that we build more houses and apartments, and that we increase supply. And that is really picking up; I think everyone can see that now.
Last year, 14,000 new homes were built, up 75% on two years ago. And we expect to hit about 20,000 this year, you know, so the overriding thing has to be supply, and then dealing with vacancy.
But vacancy is tricky, you know, we are examining the idea of putting a charge or levy on vacant homes and vacant apartments, you know ones that could be brought into use that aren’t.
But when you study that in detail, there is often very good reasons why they are vacant.’
Q: ‘You said you are not chancing your arm with Micheál Martin with a 2020 election date. But if the Confidence and Supply Agreement can’t be decided upon, when would you like to have an election?
A: ‘Well, 2020 and that’s what I mean.’
Q: What if we can’t get there, we get to the end of the year, next year, the end of the year after the Budget, if we can’t extend it?
A: ‘Like I say, it is something that Micheál Martin and I are going to talk about again in September, we have agreed to meet again before the Dáil resumes. What I really want to do is end this uncertainty.
We are in a moment now where everyone working in politics, Government and public administration, is wondering how will the election come about – will I call it, will Micheál Martin cause it, or will it happen by accident? And that’s not a good place for the country to be in.
So, that is why I have put forward the proposal that we agree a date in 2020. I don’t have a planned alternative.’