15Oct Social Justice Ireland – Policy Briefing Oct 2010

Budget Choices A Fairer Future is Possible
Policy Briefing
ISSN: 1649-4954
Social Justice Ireland
Arena House
Arena Road
Dublin 18
Phone: 01 2130724
S ocial Justice Ire-land believes a fairer future is pos-sible and that Budget 2011 can take some key steps towards such a future.
To do this Budget 2011 needs to: Make the tax system fairer; Address the working poor issue; Take action to produce real work for a large number of unemployed people; Take action on educa-tion and healthcare to make them fairer; Maintain the living standards of Ireland‘s poorest. Ensure the corporate sector makes some contribution towards Ireland‘s readjustment process. Resist the temptation to target those on low incomes while ignor-ing the benefits that only go to the better-off. Do all of this while reducing Ireland‘s bor-rowing by €3bn in 2011 as Government has proposed.
This Policy Briefing pro-vides a series of proposals that meet these criteria. It also provides costings for the proposals made.
Key Proposals
The key initiatives pro-posed are: Standard rate the tax-break for pension con-tributions; Make tax credits re-fundable; Introduce a Part-Time Job Opportunities Pro-gramme that would produce real part-time jobs for 100,000 un-employed people on a voluntary basis; Introduce an income-contingent loan facility which would enable all third-level students borrow money to pay fees and cover their living costs; Increase funding for primary level educa-tion and adult literacy programmes. Provide substantial support for developing an integrated health-care model through supporting primary care teams, older peo-ple and children and family programmes. Increase all social wel-fare rates; Introduce a levy on corporate sector prof-its.
These and many other proposals are outlined in the following pages. The proposals are accurately costed using the most up-to-date information avail-able as this Policy Briefing goes to press.
Taken together these pro-posals provide an inte-grated, coherent approach to building a fairer future that is both achievable and desirable. They are fis-cally responsible. They preserve the living stan-dards of Ireland‘s poorest and most vulnerable peo-ple. They also seek to de-velop greater fairness in the tax system and in Ire-land‘s response to its pre-sent series of crises.
Policy Briefing is a regular publication issued by Social Justice Ireland. It addresses a wide range of current policy issues from the perspective of those who are poor and/or socially excluded. Comments, observations and suggestions on this briefing are welcome.
Context for Budget 2011
Assumptions, values, attitudes
Guiding principles: 5-point plan
Challenging Exchequer position
The working poor
Labour market
Inside this issue:
Corporate levy / Social Welfare
Training / Housing / Disability
Other issues
Budget proposals – summary
A need for vision
Ireland: Some Key Diagrams and Tables
These diagrams and tables offer some insights on various aspects of Ireland‘s economy and society. A more comprehensive assessment
of these topics can be found in our annual Socio-Economic Review available online at www.socialjustice.ie
Table 1: Unemployment and Long-Term
Unemployment, 2001-2010
(all data for 2nd quarter)
Year Unemp % LT Unemp %
2001 3.8 1.1
2002 4.4 1.2
2003 4.6 1.4
2004 4.5 1.4
2005 4.7 1.4
2006 4.6 1.4
2007 4.7 1.3
2008 5.7 1.5
2009 12.0 2.6
2010 13.6 5.9
Table 2: The Minimum Weekly Disposable Income
Required to Avoid Poverty in 2010
Household containing: Weekly line Annual line
1 adult €224.75 €11,719
1 adult + 1 child €298.92 €15,586
1 adult + 2 children €373.09 €19,454
1 adult + 3 children €447.25 €23,321
2 adults €373.09 €19,454
2 adults + 1 child €447.25 €23,321
2 adults + 2 children €521.42 €27,188
2 adults + 3 children €595.59 €31,056
3 adults €521.42 €27,188
Chart 2: Effective (Average) Taxation rates in Ireland, 1997-2010
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009* 2010
Single earner on €25,000 Couple 1 earner on €40,000
Couple 2 earners on €60,000
T o provide a brief overview of the social and economic context of Budget 2011, table 3 brings to-gether a range of data and indicators reflecting various aspects of Ireland today.
The Budget is framed in the context of a severe recession from which Ireland is just beginning to emerge. The back-ground to that recession derives from three major economic factors that have significantly undermined the excheq-uer‘s finances:
(i) the collapse of the Irish construction sector and associated housing bubble;
(ii) the collapse of the Irish banking system and the decision by government to effectively rescue all the major Irish financial institutions and engage in sub-stantial borrowing to fund that rescue; and
(iii) an international economic slow-down associated with the ‗credit crunch‘ in the United States and its in-ternational repercussions.
During the past year a review of the origins of the current crises, by the Governor of the Central Bank Professor Patrick Honohan, indicated that the crisis was predominantly home grown (i.e. items i and ii above).
As we detail elsewhere in this briefing, taxation revenues have also collapsed and remained at historically low levels as a proportion of national income.
The net result of these simultaneous events has seen a rapid increase in the national debt, large increases in per-sonal taxation and pressure to make cuts in government spending. However, effective taxation rates (the % of total income that is paid as tax) are low in historical and international terms.
The Budget is also framed in the con-text of high, though declining, poverty levels; a sustained problem with child poverty; ongoing literacy challenges; rapidly increasing unemployment and lengthening social housing waiting lists. Current and future challenges arising from environmental pollution levels and projected population growth are also of relevance.
More detail on all of these indicators is provided in our 2010 Socio-Economic Review available on our website: www.socialjustice.ie
The Social and Economic Context of Budget 2011
Table 3: Ireland’s Social and Economic Position in 2010
Real GDP growth 2010*
Minimum Wage (per hour / 39hr week)
€8.65 / €337.35
GDP growth 2011*
Minimum Social Welfare Payment (1 adult)
Real GNP growth 2010*
Average Gross Household Income (2008)
€1,161 per week
GNP growth 2011*
Average Disposable H-hold Income (2008)
€940 per week
2001 General Gov Balance (%GDP)*
Poverty line 1 Adult (week / year)
€224.75 / €11,719
National Debt (%GDP) 2009*
Poverty line 2 Adults (week / year)
€373.09 / €19,454
National Debt (%GDP) 2010*(pre NAMA)
Poverty line 1 Adult + 1 Child (week / year)
€298.92 / €15,586
National Debt (%GDP) 2011* (pre NAMA)
Poverty line 2 A + 2 Children (week / year)
€521.42 / €27,188
National Capital Investment 2010
Approx. 5% GNP
% of population living in poverty (numbers)
13.9% (614,672)
Total Taxation as % GDP 2010
< 30%
% of children living in poverty (numbers)
17.4% (187,000)
%Tax on €25,000 income (single / 2 earners)
10.3% / 1.3%
LA Housing Waiting list – households
%Tax on €60,000 income (single / 2 earners)
31.7% / 15.5%
LA Housing Waiting list – persons
approx 150,000
%Tax on €100,000 income (single / 2 earners)
39.2% / 27.9%
Illiteracy rate of adult population (1996 data)^
Corporation Tax rate
% Waste Landfilled (2007 data)
Capital Gain Tax rate
Greenhouse Gas Emissions v. Kyoto target
Value of all Tax Reliefs (per annum)
€8.4 billion
Population 2006 Census
Labour Force
Population 2011* / 2016 *
4.685m / 5.093m
Population 2021* / 2041*
5.449m / 6.247m
Unemployment 2010 /rate (ILO Basis)
293,600 / 13.6%
Inflation rate (CPI) 2009
Unemployment rate 2011*
Inflation rate (CPI) 2010*
Source: Various publications including Central Bank Quarterly Bulletins; ESRI Quarterly Economic Commentaries and Medium Term Re-view; CSO Statistical Reports and publications from various Government Departments and Agencies.
Note: * = projection; ^ = no data collected since
A key question that must be cen-tral to the framing of Budget 2011 is: What type of Ireland do we want? Certainly, the Ireland of the future needs to be very different from that of recent years.
In considering the answer to that ques-tion, it is useful to review the data pre-sented in table 4. Using figures from Eurostat, the EU‘s statistics agency, it outlines where Ireland stands today relative to our fellow EU members on three key indicators – total taxation, total Government expenditure and total social protection expenditure. In all cases, Ireland is near the bottom of the rankings.
The rankings are based on Eurostat data compiled before the current eco-nomic collapse. In developing policy for the longer-term it is better to use this data rather than depend on data that is temporarily thrown out of bal-ance because of a deep recession.
The obvious question arising from this table is: against whom do we bench-mark ourselves as a society? Is it Lat-via, Lithuania, Estonia, Slovakia and Romania? Are these the countries we wish to emulate in terms of public ser-vices, pensions, social welfare pay-ments and wage rates (private and pub-lic)?
Broader Context: Benchmarking Ireland in the EU
B udget 2011 is being prepared in a period of ongoing crisis for Ireland. Despite various interventions to date, all of the 5 crises NESC identified almost two years ago are ongoing; indeed some have inten-sified. These are: a banking crisis, a public finance crisis, an economic crisis, a social crisis and a reputational crisis.
In times of crisis it is often the case that strategic thinking and planning are set-aside. This approach has been very visible in Ireland since the inception of the cur-rent crises. Its most visible manifestation has been the accep-tance into the conventional wisdom of a series of assumptions that are not valid. These include: That the economy should have prior-ity over all else. That preventing all the major banks from collapse is the major economic priority. That cuts in public expenditure are the key. (They are only part of the solution.)
The widely quoted assumptions listed above have been adopted with limited consideration of their meaning or im-plications. Consequently, those that are not valid generate ill-considered policies which are met with wide-spread opposition and anger. As a so-ciety we are lacking a coherent set of guiding values and assumptions to shape the policies and actions of the decade to come.
These assumptions fail to grasp the fact that economic development and social development are two sides of the one coin. Economic development is required to provide resources for social development. On the other hand social development is essential if eco-nomic development is to be success-ful. There will be no lasting economic development of substance without the provision of social services and infra-structure. For example, it will not be possible to promote a smart, green, hi-tech economy without having an edu-cation system that ensures people are capable of taking up jobs in these ar-eas. Likewise infrastructure in areas such as public transport and Informa-tion and Communication Technology (ICT) is essential for a successful economy in the twenty first century. Thinking we can have economic de-velopment first and then follow-up with social development is to ignore many of the major lessons that have been learned over the past two dec-ades.
There are other assumptions which are only half true that are repeated like mantras in much of what Government states and in what passes for analysis in much of the public commentary. These include: That everybody should make a con-tribution to the adjustment required. That fairness is important but taxes should not be increased.
Yes, we agree everyone should make a contribution insofar as they can. But we do not accept that some people should be driven into poverty because of the contribution that is demanded of them. To do this would be to solve one problem by creating a deeper and more long-lasting one. We reject any attempt to solve Ireland‘s problems by increasing inequality or by forcing the most vulnerable members of the popu-lation into a situation where they do not have the resources to live life with dig-nity. We also agree that fairness is criti-cally important but we do not believe that Ireland‘s socio-economic situation can be rectified fairly while we persist in having one of the lowest total tax-takes in the EU.
There are other values that are regu-larly repeated that we do accept. These include: That there should be far better value got for public expenditure. That reform of the public sector is a major priority.
Broader Context: Assumptions, Values and Attitudes
T he ramifications for Ireland‘s people of the recent economic turmoil have been severe. Most notably, in the space of a few months, one of the great achievements of recent years has been reversed with unemployment re-turning as a widespread phenomenon. In late 2006, 90,300 people were recorded as unemployed by the CSO‘s quarterly national household survey (QNHS), a figure which represented 4.2 per cent of the labour force. Three years later, the number of people unemployed tripled to reach almost 280,000 (approximately 13.75 per cent of the labour force). Suddenly, Ireland has returned to unemploy-ment levels equivalent to those experienced in the mid-1980s. Behind each of these figures are people and families – the society-wide impact of these increases cannot be over-estimated. Simultaneously, another of the social ghosts of the 1980s and 1990s has also returned – emigration.
The collapse in taxation revenues has forced the government into three challeng-ing budgets and a series of spending cutbacks in 2008, 2009 and 2010. Else-where, we have highlighted and critiqued many of the cuts in social spending including the unacceptable cut to most social welfare payments delivered in Budget 2010.
Aside from growing unemployment and long-term unemployment, emigration, service and funding cutbacks and the ongoing problems of inequality and pov-erty, we continue to live in a society with alarming numbers of people with liter-acy difficulties across all age groups, schools with leaking roofs and ‗temporary‘ portacabins and a two-tier health system where the availability of services is re-lated to income rather than need.
Clearly, Ireland in 2010 has a major social crisis.
Ireland’s Social Crisis
Despite various interventions to date, all of the five crises NESC identified almost two years ago are ongoing; indeed some have intensified
I n making choices in Budget 2011 Government should be guided by the principle of protecting the needs of the vulnerable.
13.9% of Ireland‘s population is at risk of poverty with incomes below €11,719 for a single person or €27,188 for a household of four.
39% of all the households at risk of poverty today are headed by a person with a job. A further 45% are headed by a person outside the labour force (i.e. older people and people who are ill, have a serious disability or are in caring roles) and are totally dependent on social welfare.
In the current difficult economic cli-mate, Social Justice Ireland believes that the Budget should pay particular attention to this group. Those surviv-ing on low incomes continue to strug-gle and, unlike many other groups in society, have no room to absorb in-come cuts. Any such cuts would sim-ply deepen their poverty and further undermine their attempts to live their lives with dignity.
Giving priority to the vulnerable
In practice this would mean protecting social welfare rates and compensat-ing those on the lowest income from any increase in living costs associated with the return to positive inflation rates in 2011.
It would also involve giving priority in healthcare to developing primary care teams rather than increasing consult-ants salaries. It would give priority to primary care and community services over the hospital system.
In education it would mean giving priority to funding primary education rather than expanding the resources available to fourth level education. It would also put the emphasis on reduc-ing the proportion of the population with literacy problems
In housing it would prioritise the pro-vision of resources for a sustainable programme of social housing provi-sion to reduce waiting lists.
In the area of employment it would mean giving priority to supporting those who are unemployed rather than subsidising the further training of peo-ple who are already well qualified.
In the context of the National Devel-opment Plan (NDP) it would give priority to initiatives that are good for the vulnerable and for the economy.
On the issue of taxation it would mean ensuring that those with low incomes are not disadvantaged by the tax system and that Budgetary reforms are focused on making the taxation system fairer (see our proposals on p. 8 and p. 9 of this Policy Briefing).
In transport policy it would mean assigning priority to developing public transport and within this context it would ensure that rural transport was adequate, sufficiently resourced and further supported.
In the area of foreign policy it would mean honouring Ireland‘s commit-ment to provide 0.7% of GNP in for-eign aid by 2012 and avoiding any further cuts in the ODA.
Guiding Principle: Protecting the Vulnerable
T he need for an integrated ap-proach to policy development is even more essential at this very difficult moment for Ireland. Social Justice Ireland proposes the following five-point integrated approach (already proposed by the Community and volun-tary Pillar of Social Partners) that would enable Government address the current series of crises in a fair, effec-tive and cost-efficient manner while ensuring that problems regarding the budget deficit would be addressed in a reasonable period of time.
1. Increase the over-all tax take while keeping Ireland a low-tax country and without raising income tax rates. Ireland is a low-tax economy. The starting point for increasing the total tax-take should be the 111 tax-breaks identified in by the Commis-sion on Taxation (but not taxing child benefit). A programme should be set out to increase Ireland‘s total tax-take fairly to 34.9% of GDP which is well above the present level but would still keep Ireland a low-tax economy.
2. Secure better value for money in the delivery of our public services; Resources available to Government have fallen dramatically. It is essen-tial that best-value be got for the money being spent on public ser-vices. In doing this it is crucial that Government take a long-term view and not take initiatives for short-term gain that will produce long-term negative outcomes on the vulnerable.
3. Reform the public sector. People trying to access services at present have to engage with a wide range of different agencies e.g. health, educa-tion, welfare, housing etc. to access their entitlements. A more integrated and person-centred structure is re-quired. The recommendations con-tained in the OECD report on the Irish public sector should be imple-mented without delay.
4. Target expenditure cuts where required but ensure that vulner-able people are protected. A good starting point would be the elimina-tion of waste identified by the reports of the Comptroller and Auditor Gen-eral. In this context it should be noted that tax ‗breaks‘ are in effect Government expenditure. Cutting these would be another good place to find acceptable expenditure cuts.
5. Focus expenditure on the common good to provide required infra-structure and public services. De-spite expenditure reductions Govern-ment will spend a substantial amount of money in 2011 and beyond. The choices made should ensure these resources are spent to promote the common good, assist economic re-covery and protect the vulnerable.
Ireland is experiencing multiple crises because of the actions of some bankers, developers, politicians, speculators and economists. The misdeeds, sometimes illegal, of these people, should not be paid for by the vulnerable in Irish soci-ety.
This five-point plan would ensure that Government made decisions aimed at building a fairer future for all.
Five-Point Plan to ensure integration and fairness
Budget 2011: A Challenging Exchequer Position
I n framing Budget 2011, the Minis-ter for Finance should take into account the very important role that social welfare plays in addressing poverty. As part of the SILC results the CSO has provided an interesting insight into the role that social welfare pay-ments play in tackling Ireland‘s poverty levels. They have calculated what the levels of poverty are before and after the payment of social welfare benefits. Table 6 presents these results and shows that without the social welfare system Ireland‘s poverty rate in 2008 would have been 43 per cent. The ac-tual poverty figure (calculated without removing the one-off SSIA effect) of 14.4 per cent reflects the fact that social welfare payments reduced poverty by 28.6 per cent.
Looking at the impact of these pay-ments on poverty over time it is clear that the recent increases in social wel-fare have yielded noticeable reductions in poverty levels. The small increases in social welfare payments in 2001 are reflected in the smaller effects achieved in that year. Conversely, the larger in-creases in recent years have delivered greater reductions. This has occurred even as poverty levels before social welfare have increased. Social Justice Ireland warmly welcomed these social welfare increases and the CSO‘s data proves the effectiveness of this policy approach.
In Budget 2011, the government should increase social welfare rates for all re-cipients (see p.11). Furthermore, infla-tion is forecast to rise in 2011.
It is not acceptable that Ireland‘s poor-est people be condemned to even deeper poverty in the year ahead.
The Substantial Impact of Social Welfare Payments
T he scale and composition of the decisions Government is to make in Budget 2011 are clear – indeed they are clearer than is the case for most Budgets.
In the 2010 Budget (December 2009) the Minister for Finance published a detailed set of Budget-ary parameters to which he committed to adhere over the course of the next two years.
These commitments were made to convince the public, investors, international lenders, the European Commission and the European Cen-tral Bank of Ireland‘s commitment to address over five years its fiscal problems and return the exchequer to within the rules of the EU Stability and Growth Pact.
As regards Budget 2011, the Govern-ment committed to make a total of €3 billion in adjustments. Of these, €1b will come from capital spending (investment) reductions which have already been identified. The remaining €2 billion will come from a combina-tion of current spending cuts and taxa-tion increases. Table 5 reproduces the table which outlined these commit-ments in the December 2010 Budgetary documentation. It also includes the commitments made by government for Budget 2012, due to be delivered in December 2011.
Recent public discourse has ignored the detail of these pa-rameters and inter-preted the €3 billion adjustment indicated for Budget 2011 as exclusively focused on expenditure cuts. Clearly, this is not the case and as we have identified else-where in this Policy Briefing, there is potential for taxation reform which will more than adequately achieve much of the proposed adjust-ment.
Table 5: Scale and Composition of Future Budgetary Adjustments as Identified in Budget 2010 (December 2009)
Source: Department of Finance Budget Documents 2010, Stability Programme Update (p. C19)
Table 6: The role of Social Welfare (SW) payments in addressing poverty
Poverty levels before SW
Poverty levels after SW
The role of SW
* Data for 2008 including SSIA effect as published by CSO
Budget 2011
`Budget 2012
Overall Planned Budget Adjustment
€3 billion
€3 billion
of which reductions in capital spending
€1 billion
€1 billion
of which expenditure cuts and tax increases
€2 billion
€2 billion
In the 2010 Budget the Minister for Finance pub-lished a detailed set of Budgetary parameters to which he committed to adhere over the course of the next two years….Recent public discourse has ig-nored the detail of these parameters and interpreted the €3 billion adjustment as exclusively focused on expenditure cuts
Taxation Issues
A significant outcome from the 2009 Commission on Taxation is contained in part 8 of their Report which details all the tax ‘breaks’ or tax ‘expenditures’ as they are referred to officially. For years we have sought to have a full list of these tax breaks and their actual cost published. However, despite our best endeav-ours, neither the Department of Finance nor the Revenue Commissioners were able to produce such a list. The Re-port identifies 111 tax breaks – information on many of these was not available previously. The Report also shows that Government has no idea what many of these tax breaks are costing the Exchequer. Given the scale of public expen-diture involved, this is a bizarre and totally unacceptable situation. The Commission analysed each of the 111 tax breaks and made a recommendation on each one. We sup-port most of these recommendations. However, we disagree with its proposal to tax child benefit. Social Justice Ireland believes that Government should move immediately to im-plement the recommendations of the Commission on tax breaks (with the exception of taxing child benefit). This would make the tax system fairer. It would also provide substantial additional resources towards achieving the ad-justment Government has proposed for Budget 2011. We also believe the tax break for pensions should be standard rated at least as 80% of the benefit goes to the richest 20% of the population (cf. page 14)
Reforming Tax Reliefs
D espite significant increases in the tax-take from the PAYE sector in the last two Budgets, the scale of collapse in Ireland‘s tax revenues has been dramatic. National taxes (those announced in the Budget and collected centrally) have fallen by over €16b since 2007 with the largest fall in areas such as capital gains taxes, stamp duties, corporation taxes and VAT. Decreases in income taxes have been somewhat offset by increased revenues from the income levy. Over-all, total tax receipts have fallen from in excess of €47 billion in 2007 to €32.5 billion in 2009; and current trends suggest that the 2010 figure is likely to be marginally lower than this (perhaps not as low as the €31 billion figure which the Depart-ment of Finance signalled in the December 2009 Budget).
The impact of these declines in taxation income, reflecting the scale of the national and interna-tional recession and the instabil-ity and narrowness of the na-tional tax base, have had dramatic ef-fects on the overall tax burden. Table 7 reports on this decline using data from Eurostat and Budget 2010. It shows how Ireland‘s overall taxation burden has dropped to 29.4 per cent of GDP in 2009 and 2010 – levels equivalent to those among the lowest European coun-tries. Some increase in tax is planned in 2011, reflecting some recovery in eco-nomic activity and the Budget 2010 commitment to make expenditure and taxation adjustments equivalent to €2 billion in Budget 2011.
While a proportion of the tax decline is related to the recession, a large part is structural and requires attention. Social Justice Ireland believes that over the next few years policy should focus on increasing Ireland‘s tax take to 34.9 per cent of GDP, a figure defined by Euro-stat as ‗low-tax‘ (Eurostat, 2008:5). As a policy objective, Ireland should re-main a low-tax economy, but not one incapable of adequately supporting the economic, social and infrastructural
Tax take at record low levels: Reform Required
A s we have outlined throughout this Policy Briefing, a key aspect of Budget 2011 should be to protect the weakest in society. At a time of unprecedented uncer-tainty, such an approach is even more important.
Among this vulnerable group are those workers who are living on the minimum wage; a wage of €8.65 per hour or €337 per week. The value of the minimum wage has not changed since July 2007. The minimum wage has also been subject to the 2% income levy since the 1st May 2009.
CSO earnings data suggests that there are approximately 2% of industrial workers on the minimum wage. Income data from the CSO‘s EU-SILC indicate that many others are on wages just above this level. Overall, 6.6 per cent of those at work are living at risk of poverty – about 116,000 workers.
Social Justice Ireland believes that in Budget 2011 Govern-ment should endorse the current value of the minimum wage. Arguments to cut it ignore the low incomes that those in re-ceipt of this wage struggle to live. Similarly, they ignore the fact that this wage has not increased in line with general wages over time.
There is little to be gained from proposing a cut in the mini-mum wage; indeed the costs of exposing more workers to poverty and greater inequality while deepening the experience of others in poverty would far outweigh any possible gains.
Protect the Minimum Wage
Working Poor Proposal
D uring the past year Social Jus-tice Ireland published a de-tailed study on the subject of refundable tax credits. Entitled ‗Building a Fairer Tax System: The Working Poor and the Cost of Refund-able Tax Credits‘ the study identified that the proposed system would benefit 113,000 low-income individuals in an efficient and cost-effective manner. When children and other adults in the household are taken into account the total number of beneficiaries would be 240,000. The cost of making this change would be €140m.
The Social Justice Ireland proposal to make tax credits refundable would make Ireland‘s tax system fairer, ad-dress part of the working poor problem and improve the living standards of a substantial number of people in Ireland.
The following is a summary of our pro-posal (based on 2006 data):
What is a refundable tax credit?
When an individual‘s income is insuffi-cient to use up all of his or her tax cred-its, the remaining credit is paid to the individual by means of a cash transfer. In the present system low paid employ-ees i.e. the working poor, lose out as they do not benefit from increased tax credits after any budget.
Making tax credits refundable: the benefits Would address the problem identi-fied already in a straightforward and cost-effective manner. No administrative cost to the em-ployer. Would incentivise employment over welfare as it would widen the gap between pay and welfare rates. Would be more appropriate for a 21st century system of tax and welfare.
Details of Social Justice Ireland pro-posal Unused portion of the Personal and PAYE tax credit (and only these) would be refunded.
Eligibility criteria in the relevant year: Individuals must have unused per-sonal and/or PAYE tax credits (by defi-nition). Individuals must have been in paid employment. Individuals must be at least 23 years of age. Individuals must have earned a minimum annual income from employ-ment of €4,000. Individuals must have accrued a minimum of 40 PRSI weeks. Individuals must not have earned an annual total income greater than €15,600. Married couples must not haveearned a combined annual total income greater than €31,200. Payments would be made at the end of the tax year.
Cost of implementing the proposal The total cost of refunding unused tax credits to individuals satisfying all of the criteria mentioned in this pro-posal is estimated at €140,051,823.
Major findings Almost 113,300 low income indi-viduals would directly benefit from a refund and would see their disposable income increase as a result of the pro-posal. The majority of the refunds are valued at under €2,400 per annum (or €46 per week) with the most common value being individuals receiving a re-fund of between €800 to €1,000 per annum (or €15 to €19 per week). Considering that the individuals receiving these payments have incomes of less than €15,600 (or €299 per week), such payments are significant to them. Almost 40 per cent of refunds flow to low-income working poor house-holds who live below the poverty line. A total of 91,056 individuals (men, women and children) below the poverty threshold benefit either directly (through a payment to themselves) or indirectly (through a payment to their household) from a refundable tax credit. Of the 91,056 individuals living below the poverty line that benefit from refunds, most (over 71 per cent) receive refunds of more than €10 per week with 32 per cent receiving in excess of €20 per week. A total of 148,863 individuals (men, women and children) above the poverty line benefit from refundable tax credits either directly (through a pay-ment to themselves) or indirectly (through a payment to their household). Most of these beneficiaries have in-come less than €120 per week above the poverty line. Overall, almost 240,000 individu-als (91,056 + 148,863) living in low-income households would experience an increase in income as a result of the introduction of refundable tax credits, either directly (through a refund to themselves) or indirectly (through a payment to their household).
Once adopted, a system of refundable tax credits as proposed in this study would result in all future changes in tax credits being equally experienced by all employees in Irish society. Such a re-form would mark a significant step in the direction of building a fairer taxa-tion system and represent a fairer way for Irish society to allocate its re-sources. Budget 2011 should pursue this policy reform agenda.
Budget 2011 should introduce Refundable Tax Credits
You can download a copy of the Refundable Tax Credits Study ‗Building a Fairer Tax System: The Working Poor and the Cost of Refundable Tax Credits‘ from our website:
Alternatively, you can pur-chase a copy through our web-site or by contacting the office (see p. 20).
T he past two years have seen Ireland return to the phenome-non of widespread unemploy-ment. The transition from near full-unemployment to high-unemployment has been one of the major characteris-tics of this recession.
The implications for people, families, social cohesion and the exchequer‘s finances have been serious. Economic forecasts indicate that unemployment will increase further in the period ahead.
The recent dramatic turnaround in the labour market contrasts with the fact that one of the major achievements of recent years has been the increase in employment and the reduction in un-employment, especially long-term unemployment.
In 1991 there were 1,155,900 people employed in Ireland. That figure in-creased by almost one million to peak at 2,146,000 in mid-2007.
Unemployment numbers are now at a record high. The seasonally adjusted Live Register total was 455,000 in August.
Unemployment as measured by the Quarterly National Household Survey and the latest seasonally adjusted fig-ure, for January to March 2010, is 277,400 persons unemployed. This is an unemployment rate of 13.8%.
While the live register is not an accu-rate measure of unemployment it is a useful barometer of the nature and pace of change in employment and unemployment. Increases suggest a combination of more people unem-ployed and more people on reduced working hours.
Economic forecasters are almost unanimous that there will be no surge in job creation in the coming year. 148,402 people had been on the live register for more than a year in August 2010.
These in particular seem to be at huge risk of not getting back to employment in the short to medium term.
Introduce a new programme to ensure real employment at the going hourly rate for the job is available to 100,000 people currently long-term unem-ployed. Participation must be volun-tary.
It should be modelled on the Part-Time Job Opportunities Programme that was piloted in the 1994-1998 pe-riod. (The current Directors of Social Justice Ireland led this pilot pro-gramme.) Details of the pilot pro-gramme are reported in the box below.
The new programme: Would create 100,000 part-time jobs for unemployed people; Paid at the going hourly rate for the job; Participants working the number of hours required to earn the equiva-lent of their social welfare payment and a small top-up Up to a maximum of 19.5 hours a week. Access on a voluntary basis only; Jobs would be created in the public sector and the community and vol-untary sector; Participants would be remunerated principally through the reallocation of social welfare payments. Working on these jobs participants would be allowed to take up other paid employment in their spare time without incurring loss of benefits and would be liable to tax in the normal way if their income was sufficient to bring them into the tax net.
Consequently, Social Justice Ireland believes that a Part-Time Job Op-portunities programme should be established along the lines of the programme piloted in the 1994-1998 period. Additional funding of €300m should be allocated in Budget 2011. The funding currently being spent on social welfare payments to par-ticipants on this programme should be switched to their new employer.
Labour Market Proposal
T he early 1990s saw high unemployment levels in Ireland and little pros-pect of jobs being available for some time even though the economy was beginning to recover. Jobless growth was the reality. A proposal made by the current Directors of Social Justice Ireland was formally adopted by the Irish Government and announced in Budget 1994.
The proposal sought to create real part-time jobs in the community and voluntary sector principally. Long-term unemployed people could access these jobs on a voluntary basis. They were paid the going hurly rate for the job and they worked the number of hours required to earn the equivalent of their social welfare pay-ment with a small top up. The going hourly rate for the job was agreed with the relevant trade unions and employers.
This programme was piloted in Finglas/Blanchardstown, Co. Laois, Waterford City, Four towns in South Tipperary (Clonmel, Carrick-on-Suir, Cashel and Tip-perary Town), Co. Kerry and the offshore islands. It created 1,000 part-time jobs in community and voluntary organisations in those pilot areas within six months of its establishment. These jobs were sustained throughout the pilot period. More than 500 of the original participants departed to take up full-time employment or full-time education during those years and all were replaced by new participants.
The market economy is unable to provide anywhere near to the number of jobs required to reduce unemployment anytime soon. This programme contributes to Social Justice Ireland’s view that public policy should change so that 1) it recog-nises that people have a right to work; 2) that unemployed people should not be forced to spend their lives doing nothing when jobs don‘t exist; and 3) that all meaningful work should be recognised.
PTJO Pilot Programme 1994-1998
Summary of Proposal on the labour market
Impact of this proposal on Govern-ment’s Income and Expenditure in Budget 2011
Introduce a new Part-Time Job Opportu-nity Programme to provide real, part-time jobs for 100,000 long-term unem-ployed people.
Transfer of social welfare payments for participants.
Increased expenditure: €300m
T he contribution being made by the corporate sector to address-ing Ireland‘s current series of crises is problematic. The corporate sector played a major role in undermin-ing Ireland‘s economy through the irresponsible activity of many in the banking and financial services sector. Yet very little has been asked of this sector in terms of making a contribu-tion to Ireland‘s recovery.
We acknowledge that many companies are in a loss-making situation and unable to make a contribution. Most of these are small and medium-sized busi-nesses. However, much of corporate Ireland is doing very well.
There is no justification for insisting that the low-est-paid workers (who had no responsibility for the country‘s financial collapse and economic mismanage-ment) must make a large contribution through paying more tax and having fewer services and at the same time arguing that the profitable corporate sector can escape without making any contribution to Ireland‘s rescue.
Budget 2010 estimated that corporation tax would provide €3,160m in revenue to the state in 2010. In fact the excheq-uer returns to date suggest this will be slightly higher. This revenue is based on a maximum corporation tax rate of 12.5%. It is important to put this into context.
In Budget 2002 the corporation tax rate was reduced from 20 per cent to 16 per cent. Following Budget 2003, the stan-dard rate of corporation tax was re-duced from 16 per cent to 12.5 per cent.
The total cost in lost revenue to the exchequer of these two reductions was estimated at over €650m per annum at the time. The banks benefited by more than some other parts of the corporate sector as their tax rate had been much higher prior to the standardisation of the corporate tax rate at 12.5% As a result windfall profits flowed to a sec-tor that was already extremely profit-able.
As their profits increased dramatically parts of the corporate sector were si-multaneously undermining Ireland‘s economy. Now we are told that the corporate sector is not required to make any contribution to rescuing Ire-land from its current economic mess. This is simply unacceptable.
Ireland‘s corporation tax rate is now considerably below the corresponding rates in most of Europe. Across the relevant literature no evidence of sub-stance exists to support the contention that corporations would leave if the corporate tax rate were higher – at 17.5 per cent for example. Furthermore, the logic of having a uniform rate of cor-poration tax for all sectors is question-able. In the last few years there has been some improvement in this situa-tion with special, and higher, tax rates being charged on natural resource in-dustries. Social Justice Ireland wel-comed this as an overdue step in the right direction. However, much more is required of the corporate sector as Ireland struggles to reduce its borrow-ing requirement.
Corporate Ireland should play its part in addressing the need to reduce Ire-land‘s Exchequer borrowing.
Consequently, Social Justice Ireland proposes that a levy of 2.5% be intro-duced on corporate profits in Budget 2011. This would provide an addi-tional €632m towards reducing Ire-land’s borrowing in 2011.
Social welfare rates
There are 614,672 people at risk of poverty in Ireland. One in three house-holds at risk of poverty is headed by a person with a job. These are the work-ing poor. We have proposed that tax credits be made refundable to address their situation (cf. p. 9).
Well in excess of a quarter of a million adults at risk of poverty are not in the labour force. They are ill or have a disability or are retired or are in caring roles that don‘t allow them to take a job. So-cial welfare rates are critically im-portant for these people. The cuts in welfare rates combined with other changes introduced in Budget 2010 had a devastating impact on these – Ire-land‘s most vulnerable people. The cost of living is forecast to rise in 2011. Budget 2011 must protect Ireland‘s most vulnerable.
Basic social welfare rates should be increased to ensure Ireland‘s poorest do not fall further into poverty in 2011.
Consequently, Social Justice Ireland believes that Social Welfare rates should be increased by €5 a week for all recipients with proportionate in-creases for qualified adults (i.e. €3.50 a week bringing the increase for a couple to €8.50 a week).
Corporate Levy and Social Welfare Proposals
Summary of Proposals on corporate levy and social welfare rates
Impact on Government income and expenditure
Introduce a levy of 2.5% on all corporate profits
Increased income of: €632m
Increase social welfare rates by €5 with corresponding increases for qualifying adults
Increased expenditure of: €365m
There is no justification for insisting that the lowest-paid workers (who had no responsibility for the country’s financial collapse and economic misman-agement) must make a large contribution through paying more tax and having fewer services and at the same time arguing that the profitable corporate sec-tor can escape without making any contribution to Ireland’s rescue.
For further information
See: Social Justice Ireland’s
Socio-Economic Review 2010
On Taxation Section 3.2
On Poverty Section 3.1
U rgent action is required in three key areas if the basic model of care that is to under-pin the health services is not to be un-dermined. There areas are:
1. Older People‘s Services
2. Primary Care Teams
3. Children and Family Services
Model of Care
Community-based health and social services require a model of care that: Is accessible and acceptable to the community they serve; Is responsive to the needs of the local community and its particular set of needs and requirements; Is supportive of local communities in their efforts to build social cohe-sion; Accepts primary care as the key component of the model of care and gives it priority over acute services as the place where health and social care options are accessed by the community.
Older People
If the health of older people is to be addressed appropriately then it is es-sential that there be support for older people to live at home by providing appropriate community-based services to meet their needs. This approach needs to be complemented by ensuring access to acute services is available in an appropriate manner when required.
If this approach is to be followed then there is an urgent need to address the specific deficits in infrastructure that exist at present. There should be an emphasis on replacement and/or refur-bishment of facilities.
If this is not done then we will see the inappropriate admission of older peo-ple to acute care facilities with the con-sequent negative impacts on acute ser-vices across the country.
Make a total investment of €500m over five year i.e. €100m each year. This would enable 12-15 units with about 50 beds each to be replaced or refur-bished each year.
Consequently, Social Justice Ireland believes that €100m should be allo-cated in Budget 2011 as the first tranche of funding for this purpose.
Primary Care Teams
At the moment the HSE is developing Primary Care Teams and Social Care Networks as the basic ‗building blocks‘ of local public health care provision.
We understand a Primary Care Team (or ―PCT‖) to be a team of health pro-fessionals (catering for a population of 7-10,000) who work closely together to meet the needs of people living in a community.
These professionals include GPs and Practice Nurses, community nursing i.e. public health nurses and commu-nity RGNs, physiotherapists, occupa-tional therapists and home-care staff. They provide the first point of contact when individuals need to access the health system. When fully developed, it is expected that 530 primary care teams could cover the whole country.
PCTs are also expected to link in with other community-based disciplines to ensure that health and social needs are addressed. These include: speech & language therapists, dieticians, area medical officers, community welfare officers, addiction counsellors, com-munity mental health nursing, consult-ant psychiatrists, etc.
PCTs provide a single point of contact for the person and the health system. They facilitate navigation ‗in‘, ‗around‘ and ‗out‘ of the health system.
The Towards 2016 National Agree-ment committed to put 500 of these primary care teams in place by 2012. Progress has been made but more is required if this essential development is to be secured.
Invest a total of €250m over a five-year period to support infrastructural devel-opment in putting in place the 530 pri-mary care teams that are required to cover the whole country.
Consequently, Social Justice Ireland believes that €50m should be allo-cated in Budget 2011 as the first tranche of funding for this purpose.
Children and Family Services
In tandem with the development of Primary Care Team services there is a need to focus on health and social care provision to children and families.
The obligation on the State to develop and provide services and facilities to support vulnerable and at risk children has been well highlighted recently.
The standard of care as monitored by HIQA and the challenges posed to pro-vide care to young people with com-plex needs have proven difficult to address both in pubic and private pro-vision.
In many communities there are com-munity & voluntary services being operated out of very poor facilities in need of refurbishment /rebuilding. De-spite poor infrastructure, these services are the heart of local communities and provide vital services that are locally ‗owned‘. There is a need to support this activity and in particular meet the infrastructural requirements which will in the main be by way of minor devel-opment at local level.
Invest a total of €250m over a five-year period to address the infrastructural deficit in Children and Family Ser-vices. This amounts to €27m per area for each of the nine Children Services Committee areas and a national invest-ment of €7m in Residential and Special Care.
Consequently, Social Justice Ireland believes that €50m should be allo-cated in Budget 2011 as the first tranche of funding for this purpose.
Health Proposals
Summary of Proposals on Health and Children
5-year require-ment 2011-2015
Budget 2011
Older People
Primary Care Teams
Children and Family Services
Total increase in expenditure:
€1 billion
E ducation can be an agent for social transformation. Social Justice Ireland believes that education can be a powerful force in counteracting inequality and poverty while recognising that, in many ways, the present education system has quite the opposite effect.
Recent studies confirm the persistence of social class inequalities which are seemingly ingrained in the system. Even in the context of the increased participation and economic expansion of much of the last dec-ade, the education system continues to mediate the vicious cycle of disad-vantage and social exclu-sion between genera-tions. When viewed in an international context, the most striking feature of investment in education in Ireland, relative to other OECD and EU countries, is our com-parative under-investment in primary education relative to international norms (not to mention our very limited public funding for early childhood edu-cation). Irish investment in third-level education, which is widely regarded as inadequate, is approximately at the OECD average.
However, our public investment at second level and, in particular, at pri-mary level is substantially below the OECD average and is among the low-est of all OECD countries when the expenditure is standardised as a per-centage of GDP
Contributing to higher education costs
There are strong arguments from an equity perspective that those who bene-fit from higher education, and who can afford to contribute to the costs of their higher education, should do so. This principle is well established interna-tionally and is an important component of funding strategies for many of the better higher education systems across the world.
Social Justice Ireland believes that Government should introduce a system in which fees are paid by all participants in third level education with an income-contingent loan facility being put in place to ensure that all participants who need to do so can borrow to pay their fees and cover their living costs, and repay their borrowing when their income rises above a particular level.
In this system All students would be treated on the same basis insofar as both tuition and living cost loans would be available on a deferred re-payment basis; All students would be treated on the same basis as repayment is based on their own future income rather than on current parental income; Inclusion of all part-time students would reduce the present disparity between full-time and part-time students.
Develop a new system in which a loan scheme is introduced along the lines outlined above
Consequently, Social Justice Ireland believes such a scheme should be introduced in Budget 2011. the gain to the Exchequer would be €445m on a full-year basis. Of this €120m should go towards primary level and adult literacy programmes.
Adult Literacy
The Department of Educations policy for tackling literacy problems among adults is in the opinion of Social Jus-tice Ireland simply unacceptable.
As part of the 2007 Government‘s Na-tional Action Plan for Social Inclusion a target for adult literacy policy was set stating that ―the proportion of the population aged 16-64 with restricted literacy will be reduced to between 10%-15% by 2016, from the level of 25% found in 1997‖ where ―restricted literacy‖ is de-fined as level 1 on the International Adult Literacy Scale. People at this level of liter-acy are consid-ered to possess ―very poor skills, where the individ-ual may, for ex-ample, be unable to determine the correct amount of medicine to give a child from informa-tion printed on the package‖ (OECD).
In numerical terms this implies that the aim of government policy is to have ―only‖ 301,960 adults with serious literacy difficulties in Ireland in 2016.
Would ‗achievement‘ of this target be a fitting way to honour the centenary of the publication of the 1916 Proclama-tion? Social Justice Ireland doesn‘t think it would be. We re-iterate our previous claims that this target is il-logical, un-ambitious and suggest a complete lack of serious interest in seriously addressing this problem.
Make a major step-change in adult literacy programmes.
Consequently, Social Justice Ireland believes that €20m should be allo-cated in Budget 2011 as the first tranche of additional funding for this purpose.
Education Proposals
For further information on education and educational disadvantage
See: Social Justice Ireland’s
Socio-Economic Review 2010
Section 3.7
Summary of Proposals on education
Impact on Government income and expenditure
Introduce a loan scheme for 3rd level students
Increased income of: €445m
Increase funding for adult literacy
Increase primary school funding
Increased expenditure of : €20m
Increased expenditure of: €100m
There are strong arguments from an equity perspec-tive that those who benefit from higher education, and who can afford to contribute to the costs of their higher education, should do so. This principle is well established internationally and is an important component of funding strategies for many of the bet-ter higher education systems across the world.
I n 1994 5.9% of people aged 65 and over were at risk of poverty. This number has been very vola-tile over the past decade and a half. It now stands at 10%. While there have been welcome decreases in recent years to bring it down to this level it is still much higher than it was in 1994. It is also of great concern that so many senior citizens are living on so little.
It needs to be understood that social welfare payments are the key to reduc-ing poverty among older people. With-out social welfare payments 84% of all those aged between 65-74 would be living in poverty. Without social welfare payments 88.6% of those aged 75 and over would be living in poverty. Social welfare payments reduce the poverty level among these groups to 12.1% and 9.9% re-spectively a fact which underscores the importance of these payments to older people. This is one of the reasons we propose that social welfare rates be increased in Budget 2011.
Government’s Current Approach
The Government‘s approach to pen-sions has been to provide a relatively low State pension and provide large tax-breaks to encourage people to in-vest in private pension provision. This has resulted in a situation where about €2.6bn of tax is not collected but given instead to those with resources to in-vest in a private pension. Tax relief is available at the standard rate (20%) for those on low incomes and at the higher rate (41%0 for those on higher in-comes. In practice this has led to a situation where 80% of the benefit of this tax relief is going to the richest 20% of the population. Social Justice Ireland considers this to be a scandal that should be addressed immediately.
Preferred Option
Social Justice Ireland‘s preferred op-tion on pensions would be to the intro-duction of a universal pension which would provide an individualised stan-dard payment to all pensioners satisfy-ing the residence condition, make pos-sible an equitable payment to those who worked inside and outside the home, deal with the many anomalies that exist in the Social Welfare system in relation to average contribution con-ditions and the differential between contributory and non-contributory pen-sions, largely eliminate means testing and special schemes such as the Home-maker‘s Scheme, and be simple to ad-minister
Despite these advantages, the Irish Government‘s Green Paper on Pen-sions argued that a universal State pen-sion would be contrary to entitlement based on participation in the labour market and would involve significant extra costs.
Clearly the introduction of a universal pension would require a shift from entitlement based on labour force par-ticipation to entitlement based on citi-zenship. But that does not mean there would be a significant increase in cost if the narrow definition adopted in the Green Paper were broadened to encom-pass the cost to the Exchequer of tax expenditure on the private pension system.
Members of the Pension Policy Re-search Group at Trinity College Dublin have argued the case for adopting this broader approach to pensions policy and learning from the experience of the only country in the OECD, New Zea-land, which had introduced a universal State pension and abolished all tax reliefs for saving for retirement.
The Government‘s Pensions Frame-work was a great disappointment as it decided to ignore this route and opted instead for slight changes to the current system based on some very question-able calculations which were simply asserted. The basis for the Govern-ment‘s calculations was never authenti-cated by any independent research and no sources were cited.
New Zealand‘s experience shows a more radical approach to pension re-form could help Ireland provide fairer treatment for the majority of taxpayers. This majority derives little benefit from the existing tax treatment of pension funds. A more radical approach could also improve the long-term sustainabil-ity of the public pension system
Evidence to sup-port these claims was presented in a paper written by Professor Gerry Hughes and pub-lished in 2008 (available at www.socialjustsice.ie). Using the criteria of simplicity, ade-quacy, cost, equity, coverage, effec-tiveness in delivering pensions, and sustainability he showed how a univer-sal State pension was not just viable but also the fairest option for Ireland.
That the Irish government decided to ignore this approach was unfortunate. Its Pensions Framework does not pro-vide universal coverage, is based on unverified statistics and is inappropri-ate for the world of the 21st century.
The present unfair, unbalanced system should be addressed. The simplest ini-tiative that can be taken immediately is to standard rate the tax-break for all pension contributions.
Greater fairness is urgently required. Standard rating pension contributions in Budget 2011would be a step towards a less skewed tax system
Consequently, Social Justice Ireland believes that the tax-break for all pension contributions should be standard rated in Budget 2011. This would increase the tax-take by €1.4bn on a full-year basis.
Pensions Proposal
Summary of Proposals on Pensions
Impact on Government income and expenditure
Standard rate all pension contributions
Increased income of: €1,400m
For further information on older peo-ple and poverty
See: Social Justice Ireland’s
Socio-Economic Review 2010
Section 3.1
The tax break on pensions costs the Exchequer about €2.6bn. 80% of this tax break goes to the rich-est 20% of the population. Social Justice Ireland considers this to be a scandal that should be ad-dressed immediately.
Budget 2011 Issues
P eople with a disability are, for the most part, among the excluded in our society. They and their families are expected to be grateful for whatever the rest of society decides to do for them. This needs to change.
Recent CSO figures show 35 per cent of people in the cate-gory called ill/disabled at highest risk of poverty. In 1994, according to ESRI studies, 29.5 per cent of this category were at risk of poverty. This significant increase for people with a disability is of major concern.
There is an ongoing need to target policies to address the needs of these groups. These policies should focus on in-come adequacy, work, training and retraining, care, health, education, access and independent living.
These areas have all been addressed in Towards 2016 and high-level goals have been agreed and are to be achieved by 2016. Progress to date, however, has been far from what is required.
There is a strong case, to be made for the introduction of a non-means tested cost of disability allowance.
Develop a cost of disability allowance system.
Consequently, Social Justice Ireland proposes that Gov-ernment devise a scheme for introducing a cost of disability allowance and set out a pathway for its implementation.
O n pages 14 and 15 of this Policy Briefing we have already outlined key parts of Social Justice Ire-land’s response to the working poor issue and to the high level of unemployment. We have included Budget proposals to make tax credits refundable and to create a new Part-Time Job Opportunities programme for people who are long-term unemployed. However, there is also a great need to address issues concerning training and skills development for people who are unemployed or at risk of unemployment.
What is required is a suite of education, training and em-ployment options that would give unemployed people the opportunity to maintain and improve their skills. Participa-tion in these options should be voluntary. It is a complete waste of money forcing people onto unsuitable pro-grammes which will offer them little if any future pros-pects.
Re-design the system to provide appropriate programmes with sufficient places to meet current needs.
Consequently, Social Justice Ireland proposes that the substantial resources available to FAS should be refo-cused in Budget 2011 on achieving this outcome. This would be revenue neutral.
Training and Skills
T he need for development to be sustainable has been clearly recognised. Decisions made in Budgets should be economically, environmentally and socially sustain-able. Otherwise they simply store up problems for future gen-erations which will be even more difficult to address effec-tively.
There has been some evidence in recent years that Govern-ment recognises this fact and some initiatives focused on sus-tainable development have been taken in recent Budgets. There is a long way to go however before sustainability could be said to be at the core of decision-making.
Conventional economic models of development or progress fail to meet the needs of millions of people on this planet to-day. More appropriate alternative models are required. One initiative that would go some way towards achieving this goal would be the introduction of ‗satellite‘ or ‗shadow‘ national accounts as developed by many governments across the world. Towards 2016 commits the Irish government to examine the application of satellite accounts.
Develop satellite national accounts along the lines ouitlined above.
Consequently, Social Justice Ireland proposes that Govern-ment take the necessary steps to do this in 2011.
I n 1996 there were less than 28,000 households on waiting lists for appropriate accommodation. Today there are close to 60,000 households on these waiting lists. It is a serious indictment of the Celtic Tiger years that while Ireland produced far more houses than it needed, at the same time it failed to address the waiting list issue. This failure is of such a scale that the numbers on waiting lists more than doubled in a decade and a half.
Government‘s response had to take account of the current difficult fiscal situation and the lack of resources available to build new houses. The move towards a greater focus on rent-ing accommodation from the private sector and making it available to those in need of social housing has had some very positive impacts. But it does not address some of the key problems facing those who seek to provide social or co-operative housing. Much of the excess housing is not in the right places or is not appropriate for those on waiting lists.
Provide additional resourcing for appropriate schemes aimed at meeting current social housing needs.
Consequently, Social Justice Ireland proposes an addi-tional €20m be made available to support the work of so-cial and co-operative housing organisations in addressing the needs in this area
Social Housing
Budget 2011 – Issues (further information in our annual Socio-Economic Review)
Unemployment has risen to 13.6%. Long-term unemployment must be addressed.
Proposals: Refocus FAS to appropriately resource the preparation and enabling of unemployed people to access jobs. Introduce a Part Time Opportunities Programme.
39% of all households at risk of poverty are headed by a person WITH a job. Many of these are outside the tax net. They neither benefit from budget changes nor get the full value of their tax credits.
Proposal: Ensure the working poor can benefit from the full value of their tax credit by making tax credits refundable.
60,000 households are on housing waiting lists. Many are homeless. These cannot af-ford to provide appropriate accommodation for themselves.
Proposal: Meet the social housing commitments contained in To-wards 2016 and in the National Development Plan (NDP).
People who are ill or have a disability are among the two categories at highest risk of poverty (21.6%). They have additional expenses because of their disability.
Proposal: Devise a scheme for introducing a cost of disability al-lowance.
Ireland‘s public services are underdeveloped. Poorer people rely on these more than those who are better off.
Proposals: Protect public service provision Give priority to public transport systems.
More than 17% of children (approx. 187,000) are at risk of poverty. There is also an ongoing problem with the provision of childcare.
Proposal: Protect Child Benefit payments; do not cut or tax them.
Socio-Economic Review 2010
Section 3.3
Socio-Economic Review 2010
Section 3.1 and 3.2
Socio-Economic Review 2010
Section 3.5
Socio-Economic Review 2010
Section 3.1 and 3.3
Socio-Economic Review 2010
Section 3.4
Socio-Economic Review 2010
Section 3.1 and 3.2
Budget 2011 – Issues (further information in our annual Socio-Economic Review)
Ireland has committed to providing 0.7% of GNP in foreign aid by 2012 – reaching the UN target. This expenditure is targeted at the most vulner-able people on the planet.
Proposal: Increase the ODA budget to bring it on target so that it meets the 2012 target.
The work of Ireland‘s carers receives minimal recognition. Census 2002 indicated that there were approximately 149,000 carers in Ireland with 1 in every 10 women in their 40s and 50s a carer.
Proposal: Finalise and implement the National Carers Strategy immediately and resource its implementation adequately.
The dominant economic measures of progress fail to take account of sustainability is-sues. A new approach that conserves the planet and its re-sources and protects its people is needed.
Proposal: Resource and implement the commitment in Towards 2016 to develop a set of shadow national accounts.
Rural Ireland has high dependency levels, out-migration and many with low incomes.
Proposals: Address rural disadvantage (e.g. transport, housing etc). Protect rural services such as the Rural Transport Initia-tive and the Community Services Programme.
Ireland is now the only EU country in which asylum seekers are not allowed to work. Direct Provision violates asylum seekers‘ rights to an ade-quate standard of living, particularly the right to adequate housing and the interrelated rights to food and health.
Proposal: Reverse this approach.
The influx of migrant workers in recent years presents Ireland with a major challenge—to integrate rather than isolate these populations. The chal-lenge, though reduced by the current recession, remains.
Proposal: Implement & resource the Towards 2016 commitment to establish a new framework to address integration issues.
Socio-Economic Review 2010
Section 3.8
Socio-Economic Review 2010
Section 3.8
Socio-Economic Review 2010
Section 3.11
Socio-Economic Review 2010
Section 3.10
Socio-Economic Review 2010
Section 3.3
Socio-Economic Review 2010
Section 3.12
Social Justice Ireland’s Proposals for Budget 2011
Social Justice Ireland’s key Budget Initiatives for Budget 2011
Impact on Exchequer Income
Increase in Exchequer Expenditure
Decrease in Exchequer Expenditure
Standard-rate the tax-break on all pension contributions (cf. page 14).
+ € 1,400m
Make tax credits refundable (cf. page 9).
€ 140m
Implement Commission on Taxation recommenda-tions re tax breaks (with exception of taxing child benefit) worth €872m in total (cf. page 8).
+ € 552m
Introduce a tax of one third of one cent on each text sent via SMS through mobile phones or any other device.
+ € 25m
Increase tax-take from gambling (bookmakers / inter-
+ € 40m
Corporate sector
Introduce a 2.5% levy on all corporation profits as a contribution towards solving Ireland‘s current fiscal problems (cf. page 11).
+ € 632m
Labour Market
Introduce a Part-Time Job Opportunity Programme for those who are long-term unemployed (cf. p 10)
€ 300m
Re-focus the work of FAS so that its Budget is spent on providing appropriate education, training and em-ployment options (cf. page 15)
No extra cost
No extra cost
Enterprise, Trade and Employment
Implement recommendations from the McCarthy Report on the IDA, Enterprise Ireland, FAS and the STI activities across all departments.
€ 51m
Older people programme to enable 12-15 units with about 50 beds each to be replaced or refurbished. (cf. page 12)
€ 100m
Primary care teams programme (cf. page 12)
€ 50m
Children + Family Services programme (cf. p.12)
€ 50m
Introduce an income-contingent loan scheme for 3rd level students to pay their fees and cover their living costs (cf. page 13).
€ 445m
Increase funding for adult literacy (cf. page 13)
€ 20m
Increase funding for primary schools (cf. page 13)
€ 100m
Social Welfare
Increase social welfare rates by €5 a week for single people and €8.50 a week for couples. (cf. page 11)
€ 365m
Social Housing
Increase provision for social housing (cf. page 15)
€ 20m
Third World
Increase Aid Budget to meet UN target (cf. p.20)
€ 50m
Implement McCarthy Report recommendations re general admin, Revenue Comms. the OPW etc.
€ 50m
+ €2,649m
€ 1,195m
€ 546m
I reland is in an exceedingly diffi-cult position as Budget 2011 is finalised. Economic growth is not likely in 2010.
The forecast for 2011 is for some growth but not on a scale that would make a major impact on employment.
More than 600,000 people are at risk of poverty. More than one in three of all households at risk of poverty is headed by a person with a job.
These are the working poor and their situation has been consistently ignored by policy makers in recent years.
The banks who contributed in a major way to the current crisis are being res-cued at tax-payers expense.
This has produced a situation where public finance is not available for other areas of government activity.
Services are being cut back, welfare payments have been reduced and poor people, who had no part whatsoever in producing the current crisis are being forced by Government to carry an inor-dinate part of the burden for Ireland‘s rescue.
Small and medium enterprises are find-ing it ever more difficult to access credit to allow them to carry on their businesses even where these businesses are viable.
Because of the retrenchment the cur-rent series of crises has produced there are more people on the live register now (450,000+) than has ever been the case in Ireland. This number is not likely to fall dramatically in the imme-diate future.
Consequently, Budget 2011 should make decisions that are fair, that pro-tect the vulnerable and that move Ire-land towards a better future.
In this Policy Briefing Social Justice Ireland has presented a series of pro-posals that meet these criteria.
Impact of these proposals
Taken together they would: Introduce some tax reform; Ensure progressive redistribution; Produce a fairer sharing of the bur-den; Protect the vulnerable Address the working poor issue; Produce real part-time jobs for 100,000 unemployed people; Make progress towards a better healthcare system; Produce greater equity in the edu-cation system; Move towards attaining the UN target for supporting the world‘s poorest people; Ensure the corporate sector would also make some small contribution towards rectifying Ireland‘s current situation.
Social Justice Ireland has outlined on previous occasions what it believes should be done to address the banking crisis and to address the funding crisis faced by small and medium industries. We do not repeat these proposals here but they remain our position.
The budget is not an end in itself. Nei-ther is the economy. They are means to an end. When framing a budget Gov-ernment must address this issue of pur-pose.
Social Justice Ireland believes that Government decisions on Budget 2011 and beyond should be guided by a vi-sion of building a society where the well-being of all is promoted and sup-ported. The economy‘s purpose should also be to serve this purpose.
Budgets should not be developed as if the correct order is that people serve the economy. In fact the opposite should be the situation: the economy should serve people.
The proposals set out here have been developed and presented on this basis. They have been accurately costed us-ing the most recent data available.
While they will not solve all of Ire-land‘s current problems, no single budget could, they would have a very positive impact on Ireland‘s current situation and on the situation of all those living in Ireland.
Social Justice Ireland’s Proposals for Budget 2011
A Fair Budget to address Ireland’s Current Crises
Fiscal impact of Social Justice Ireland’s Budget Initiatives for Budget 2011
Impact on
Government Expenditure
Impact on
Government Income
Impact on
Government Borrowing
Increases in expenditure
+ € 1,195m
Decreases in expenditure
– € 546m
Overall Change in Expenditure
+ € 649m
+ € 649m
Increases in income
+ € 2,649m
– € 2,649m
Savings in capital expenditure already agreed by Government
– € 1,000m
– €1,000m
– € 351m
+ € 2,649m
– € 3,000m
Social Justice Ireland is a research and advocacy
organisation of individuals and groups, lay and religious,
throughout Ireland who are committed to
working to build a just society where human rights
are respected, human dignity is protected, human
development is facilitated and the environment is
respected and protected. It has taken over the programmes
and projects previously run by CORI Justice
including its social partnership role.
Social Justice Ireland
Arena House
Arena Road
Dublin 18
Phone: 01 2130724
Email: secretary@socialjustice.ie
Web: www.socialjustice.ie
We’re on the web
Recent Publications from Social Justice Ireland
The Future of the Welfare State
Building a Fairer Tax System: The Working Poor and
the Cost of Refundable Tax Credits
Policy Briefing on Poverty
An Agenda for a New Ireland: Socio-Economic Re
view 2010
Beyond GDP: What is progress and how should it be
All of these are available on our website at
www.socialjustice.ie. Printed copies can be purchased
from the Social Justice Ireland offices.
Support Social Justice Ireland
If you wish to become a member of Social Justice Ireland
or make a donation to support our work you may do
so through our website at www.socialjustice.ie or by
contacting our offices directly.
Social Justice
T he scale of the various crisis
(banking, public finance, economic,
social and reputational)
facing Ireland today is dramatic. They
imply a period of recovery, one that
will take a number of years. The nature
of that recovery has both international
and national aspects. While the
former is out of our control, decisions
regarding our national policy responses
to these crises will need to be
considered and taken over the next
few months and years.
Social Justice Ireland believes that
these national decisions should be
framed in the context of one central
Where does Ireland, and Irish society,
want to be in 10 years time?
Budget 2011 offers Government an
appropriate opportunity to outline an
answer to this crucial question.
As we have outlined in our 2010
Socio-Economic Review (available at
www.socialjustice.ie; see section 2.4)
we believe that such a long term vision
should incorporate each of the
Collect Sufficient Taxes with a
Fair Tax System
Protect Social Provision
Address Unemployment and Support
Continue to Reduce Poverty
Develop Long Term Planning
Shift Policy to Target Growth of
per-capita National Income
Restate Commitments to the High
Level Goals in Towards 2016
Avoid Upwards Redistribution in
Supporting Banks and Developers
Maintain Ongoing Dialogue with
Social Partners
Develop a Rights-Based Approach
in policy formation.
Budget 2011: A Need for Vision
S ocial Justice Ireland believes that
in Budget 2011 Ireland‘s overseas
aid budget should move towards
the UN target. In the context of Ireland‘s
current challenges it is important to bear
in mind that many people in the world are
in a far worse situation and have been in
this situation for a very long time. Ireland
and other countries in the better-off part
of the world should not abandon the
world‘s poorest at this crucial time.
One of the major cuts in Ireland‘s second
Budget of 2009 was to the overseas aid
budget. It was cut by €100 million, adding
to a cut in January 2009 of €95 million.
In 2010, Ireland will give €671 million
in overseas aid; an amount equivalent
to 0.52% of GNP. The Irish Government
made a commitment to reach a target of
spending 0.7% of our national income on
overseas aid by 2012. Social Justice Ireland
strongly urges Government to provide
an additional €50m in Budget 2011
towards reaching that 2012 ODA target.
Protecting the
World’s Poorest