Saturday 19 October 2019

Dr Seán Healy: 'Budget failed to alleviate plight of most vulnerable despite welcome initiatives'

Finance Minister Paschal Donohoe
Photo: Collins Photo Agency
Finance Minister Paschal Donohoe Photo: Collins Photo Agency

Dr Seán Healy

THE cost of living for average Irish households will rise by between €892 and €1,360 a year as a result of Brexit. The ESRI has pointed out that these increases will be "very unevenly distributed across households" with those on lower incomes being most exposed. The poorest 30pc of the population spend a far higher proportion of their income on food, so Brexit will hit them hardest while they have the least capacity to absorb an increase in living costs. Yet, Budget 2020 did nothing for large numbers of these vulnerable people. The Government needs to widen its understanding of those who would be impacted by a hard Brexit. If a hard Brexit emerges there is an unavoidable need for a supplementary budget to ensure the vulnerable are protected from its inevitable impact.

The finance minister highlighted that the Government was allocating €2.5bn to housing. More than €400,000 of this is being spent every day to provide emergency accommodation alone. Yet 5,532 homeless households have no homes to go to.

Approximately €2,200 is currently being spent every month to accommodate each of these families in hotels, B&Bs and family hubs. This amount is more than the average asking rent for a three-bed house in south Co Dublin and comes with none of the tenant protections.

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The housing crisis requires a huge increase in the provision of social housing. The scale of the response in Budget 2020 is nowhere near the level required to solve the crisis.

One in every six people in Ireland lives with an income below the poverty line (15.7pc of the population). Based on the latest CSO data, this corresponds to approximately 760,000 people.

A major lesson to be learned from previous experiences is that the vulnerable in our society are left behind unless welfare increases keep pace with increases elsewhere in the economy.

A €9 per week increase in minimum social welfare payments was required in Budget 2020 in order that social welfare rates keep up with wage growth (based on a benchmark of 27.5pc of average earnings). Yet there was no increase at all for many depending on these payments. If social welfare rates are allowed to fall behind earnings over time, increases in poverty are inevitable.

Budget 2020 does not contain the "bold and new decisions" required to meet the "defining challenge" of climate change which the finance minister claimed were a priority of Budget 2020.

There was no move to introduce a levy on single-use coffee cups, to introduce a commercial air transport tax or to invest in the circular economy.

The increase in carbon tax and ringfencing commitments is welcome. However, not everyone who will be most impacted is entitled to the fuel allowance and little progress was made on delivering a scaled-up national retrofitting programme.

The Midlands Fund is welcome but must be replicated across all regions.

Ireland is a low-tax economy with its total tax-take among the lowest in the EU. However, even to maintain current levels of public services and supports, more revenue will need to be collected. Consequently, an increase in the tax-take is a question of how, rather than if, and it should be of a scale appropriate to maintain current public service provisions while providing the resources to build a better society.

Social Justice Ireland believes that the issue of corporate tax contributions is principally one of fairness.

A recent report from the Comptroller and Auditor General found that among the top 100 corporate taxpayers, who account for 70pc of tax paid, eight had a 0pc or less rate, five paid between 0pc and 1pc.

The Government should introduce a minimum effective rate of tax of 6pc on corporate profits and this could have been introduced in Budget 2020.

Another area to examine is tax expenditures (breaks) which amount to approximately 10pc of total tax revenue.

The full list of tax expenditures and their cost should be published each year with the budget documentation. They should all be reviewed regularly and have "sunset" clauses.

Social Justice Ireland's analysis of the Budget documents supplied by the Government raises some questions on transparency.

For example, we do not believe that the information and back-up figures on the healthcare budget are really transparent. These figures do not appear to us to add up. This is a totally unacceptable situation. Transparency is an essential component of democracy.

In conclusion, drafting a budget involves the Government in major decision-making about the direction of society and of how the available resources can best be used.

Budget 2020 included a number of welcome initiatives.

However, its failure to protect the vulnerable is very disappointing. I acknowledge the importance of prudence in preparing for an uncertain Brexit impact, but we know that the vulnerable will be among the first to take the hit it brings.

Budget 2020 doesn't provide the scale of response that protecting the vulnerable requires.

The Taoiseach claimed that this is a social justice Budget; there is little evidence to support this claim.

  • Dr Seán Healy is CEO of Social Justice Ireland

Irish Independent

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