Elaine Loughlin: Is Sinn Féin's alternative budget realistic?

The party proposes a significant spend on housing and health, funded by tax increases for those on higher incomes – but do the numbers add up?
Elaine Loughlin: Is Sinn Féin's alternative budget realistic?

Sinn Féin leader Mary Lou McDonald at the Alex Hotel in Dublin for the launch of Sinn Féin alternative Budget 2022 proposals. Picture: Gareth Chaney/Collins 

In an alternative budget that is about "putting workers and families first", Sinn Féin has promised to tackle housing, health and childcare.

There are some nuggets in the document that, if Sinn Féin were in power, would undoubtedly be welcomed, including a new two-week parental bereavement payment, a €10 weekly increase to working-age social welfare payments and the commitment to cut childcare costs by two-thirds.

The document also contains a €127m package to restore the right to retire on a pension at 65, €1.5m in funding for a citizen's assembly on Irish unity, and 800 extra gardaí next year.

Overall, Sinn Féin’s fiscal strategy will provide for €2.7bn in core current expenditure, partially funded by €1.5bn in progressive tax measures to put increases in permanent spending on a more sustainable footing.

But is it realistic?

Housing

Under the plan, Sinn Féin would build 20,000 social and affordable homes next year. This is very ambitious given that just slightly more (21,241) homes were built across both public and private housing in 2019.

The figures are broken down into 12,000 real social homes, 4,000 affordable rental homes, and 4,000 affordable purchase homes at a cost of €3.02bn, which is €1.62bn above what the Government intends to spend.

Housing policy analyst Lorcan Sirr said delivering 20,000 new social and affordable homes next year, while doable, would be a significant challenge.

"It would mean that every house that we're going to build would be a social or affordable house, so there would be very little in terms of private market housing."

But Mr Sirr said claims around a shortage of skilled labour, often made by the current Government, are in some respects a "red herring".

He said the Sinn Féin proposal to direct the workforce away from building hotels, high-end rental apartments and commercial buildings and into housing would successfully increase the number of homes built.

In a controversial move, the party also proposes the abolition of the first-time buyers grant.

Tax

Sinn Féin has come up with a range of measures that would see extra taxes applied and relief schemes abolished, all of which would mainly target higher earners.

A 3% solidarity tax on individual incomes above €140,000 and the removal of tax credits on a tapered basis from individual incomes above €100,000 would make €408m available to spend on public services, the party claims.

Economist Seamus Coffey has pointed out that those earning over this amount are a "relatively volatile" group, as bonuses or payments from share schemes can tip them over the threshold one year but not the next.

The Special Assignee Relief Programme, a tax break given to what the party describes as the "richest multinational employees" would also be abolished, which would provide €42m to spend elsewhere each year.

Sinn Féin President Mary Lou McDonald and spokesperson on finance Pearse Doherty arrive at Alex Hotel, Dublin, to publish Sinn Fein's proposals for Budget 2022. Picture: Brian Lawless/PA Wire
Sinn Féin President Mary Lou McDonald and spokesperson on finance Pearse Doherty arrive at Alex Hotel, Dublin, to publish Sinn Fein's proposals for Budget 2022. Picture: Brian Lawless/PA Wire

Announcing her alternative budget, party leader Mary Lou McDonald said: "Resources are not infinite and let me remind the Government things have to be paid for. There are far better uses for €40m of public money than in a scheme like this – 55 millionaires, very, very wealthy people avail of an incredible tax relief to the tune of €111,000 each."

However, director of public policy at Chartered Accountants Ireland
Brian Keegan said the scheme was designed to bring people into the country to pay income tax and scrapping it could have unforeseen consequences, especially given this group tends not to be geographically tied to one place.

"So if you get rid of the Special Assignee Relief Programme, you're going to end up with fewer people coming in. So it might save €42m on the face of it, but you are abolishing a relief which was designed to have more people paying income tax."

Speaking more generally of the revenue-raising tax measures, Mr Keegan said: "You cannot propose multi-year commitments without multi-year revenue raising and there is nothing really jumping out to me that would be multi-year."

In order to transform how our social insurance system is funded, Sinn Féin wants to increase employers PRSI by 2.2% on the portion of salaries above €100,000 from next year.

This, it claims, would generate the €127m that is needed to fund the right to retire on a pension at the age of 65, another measure contained in its alternative budget.

Tánaiste Leo Varadkar has previously hit out at Sinn Féin proposals to increase PRSI, describing its policies as "very scary" and suggesting they would impose "business harming, job-killing" tax increases, if in power.

But, reacting to the suggested PRSI increase, Mr Coffey said: "In EU terms, we are low for employer PRSI, having said that, our system is a bit different to most other countries.

"There is no doubt that Ireland is relatively low, so it is something that could be increased."

Health

Sinn Féin says Fianna Fáil and Fine Gael have failed to transform our "unfair and substandard" health system because they have "no desire to tackle the vested interests operating in the field or to commit the level of public investment that is required to expand capacity".

It says healthcare has been consistently underfunded and with 900,000 people on hospital waiting lists, including 98,000 children, it believes its 10-year plan will address the crisis.

In the first year of a decade-long blueprint, Sinn Féin would deliver 932 additional beds, including 600 acute inpatient beds, 34 critical care beds, 50 inpatient neuro-rehabilitation beds and 248 specialist community beds across mental health, addiction recovery, and palliative care. It breaks the cost of this down into €181.42m current and €345.16m capital.

The party would next year recruit more than 6,250 additional staff, including consultants, nurses, psychologists and other specialties.

Whether the plan would actually work or not would be highly dependent on the number of extra staff the HSE can recruit. It's an obvious fact that if staffing targets are not met this has a knock-on impact on the provision of beds, theatre time and other services.

As part of Budget 2021, the current Government promised an additional 14,700 staff in the health service this year.

While the funding is there, it has now revised downwards those projections to 7,300 new recruits by the end of this year.

The HSE said there has been a "surge" in the number of posts that have been approved this year which has resulted in a higher number of vacancies.

"There is often a significant period of time between approval of a consultant post to an appointee commencing employment," said Leah O'Toole the HSE's assistant national director.

While the party has made bold promises, attracting and retaining healthcare staff would also be an issue for Sinn Féin in government.

More in this section

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up