Policy Briefing on Poverty - February 2010

 Policy Briefing on Poverty - February 2010

Policy Briefing on Elections 2009

Election 2009

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European and local elections are taking place in early June. It is a moment of major change.  Not just in Ireland but in Europe and across the world the collapsing financial systems have produced unparalleled economic upheaval with major implications for people across the globe.

Millions have become unemployed; many for the first time in their lives. Governments have been forced to bail out banks and borrow enormous amounts.

Services have been cut drastically. People who had become accustomed to a good standard of living have suddenly found themselves in serious trouble. Poor people have found their already meagre resources and services further reduced.

At a time like this it is crucial that the politicians elected to the European Parliament and to Local Authorities have a vision of the future they wish to see emerge and some appreciation of what is required if this vision is to be attained.

Catholic Social Thought places the dignity of the human person at the centre of such a vision. It also highlights the need to recognise that:

• Participation by people is both a right and an obligation;
• The Common Good should be at the centre of policy development;
• All property rights are subservient to the rights of all people to subsistence;
• People who are poor, marginalised or vulnerable should be the focus of special concern;
• Subsidiarity should be at the core of decision making;
• Solidarity requires recognition of the reality of interdependence in all aspects of life today.

The future will be shaped by decisions taken by, among others, those who are elected at different levels of the political structure. These decisions will involve choices.  These choices will be based on values.

Consequently, every voter should discover what the vision and the values of those standing for election are.  They can then vote for candidates who propose to build a future that voters would like to see emerge.

In this Policy Briefing we set out a range of issues we believe are important in the context of elections for the European Parliament scheduled to be held in Northern Ireland on June 4 and the Republic of Ireland on June 5.

We also set out issues we consider to be relevant in the local elections to be held in the Republic on the same day. 

We ask all readers to reflect on these issues and to consider taking them up with canvassers for the candidates standing for election.

We also urge readers to vote.  Very often people are critical of the democratic process maintaining that politicians ignore the will of the general population.

It is also true however that politicians pay close attention to the wishes of voters.

Elections are important for democracy. So we urge you to vote.

Give Priority to the Common Good Over the Market
Those who are elected in the upcoming elections need to recognise that solutions based on the market alone will not solve the present series of crises. Of course there are problems with the market and these must be addressed. But there is far more to progress than getting the market right. A balance is required between the various aspects of life.  Failure to recognise the need for such balance has produced the present situation.

The dominant world view that produced the current global crisis is highly problematic.   A great part of the current crisis is rooted in a philosophy of individualism that sees the individual as the primary unit of reality and refuses to acknowledge the importance of communitarian connectedness.

This philosophical approach sees the person principally in economic terms and considers the market to be the key place of advancement/development. 

In this understanding a person can measure his/her worth by discovering what he/she is worth in the marketplace. The consequences of this approach are all around for people to see.
CORI Justice believes that an alternative to the present dominant view of the world and how it should function is required.

We need to move from a world that is built on individualism, anxiety and greed to a world that is built on the reality of abundance, the need for generosity, the dignity of the person and the centrality of the common good.

It is not enough for economic activity to be profitable.  It is also essential that it promote the common good.

One example of this in practice would be a recognition of the fact that economic development and social development are two sides of the one coin. Economic development is required to produce the resources needed to provide good social services.  At the same time, however, it has to be acknowledged that good social services are required if the economy is to develop to its potential.  For example, a cursory look at the contribution a good education system makes to economic development serves to illustrate the validity of this claim.

Consequently, preference voting in the elections should be based on the candidates’ expressed views on these relationships - between the market and the common good, between economic development and social development.

Address Poverty Not enough has been done in the EU to address the scale of poverty and social exclusion. 16% of the Union’s population is at risk of poverty. In  the Republic of Ireland the poverty level is at the European average but in Northern Ireland it is 20%.

Over the years the EU has taken a series of initiatives and funded a range of programmes to address poverty and social exclusion. These have had many positive impacts.  However, the fact that one in every six people is at risk of poverty in such a wealthy part of the world is a major indictment of the Union’s priorities more than six decades after its foundation.

Many issues addressed by the European Parliament have an impact on the quality of life of people across the Union. The Parliament controls the EU Budget and thus has a strong influence on how funds are allocated and on what programmes are given priority.

CORI Justice believes that the elimination of poverty and social exclusion should be at the core of  EU policy. Quality social services should be available to all who need them in areas ranging from health to education, from social housing to public transport.  Likewise people

with disabilities should be supported where necessary to play a full role in society.
Because of the dominance of the market over the common good in policy-making arenas within the EU in recent years, the elimination of poverty and social exclusion have not received the priority they require. Delivering real social cohesion across the Union and beyond should be an EU priority in the coming five years. Those elected to the European Parliament will be in a strong position to ensure this priority is addressed effectively.

Promote Solidarity
Solidarity was at the core of the establishment of the European Union which also sought to promote pluralism, non-discrimination and tolerance. These were seen as promoting human dignity, freedom, democracy and respect for human rights.

A key dimension of solidarity at the EU level concerns social protection and social inclusion.  More than 80 million people in the EU were at risk of poverty before the recent economic crisis.  We deal with these issues on page 3 (cf. item on future of the welfare state).  But there are other aspects to solidarity in the EU.

Solidarity among EU States Structural funds and cohesion funds were put in place as a concrete symbol of solidarity between the richer and poorer regions of the EU.  Ireland benefited enormously from these funds and much of the country’s infrastructure was part-funded at least through these funds.

With the expansion of the Union to 27 countries it is very important that the regional disparities, which have increased enormously, are addressed with sustained and well-resourced action.

Solidarity with the wider world
Looking beyond the EU’s borders the Union’s solidarity should be expressed with policies that promote peace, human rights and democratic development. 

In practice this would require Europe to use its huge economic, political and scientific capacities to promote just and collaborative international relations.  It has used its resources to promote positive development across the EU. It should do the same across the planet which has so many people in great need.

Secure the future of the European Welfare State
The development of the EU has been strongly portrayed as a peace process.  It has been effective in that regard and has contributed to the process of bringing democratic stabilisation to some high-risk regions of Europe. 

Commitment to supporting the welfare state has been a consistent part of EU policy and strong rhetorical support continues.  There is much affirmation in the EU of the 'European Social Model'.  However there is no one dominant model of the welfare state or one dominant 'social model'. 

In recent decades a number of developments have led to questions being raised concerning the reality of this commitment. 

From the 1980s onwards there has been a reaction against the ‘interventionist’ state and growing support for market fundamentalism in the EU. 

There is also a questioning of the peace-building motivation for the EU. 

Instead we have seen the emergence of a view that the European Union should focus on building its power and pooling its sovereignty.  

This implies a very different understanding of the EU and has raised questions on whether or not it remains committed to the ‘European Social Model’ and to ensuring the continuation and strengthening of the welfare state. 

In recent years there has been a growing fear that the elimination of borders across the EU would lead to a ‘race to the bottom’ where welfare provision was concerned.  The evidence on this is mixed. 

Recent economic pressures following from the collapse of much of the world’s financial system have led to growing calls for a reduction in social welfare rates and the cutting back of social services. 

In many cases these calls are based on claims that are patently untrue e.g. that Ireland’s welfare rates are among the most generous in Europe when in fact they are at the other end of the spectrum.  However the lack of data to support the claims has not stopped these claims being made. Rather they appear to emanate from a wish to see the welfare state rolled back. 

The incoming European Parliament should give priority to ensuring the welfare state is protected and promoted. The recent economic collapse has highlighted the need for the European Social Model to be secured for the future.

Strengthen Democracy
Participation is a central requirement for democracy to succeed whether at the European or the local level.

EU Level
The European Union has been criticised regularly for its lack of democratic accountability.  This perception of the EU as not being very democratic has been strengthened by the priority it has given to economic issues and its failure to give social services and issues such as poverty and social exclusion the same level of attention.

Local level
At a local level there have been several attempts in recent years to strengthen the participation of various sectors. The development of Strategic Policy Committees saw the direct involvement of a wide range of local people, other than elected Councillors, in the policy-making process.

The development of County and City Development Boards was meant to ensure the integration of local decision-making and planning and the elimination of parallel processes that often worked at cross purposes or simply ignored each other.  This has a long way to go before it reaches its goal.

Involvement of people
At every level, the democratic process needs to involve people more.  Participation by as many as possible strengthens the institutions and makes it more likely that decisions are well informed and based on the experiences of all and not just the privileged few.

Both the institutions and the people they serve have a shared responsibility to ensure such participation is possible and that it happens in reality.

Promote Subsidiarity
The principle of Subsidiarity states that larger entities should not assume the roles and functions of smaller entities unless it is absolutely necessary.  Putting this principle into practice is meant to protect people from abuses by higher-level authority.

A question of responsibility
It places a responsibility on these higher-level authorities to help individuals and groups to enable subsidiarity to be achievable in practice.  It also places a responsibility on the individuals and groups to play a responsible role in this process.

Ireland and subsidiarity
In practice, Ireland’s Local Authorities, have a range of powers and functions that have been devolved since 1976.  The principal ones are: housing and building; road transport and safety; water schemes and sewerage; development incentives and controls (includes planning); environmental protection (including waste collection); recreation and amenities; agriculture, some education, health and welfare issues; and a category entitled miscellaneous services that includes issues such as financial management.

It is clear from this list that these Local Authorities have substantial work to do.  However, much of the key decision-making is still controlled by central Government as it controls most of the finance.  

Government in Ireland has failed to honour this principle of subsidiarity in a meaningful way.  The recent programme of decentralisation was not really a decentralisation of authority but rather a re-location of the offices of some Government Departments.  CORI Justice believes that substantial further devolution of power to Local Authorities is required before the principle of subsidiarity is honoured in full.

Policy Issues in European Elections
The European Union has a complex policy-making process involving the Commission, the Council of Ministers and the European Parliament.  The Parliament’s role has been increasing in recent years. 

As the only directly elected body at EU level the Parliament constantly asserts its role and legitimacy in the policy-making process. 

The Parliament elected in June, 2009 will have many issues to address and many decisions to make.  These decisions will all involve choices.  All choices are based on values. So it is very important to ask questions of candidates in the forthcoming election to ascertain their stance on various issues and to discover the values that will shape the choices they intend to make.
On these two pages we identify some of the key issues the European Parliament will address in the next five years.  We outline why each of these issues is important.  We go on to suggest one or two actions that could be taken by, or supported by, the European Parliament.

Policy Issues in European Elections

The European Parliament is the only institution directly elected by people in the EU. In recent years the Parliament has been given more power. It must be consulted by the Council of Ministers before decisions can be made. The Parliament now has power to: Accept or reject Commission proposals on EU legislation and pass EU laws jointly with the Council on many issues. Accept or reject the EU Budget. Approve international agreements and admission of new members. Most of the work of the European Parliament is done through committees. The committees cover areas such as: Foreign affairs, human rights and common security and defence; Budgets; Economic and monetary affairs; employment and social affairs; environment, public health and consumer policy; agriculture and rural development; and many more. Members of the European Parliament in the 2009-2014 period will exercise influence in all of these areas.

Policy Issues in Local Elections

Local Authorities play a very important role in the democratic process. Often, however, they are overlooked or dismissed as irrelevant. They should be supported.

Government at national level has failed to decentralise many decision-making functions and the resources required to ensure that these Authorities can maximise their potential.

On these two pages we have identified eight of the core issues that Local Authorities address.  We identify why we consider each particular issue to be important and we make proposals concerning some of the actions we believe the incoming Local Authorities should take to address these policy issues.

Readers will be aware of many more policy issues that are of major importance to people and over which the Local Authority can have some influence.  We urge everyone to reflect on these issues and on what could be done. 

Assess the proposals being made by candidates and then decide to vote for those making proposals you believe are closest to the ones you consider to be most important.

Policy Issues in Local Elections

Over the past decade there have been some very positive developments at Local Authority level. A number of Strategic Policy Committees (SPCs) were established in every Local Authority. These involve some councillors and others representing outside interests which vary depending on the issues being addressed by the particular SPC.  The Community and Voluntary sector has representatives on many of these Committees.

Every Local Authority has a Community Forum which draws together all interested groups in the Community and Voluntary sector who are active in the area. These Forums provide an opportunity to ensure the sector’s voice is heard.

County Development Boards produce and oversee implementation of local development plans for the Local Authority area.  These draw together representatives of the elected Local Council, local development agencies, national bodies and social partners.

These structures provide opportunities for better development at local level. It is important they be used to the full.

A Fair and Sustainable Future

When people vote they are making choices not just about the candidates but also about the policies they (and their parties) support.  People are, in fact, expressing their own preferences for the future of their local communities and the EU community.

For examples, decisions taken in Europe can have an impact not just across the 27 member states but far beyond the EU’s borders.

As responsible participants in the democratic process there is an onus on all voters to study the policies of the various candidates, to avail of opportunities to inform candidates of their opinions and to engage in debate about the issues.

At election time the voices of the articulate and well organised are heard. Political parties are sensitive to their issues.  It is therefore important that the needs and concerns of those poorly organised and with scant resources are not forgotten.

CORI Justice has produced this Policy Briefing on the upcoming European and Local elections to assist people in this process.

We strongly believe that people generally would be very positive about decisions taken locally, nationally, internationally, that were seen to be aimed at producing a future that was both fair and sustainable.

Recent developments have shown clearly that many decisions taken in recent decades failed to prioritise these two dimensions. Consequently, a very unfair society has emerged which is not sustainable from an economic, environmental or social perspective.

The people of Ireland and of the EU deserve more. It is possible to build a better future - despite the series of crises currently being faced. But it requires a commitment to make different choices based on values that give priority to people and the common good over greed and the market. This is a challenge that must be met.

Use Your Influence - VOTE

Many people feel voting is a waste of time. They claim decisions are made without real consultation and that their major interests are not given real consideration by politicians.

In the EU context they feel the issues are remote and not immediately relevant to their lives. 

At a Local Authority level people sometimes feel that Councils have no power to do anything. 

In both cases perceptions do not coincide with the reality.  Major decisions are made in both arenas.

The European Parliament and Local Authorities will make decisions on major issues in the years ahead. Choose wisely.

Use your influence. VOTE.

Other CORI Justice Publications

The following publications (and many more) may be downloaded for free from our website and are available for purchase from the CORI Justice Office:

• Analysis and Critique of Budget 2009 #2 (April 2009)
• Policy Briefing on Poverty (March 2009)
• Socio-Economic Review - 2009 - Available June 2009
• Policy Briefing on Taxation (November 2008)
• Making Choices - Choosing Future: Ireland at a Crossroads (2008)
• Values, Catholic Social Thought and Public Policy (2007)

Policy Briefing on Poverty 2009

Poverty

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The good news is that poverty fell by 100,000 over the most recent three-year period for which statistics are available.  The bad news is that the current economic crisis and its attendant rising unemployment does not augur well for poverty in Ireland.

CORI Justice welcomes the reduction in poverty from 19.4% to 15.8% over the three year period to end-2007. This reduction is due principally to the increases in social welfare (totalling €51 a week) that were contained in the budgets of 2005/6/7. 

This in turn vindicates the CORI Justice approach which has emphasised the importance of raising the lowest social welfare rates for a single person to 30% of gross average industrial earnings (GAIE).

These figures cover the period to end-2007.  We highlight Government's failure to maintain this anti-poverty momentum in Budgets 2008 and 2009
Almost a third of all households at risk of poverty are headed by a person WITH a job (31.3% in 2007, up from 29.5% in 2006).  These are the ‘working poor’.  Government has failed to take the necessary initiatives to tackle this working poor issue.

CORI Justice notes that Government has said it is committed to protecting the most vulnerable in these difficult economic times. If it is to do this credibly then CORI Justice now urges Government to:

• Continue benchmarking the lowest social welfare rates at 30% of gross average industrial earnings.
• Make additional resources available to support households at risk of poverty by targeting further welfare increases at the second adult and the children in these households.
• Take initiatives to tackle the working poor issue, the rising level of unemployment and issues such as food poverty that were not addressed in Budget 2009.

CORI Justice recognises that poverty is about much more than income adequacy although income is of critical importance.  Consequently it is important that the deficit in social services be addressed in the period ahead.

These include services in the areas of: education, health, childcare, eldercare, housing, transport and training. 

Likewise it is critically important that activation programmes for people who are unemployed or at risk of becoming unemployed be supported adequately. It is important also to ensure that activation programmes for people with disabilities, for children and others should also be supported adequately.

If the working poor issue is to be tackled effectively then it is crucial that all those with a job who are at risk of poverty should be able to benefit from the full value of the tax credits to which they are entitled.  It is very simple to do this and it would not be very costly.

CORI Justice has commissioned a study on this issue which will be published in mid-2009.

Poverty and how it is measured
The National Anti-Poverty Strategy (NAPS) published by government in 1997 adopted the following definition of poverty:

People are living in poverty if their income and resources (material, cultural and social) are so inadequate as to preclude them from having a standard of living that is regarded as acceptable by Irish society generally. As a result of inadequate income and resources people may be excluded and marginalised from participating in activities that are considered the norm for other people in society.

This definition, was once again endorsed in the 2007 NAPinclusion document.

In trying to measure the extent of poverty, the most common approach has been to identify a poverty line (or lines) based on people's incomes.

Where that line should be drawn is sometimes a contentious matter, but many European studies [including those carried out by the Central Statistics Office (CSO) in Ireland] now suggest a line, which is at 60% of median income, adjusted to take account of family size and composition.

The median income is the income of the middle person in society’s income distribution, in other words it is the middle income in society.

Irish data on poverty is published annually by the CSO using results from a comprehensive national survey called EU-SILC (EU-Survey on Income and Living Conditions). This data is used throughout this Policy Briefing.

Where is the poverty line?
The most up-to-date data available on poverty in Ireland comes from the 2007 EU-SILC survey, conducted by the CSO.

The 2007 data includes a one-off effect on Irish household incomes associated with the SSIA (Special Savings Incentive Accounts) scheme. As a result of the release of these savings and the associated cash bonuses/interest, many household’s income increased in 2007 on a one-off basis.

Given that this effect will not re-occur in future years the CSO have provided their 2007 EU-SILC results both including and excluding the SSIA effect. To ensure continuity of analysis with previous and future years the majority of the analysis that follows in this Policy Briefing reports the results excluding the once-off SSIA effects.

According to the CSO the median income per adult in Ireland during 2007 was €367.74. Consequently, the 60% of median income poverty line for a single adult derived from this value was €220.64 a week.

Updating this figure to 2009 levels, using predicted increases in average industrial earnings, produces a relative income poverty line of €229.47 for a single person. In 2009, any adult below this weekly income level will be counted as being at risk of poverty.

Table 1 applies this poverty line to a number of household types to show what income corresponds to each household’s poverty line.

The figure of €229.47 is an income per adult equivalent figure. This means that it is the minimum weekly disposable income (after taxes and including all benefits) that one adult needs to receive to be outside of poverty.

For each additional adult in the household this minimum income figure is increased by €151.45 (66 per cent of the poverty line figure) and for each child in the household the minimum income figure is increased by €75.73 (33 per cent of the poverty line). These adjustments are made in recognition of the fact that as households increase in size they require more income to keep themselves out of poverty.

In all cases a household below the corresponding weekly disposable income figure is classified as living at risk of poverty. For clarity, corresponding annual figures are also included in table 1.

One immediate implication of this analysis is that most social assistance rates paid to single people are €25.17 below the line.

How many are below the poverty line?
The most up-to-date data available on poverty in Ireland comes from the 2007 EU-SILC survey, conducted by the CSO (published in early December 2008). Table 2 presents their key findings showing poverty levels among the Irish population.

Using the EU poverty line set at 60 per cent of median income, the findings reveal that in 2007 almost 16 out of every 100 people in Ireland was living in poverty.

The table also indicates that in recent years rates of poverty have begun to decrease towards the levels recorded in the mid-1990s (when detailed poverty studies commenced). Data for 1994-2007 show that the proportion of the population in poverty increased from 15.6 per cent in 1994 to peak at 21.9 per cent in 2001 before gradually falling to 15.8 per cent in 2006.

As it is sometimes easy to overlook the scale of Ireland’s poverty problem table 2 translates the poverty percentages into numbers of people. The results give a better insight into how large the phenomenon of poverty is and show that in 2007 over 685,000 people lived with incomes below the poverty line.

poverty levels have fallen...decreases that can be
directly related to recent increases in social welfare

The most recent data indicate that the poverty levels have fallen at a notable pace over the past few years. This decrease can be directly related to the increases in social welfare payments sought by CORI Justice and delivered over the Budgets from 2004-2007.

Table 3 presents the results of a CSO analysis that shows without the social welfare system Ireland’s poverty rate in 2007 would have been 41 per cent. The actual poverty figure reflects the fact that social welfare payments reduced poverty by 24.5 per cent.

Looking at the impact of these payments on poverty over time it is clear that the recent increases in social welfare 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 increases in recent years have delivered greater reductions. This has occurred even as poverty levels before social welfare have increased. CORI Justice has warmly welcomed these social welfare increases and if the government continues to maintain a benchmarked social welfare payment, as agreed under the NAPinclusion, these figures measuring the role of social welfare in reducing poverty will increase.

* Data for 2007 not excluding SSIA effect as not published by CSO

Finally, table 3 examined the number of adults in poverty in Ireland classified by their principle economic status  - the main thing that they do (we discuss children on p6). The calculations show that over one-fifth of Ireland’s adults who have an income below the poverty line are employed.

Overall, 45 per cent of adults who are at risk of poverty in Ireland are associated with the labour market (classified as in work, unemployed or ill/disabled). The remaining 55 per cent of adults who are poor are classified as being outside the labour market.

Household data offers better insight for tackling poverty
Given that households are taken to be the ‘income receiving units’ (income flows into households who then collectively live off that income) there is an attraction in assessing poverty by household type. Table 5 examines the composition of poverty by household type.

CORI Justice welcomed the fact that the CSO have, at our suggestion, begun to publish the EU-SILC poverty data broken down by household category. From a policy formation perspective, having this information is crucial as anti-poverty policy is generally focused on households (households with children, pensioner households, single person households etc).

The data in table 5 shows that in 2007 31.3 per cent of households who were at risk of poverty were headed by somebody who was at work. Almost 50 per cent of households at risk of poverty were found to be outside the labour market - on home duties, students /school attendees, retired plus a proportion of those who are ill and disabled.

Persistent poverty delay
CORI Justice is committed to using the best and most up-to-date data in its ongoing socio-economic analysis of Ireland. We believe that to do so is crucial to the emergence of accurate evidence-based policy formation. It also assists in establishing appropriate and justifiable targeting of state resources.

One of the new indicators of poverty, ratified at the 2001 EU intergovernmental conference in Laeken, measures the proportion of those living below the 60 per cent of median income poverty line in the current year and for two of the three previous years. This indicator is known as ‘persistent poverty’ and it identifies those who have experienced sustained exposure to poverty which is seen to harm their quality of life seriously and increase their levels of deprivation.

To date the EU-SILC survey has not produced any detailed results and breakdowns for this measure (although the survey has run for 4 full years).
The CSO have indicated that they intend to publish such a breakdown during 2009 and we encourage them to do so. Once this data becomes available CORI Justice believe that it should be used as the primary basis for setting poverty targets. Existing measures (relative and consistent poverty) should be maintained as secondary indicators.

However, the available EU-SILC data has given some insight into the likely persistent poverty numbers. The CSO report than in 2007 the persistent poverty rate was 15.4 per cent. This figure, while preliminary, is worryingly high. It implies that the vast majority of those living below the poverty line in 2007 have been in poverty for a number of years. Simply, the figure implies that most of Ireland’s poor are long-term poor and that poverty in Ireland is a structural problem which requires focused policies to address and reduce it.

Poverty gap - some progress
As part of the 2001 Laeken indicators the European Union requested that all member countries begin to measure the relative at-risk-of poverty gap. This indicator assesses how far below the poverty line the income of the median (middle) person in poverty is. The size of that difference is calculated as a percentage of the poverty line and therefore represents the gap between the income of the middle person in poverty and the poverty line. The higher the percentage figure gets the greater the poverty gap and the further people are falling beneath the poverty line. As there is a considerable difference between being 2 per cent and 20 per cent below the poverty line this approach is significant.

The EU-SILC results for 2007 calculated that the poverty gap was 17.4 per cent a minor decrease from 2006. Over time the gap had decreased from a figure of 21.5 per cent in 2003. In 2007 the poverty gap figure implies that 50 per cent of those in poverty had an equivalised income below 82.6 per cent of the poverty line.

As table 6 shows, the 2006 and 2007 levels marks the lowest recordings for this measure since the EU-SILC began in 2003. CORI Justice welcomes the fact that this gap is reducing. Given the profile of those who are poor, we expected the recent budgetary increases in welfare payments will continue to cause this gap to reduce. As the depth of poverty is an important issue, we look forward to monitoring the movement of this indicator throughout future editions of the EU-SILC. It is crucial that as part of Ireland’s approach to addressing poverty that we see this figure continue to decline.

Unemployment increase - long-term implications
The rapid turnaround of the Irish economy in recent months has lead to a sudden return to the phenomenon of wide-spread unemployment. Using data from the Live Register, Chart 1 shows how unemployment began to climb throughout 2008 and is projected to increase to a figure of 450,000 people by mid to late 2009. While the increase has, and will be, spread across people of all ages and sectors, table 7 highlights the very rapid increase on the Live Register of those aged less than 25 years.

Previous experience, in Ireland and elsewhere, has found that many of those under 25 and over 55 find it challenging to return to employment after a period of unemployment. This highlights the danger of major increases in long-term unemployment in the coming years and suggests a major commitment to retraining and re-skilling will be required.

* Data for mid and late 2009 are projections

In the long-run Irish society can ill afford a return to the long-term unemployment problems of the 1980s. In the short-run the new-unemployed will add to the numbers living on low-income in Ireland and will impact on future poverty figures.

New policies needed to address ‘working poor’ issue
The growth in jobs over the years leading up to the collection of this data in 2007 was dramatic. However, it is important to realise that having a job is not, of itself, a guarantee that one lives in a poverty-free household.

As table 4 indicated 22.7 per cent of those classified as being at risk of poverty in Ireland have a job. Translating this into numbers of people suggests that among Ireland’s employed in 2007 at least 115,000 were at risk of poverty.

This is a remarkable statistic and it is important that policy begin to address this problem. The sustained commitment in recent Budgets to keep those on the minimum wage out of the tax net marks a welcome move in this direction.

Similarly, attempts to increase awareness among low income working families of their entitlement to the Family Income Supplement (FIS) are also welcome; although evidence suggests that FIS is experiencing dramatically low take-up and as such has questionable long-term potential.

However, the most effective mechanism available within the present system to address the problem of the working poor would be to make tax credits refundable (see story on page 8). This would mean that the part of the tax credit that an employee did not benefit from would be “refunded” to him/her by the state. The major advantage of making tax credits refundable would lie in addressing the disincentives currently associated with low-paid employment. The main beneficiaries of refundable tax credits would be low-paid employees i.e. those who comprise the ‘working poor’.

For many years the ‘working poor’ issue has received limited attention. CORI Justice believes that this issue needs to be addressed and that new policies, along the lines we outline above, are required.

Child Poverty
One of the most vulnerable groups in any society are children and consequently the issue of child poverty is one that deserves particular attention. Child poverty is measured as the proportion of all children aged 17 years or younger who live in households that have an income below the 60 per cent of median income poverty line.

The 2008 edition of the CSO’s Statistical Yearbook indicates that there are approximately 1,050,000 children in Ireland aged less than 18 years. Of these some 19 per cent are classified as being at risk of poverty. This amounts to approximately 200,000 children.

The scale of this statistic is shocking. Given that our children are our future, this finding is not acceptable. Furthermore, the fact that such a large proportion of our children are living below the poverty line has obvious implications for the education system and the success of these children within it.

The long-term cost of child poverty, for children and for society, necessitate that this issue be given greater prominence and attention.
Despite the Budgetary pressure facing Government in the run-up to Budget 2010, CORI Justice believes that policy decisions should not be taken which in any way worsen the situation of Ireland’s children who live in poverty.

Minimum Income Study
For some years there existed a lack of information on the life experiences of those families living on a low income. Fortunately a recent report published by the Vincentian Partnership for Social Justice casts new light on the challenges faced by people living on low incomes.

Current debates about the extent of poverty and whether or not it can be reduced or eliminated suffer from the absence of agreed empirically based income standards. What is the minimum essential amount of money a person or household needs to enable them to have an acceptable standard of living? The Vincentian report addressed this question in their study entitled Minimum Essential Budgets for Six Households. The results of this research project show for the first time the income needed for a household to have a minimum essential lifestyle in modern Ireland. The households studies included: 2 parents and 2 children (aged 3 and 10); 2 parents and 2 children (aged 10 and 15); a lone parent and 2 children (aged 3 and 10); a pensioner couple, a single female pensioner and a single adult male. It found that most households on social welfare or the minimum wage do not have enough income to sustain a basic standard of living. The gap between the basic standard of living and the actual incomes of these households varied by between €10 and €150. This study has major implications for government policy if poverty is to be eliminated. It can be downloaded from www.budgeting.ie

Illness and Disability
Over one-third (34.5 per cent) of those who are long-term ill or have a disability are at risk of poverty. Over time the situation of this group has visibly deteriorated. Previous poverty studies by the ESRI have shown that this group’s risk of poverty has increased  over the last 15 years; climbing from 29.5 per cent in 1994. Consequently, although people who are ill or have a disability only account for a small proportion of those in poverty, among themselves their experience of poverty is worryingly high.

CORI Justice believes there is an ongoing need for targeted policies to assist this group. These include job creation, retraining and further increases in social welfare supports. There is also a very strong case to be made for introducing a non-means tested cost of disability allowance.
This proposal, which has been researched and costed in detail by the National Disability Authority and advocated by Disability Federation Ireland, would provide an extra weekly payment of between €10 and €40 to somebody living with a disability (calculated on the basis of the severity of their disability). In their 2008 Pre-Budget Submission (for Budget 2008) DFI anticipate such a scheme would cost €183m per annum (DFI, 2007).

CORI Justice believes that if people with a disability are to be equal participants in society then the extra costs generated by their disability should not be borne by them alone, but rather society at large should act to level the playing field by covering those extra but ordinary costs.

Poverty and Education
The 2007 EU-SILC results provide an interesting insight into the relationship between poverty and completed education levels. Table 8 reports the risk of poverty by completed education level and shows, as might be expected, that the risk of living on a low income is strongly related to low education levels.

These figures underscore the relevance of continuing to address the issues of education disadvantage and early-school leaving. Government education policy should ensure that these high risk groups are reduced. The table also suggests that when targeting anti-poverty initiatives, a large proportion should be aimed at those with low education levels, including those with low levels of literacy.

Main Policy Recommendations on Poverty

CORE POLICY OBJECTIVE
To provide all with sufficient income to live life with dignity. This would involve enough income to provide a minimum floor of social and economic resources in such a way as to ensure that no person in Ireland falls below the threshold of social provision necessary to enable him or her to participate in activities that are considered the norm for society generally.

CORI Justice believes that a Government commitment to:

• benchmarked social welfare payments,
  • equity of social welfare rates,
  • early childhood supplement,
  • higher state pensions and cost of disability payments

would lead to Ireland’s poverty risk levels falling to at least the EU-average level over the next few years. Government should adopt these policy reforms so that this goal is achieved.

• Acknowledge that Ireland has an ongoing poverty problem.
• Continue to honour the NAPinclusion and Towards 2016 commitment that the lowest social welfare payment for a single person will be benchmarked to 30 per cent of GAIE until 2016.
• Raise the 'qualifying adult' social welfare payments until they reach the single-adult payment rate.
• Establish measures to address the threat of long-term unemployment among those recently unemployed.
• These should include programmes aimed at re-training and re-skilling those at highest risk.
• Recognise the problem of the ‘working poor’ and adopt policies to improve the situation of the 115,000 workers and their families who are living in this situation.
• Introduce a cost of disability allowance as a means of addressing the poverty and social exclusion experienced by people with a disability.
• Poverty-proof all public policy initiatives and provision.
• Recognise the new problems of poverty among migrants and adopt policies to assist this group.
• Increase the ‘direct provision’ allowances paid to asylum seekers.
• Adopt a new approach to measuring deprivation - one that uses regularly updated indicators reflective of society as it currently is.
• Continue to resource the production of up-to-date data in the area of poverty and social exclusion and ensure the publication of such data as soon as they become available.
• Accept that persistent poverty should be used as the primary indicator of poverty measurement once this data becomes available.
• Move towards introducing a basic income system. All initiatives in the areas of income and work should constitute positive moves towards the introduction of a full basic income guarantee system.

Deprivation and ‘consistent poverty’
CORI Justice, among others, has continued to express its discomfort with the range of deprivation measures provided by the CSO in the EU-SILC survey; although the 2007 data presents a larger set of deprivation items than in previous years (eleven rather than eight). Looking forward we believe that a whole new approach to measuring deprivation needs to be taken. Continuing to collect information on a limited number of static indicators is problematic and not a true representation of the dynamic nature of Irish society and the ever changing set of items needed to participate in Irish society.

The 2007 study found that rates of deprivation recorded across a set of eleven items varied between 2.2 and 13.1 per cent of the Irish population. Overall in 2007, 75.6 per cent of the population were not deprived of any item while 12.6 per cent were deprived of one item, 4 per cent were without two items and 7.8 per cent were without three or more items. The major deprivation items included an inability to replace worn-out furniture, a lack of heating and two measures capturing financial difficulties associated with socialising (meal with family/friends and a brief trip away from home)

‘Consistent poverty’ combines deprivation and poverty into one indicator. It does so by calculating the percentage of the population who are simultaneously experiencing poverty and are also registering as being deprived of two or more of the items. As such it captures a sub-group of the poor.

The 2007 data marks an important change for this indicator. Coupled with the expanded list of deprivation items the definition of consistent poverty has been changed such that individuals must now be below the poverty line and experiencing deprivation of at least two items to be counted as experiencing consistent poverty. Prior to the 2007 survey the indicator measured those below the poverty line and experiencing deprivation of at least one item.

The National Action Plan for Social Inclusion 2007-2016 (NAPinclusion) published in early 2007 set its overall poverty goal using this consistent poverty measure. It set an aim to reduce the number of those experiencing consistent poverty to between 2 per cent and 4 per cent by 2012, with the aim of eliminating consistent poverty by 2016.

Using these new indicators and definition, the 2007 EU-SILC data indicates that 5.1 per cent of the population experience consistent poverty. Interpreting this in terms of the population the 2007 figures indicate that 221,289 people, of whom 86,524 are children, live in consistent poverty.

Refundable tax credits study underway
The move from tax allowances to tax credits was completed in Budget 2001. This was a very welcome change because it put in place a system that had been advocated for a long time by a range of groups including CORI Justice.

One problem persists however, a problem that the old system of tax allowances also had. If a person does not earn enough to use up his or her full tax credit then he or she will not benefit from any tax reductions introduced by government in its annual budget. In effect this means that, under the present system, those with the lowest pay will not benefit in any way at budget time.

A simple solution exists to rectify this problem: make tax credits refundable. This would mean that the part of the tax credit that an employee did not benefit from would be “refunded” to him/her by the state.

The major advantage of making tax credits refundable would lie in addressing the disincentives currently associated with low-paid employment. The main beneficiaries of refundable tax credits would be low-paid employees (full-time and part-time); those often referred to as ‘the working poor’ (for more details see page 5 of this Policy Briefing). Outside Ireland, the refundable tax credits approach has gathered more and more attention over recent years including a detailed Brookings Policy Briefing on the issue published in the United States in late 2006.

As a means of progressing this issue CORI Justice recently commenced a major empirical study of refundable tax credits. The study uses major national datasets to simulate and accurately cost the introduction of a refundable tax credit system. It is intended to produce a detailed report based on the findings of this study in mid-to-late 2009.

We look forward to publishing the results of this study which we believe will stimulate and inform the debate on this issue in the years to come.

Budget Choices 2009

The roots of the current economic crisis lie in a set of policy decisions taken in the late 1990s.  It is important that this fact be recognised and acknowledged before decisions are made on the second Budget for 2009.  Otherwise the decisions made may serve to worsen the situation rather than provide a pathway towards a solution. 

Over the past half century Ireland embraced the whole process of liberal globalisation with enthusiasm. It built on the policy of free trade from the 1960s onwards. Its imports and exports as a percentage of GDP are among the highest in the world.

It supports transfer pricing, whereby transnational corporations take their profits in Ireland because of its low corporate tax rate and its many tax breaks.

Ireland presents itself to the world as a place that is attractive to global capital and the pursuit of foreign direct investment has been central to its development for almost half a century.

In the 1970s Ireland’s total tax-take and its expenditure as a percentage of GDP were close to the European average. In the following two decades both of these declined to a level that was much closer to the US by the end of the 1990s. The focus was on “getting Government out of the way”, on becoming ever more competitive and “giving people back their own money” in tax cuts.

Problematic policy decisions in the 1990s
Following this neo-liberal approach to policy development in the late 1990s Ireland:

• Dramatically reduced regulation on financial speculation;
• Persistently cut taxes;
• Developed a tax structure that was dangerously dependent on transaction taxes (stamp duty, capital gains and VAT, among others);
• Became addicted to high growth rates;
• Fuelled a building bubble;
• Failed to generate productive investment.
• Failed to improve Ireland’s infrastructure and services to EU-average levels.

Ireland is now facing  five interconnected crises
The result of these and other developments has produced the current series of five crises that Ireland faces which have been well summarised in the recent NESC report as:

• A banking crisis - in which the taxpayer is taking responsibility for rescuing the banks and financial institutions from the consequences of  the dishonesty and incompetence of individuals and institutions who were in charge of running and regulating our financial system;
• A fiscal crisis - because we are borrowing far more than we are collecting in taxes;
• An economic crisis - because we have lost competitiveness and jobs;
• A social crisis - because our social services and social infrastructure are being eroded, unemployment is rising, incomes are falling and debt levels are rising; and
• A reputational crisis - our reputation around the world has been damaged by, among other things, a perception that Ireland has a lax and ineffective system of regulation of the financial sector.

Source: OECD Factbook 2008, CSO National Accounts and Department of Finance Stability Pact Addendum Significant declined in Effective (Average) Taxation Rates, 1997-2009 Source: CSO QNHS various editons; data for mid and later 2009 are projections

A clear, coherent, credible and integrated plan needed
To date Government has chosen to address these crises one at a time, tackling each problem as it emerged. This approach has caused serious problems for Government both at home and abroad.

• At home there has been an ongoing fury at what people perceive as unfair targeting of particular groups by Government.  This perception has been strengthened when people cannot see how the various parts of Government’s response are connected.  A clear, integrated plan would address this problem effectively, showing where each initiative fitted in the overall scheme and how each group were expected to contribute according to their means.
• Abroad there has been an ongoing problem with financial institutions who charge Ireland more for the money borrowed.  This higher charge is based, in part at least, on their perception that Ireland lacks a coherent, integrated plan to address the range of crises it faces in a credible manner.

A clear, coherent, credible and integrated plan articulated by Government to address the five crises Ireland currently faces would go a long way towards addressing both of these problems.

A vision of Ireland’s future needed to guide plan
For such a plan to be credible and acceptable it needs to spell out where Ireland wishes to be in five to seven years time.  A vision of Ireland’s future is required to guide the decisions being made on issues.

Ireland is now facing a crucial choice - whether to reduce the level of services and infrastructure or to increase the tax-take to pay for these.
On the one hand services in areas such as health, education and welfare are not at the level expected of a country with Ireland’s level of wealth.
Likewise, Ireland’s infrastructure in areas such as public transport, social housing and broadband is very inadequate. 

On the other hand Government is facing very large borrowings that go far beyond the highest levels expected of any country in the euro-currency area.  

CORI Justice believes that Ireland needs:

• Agreement on what level of services and infrastructure it wishes to have in five to seven years time;
• A clear, coherent and credible plan to reach that destination;
• A fairer tax system in which those who have more pay more while those who have less pay less;
• A public sector providing good public services and real value for money.
• To move in this direction Ireland also needs to recognise that:
• Ireland’s tax take is low by EU standards whether measured as a percentage of GDP or GNP;
• Ireland’s tax take is falling under both these measures in 2009;
• Ireland’s total Government expenditure is low by EU standards.

If Government were to seek agreement on what level of services and infrastructure Ireland wishes to have in the medium-term it already has a detailed outline in the national agreement Towards 2016. This agreement sets out a series of high-level goals to be achieved by the end of 2015 - a seven year period.

The time-frame would need to be adjusted in light of the current fiscal situation but those goals are supported by most people in Ireland and are worth pursuing. They should form the core of a vision of Ireland that would guide Government decision-making at this difficult time.
Principles/Criteria to guide decisions

In responding to the current crises CORI Justice believes that the following key criteria and principles should form the core of a coherent, credible and clear response. Government should:

• Ensure all decisions it takes are fair and are seen to be fair.
• Ensure that the contributions being sought from different groups in Irish society are proportionate - all should contribute according to their means.
• Grow the economy and restore competitiveness.
• Ensure that existing infrastructure is not damaged by decisions made.
• Ensure the brunt of the required adjustments is not borne by the unemployed, the working poor or those depending on social welfare.
• Support and develop public services realising that vulnerable groups especially rely on these services.
• Protect the vulnerable throughout all stages of the lifecycle (children, adults of working age, older people and people with a disability).
• Recognise that maintaining levels of services and social infrastructure will ensure that the system is poised to take full and early advantage of the economic upturn and avoid a lag between economic recovery and social service provision.
• Recognise that economic development and social development are complementary - they both need each other.
• Focus on doing what is sustainable in the long run
• Avoid causing cumulative damage.
• Be flexible
• Act in solidarity through consultation and partnership
• Show how each decision will help Ireland
  • Address the five crises it currently faces, and
  • Move towards the overall vision that is guiding policy.

Public spending and social spending are low

What worked for Ireland in the good times?
The Celtic Tiger in its most effective years depended on a range of measures to secure development including:

• Significant spending on social and regional infrastructures;
• National agreements that coordinated wages, taxation, employment and social development;
• An industrial policy where state agencies worked closely with firms to develop them; and
• Public subsidies for social services such as education, mortgage relief and pensions.

But Ireland lost its way
However, Ireland changed direction in the early years of this decade and put its trust instead in property and financial speculation.   The tax base was changed and tax rates reduced. This had two consequences:

• Ireland became dangerously dependent on increases in the tax-take being generated by constant high growth levels; and
• Ireland’s services (e.g. health, education) and infrastructure (e.g. public transport, social housing, broadband) were far below the levels being provided by countries across the EU with equal or lower levels of income.

The one exception to this was in the area of social welfare rates which rose to a point where the lowest rate for a single person equaled 30% of gross average industrial earnings. In reaching this rate Government honoured one of the key commitments it made in the National Anti-Poverty Strategy and had a dramatic impact on the level of poverty.

Reducing capital gains tax, for example, had major negative impact
In 1998 capital gains tax was cut from 40 to 20% (a move opposed by CORI Justice in its analysis and critique of the 1998 Budget). Capital surged into the economy. Bank lending between 1998 and 2007 increased almost five fold. But two thirds of the increased bank lending went into property (construction, developers, mortgages). An additional 14% of the increase went into lending between financial institutions. Relatively little investment went into the productive sector. In 2007 less than 1% of bank lending went into high tech computer hardware, software and research and development.

This showed up in investment. While capital investment increased from 22% of GDP in 1998 to 26% in 2006, that increase was entirely taken up with construction as non-housing investment decreased as a percentage of economic activity. Spending on technology by manufacturing businesses increased only marginally between 1998 and 2007. Underneath the boom, the financial, speculative economy was overwhelming the productive, innovative economy.

Serious problems emerged in the tax system
But the boom also masked serious problems in the public finances and in the changed structure of the tax system. Ireland’s tax revenue in 2007 was 32.5% of GDP according to the latest Department of Finance figures.  This was well below the EU average of 37.4%. In these calculations Eurostat includes all taxes to central and local government together with social insurance contributions from employees and employers.

The structure of the tax system changed.  An increasing proportion of the total tax-take came from taxes on transactions. By 2008 the tax structure was dangerously vulnerable – when growth slowed, the revenues from capital gains, corporate taxes, VAT and stamp duty collapsed.

The current crisis was not generated by high public or social spending
Despite the rhetoric, the current crisis was not generated by excessive public spending. Ireland’s public spending remains among the lowest in Europe. The total Government expenditure in the latest year for which comparable data are available shows that Ireland’s total Government expenditure was 34.2% of GDP compared to an unweighted EU-27 average of 43.6%. Only Latvia and Lithuania record lower levels of government expenditure.

A similar picture emerges when Ireland’s expenditure on social protection is analysed.  Social protection expenditure is defined by Eurostat to include: sickness/health care, disability, old age, survivors, family/children, unemployment, housing and social exclusion initiatives not elsewhere classified. The most recent Eurostat figures show that  Ireland spent 18.2% of GDP on social protection compared to an EU-27 average of 22.4%.

This low expenditure has meant that far less impact has been made on issues of poverty and social exclusion than would have been the case if Ireland were even to move a little closer to the EU average spend on these issues.

Poverty has not been adequately dealt with in the years of plenty
The number of people in poverty fell by 100,000 over a three-year period (2005-7) representing a fall from 19.4% to 15.8% according to the latest analysis from the Central Statistics Office (CSO). This development was very welcome.

At the same time however it has to be acknowledged that while there were many good developments over the past fifteen years the Celtic Tiger failed to deliver infrastructure, services and wellbeing on the scale required. 

The fall in poverty rates is due principally to the increases in social welfare (totalling €51 a week) that were contained in the budgets of 2005/6/7.  This in turn vindicates the CORI Justice approach which has emphasised the importance of raising the lowest social welfare rates.  This is a strong indicator that any reduction in welfare rates would lead directly to an increase in the level of poverty in Ireland.

The vulnerability of people on social welfare to poverty was well illustrated in recent research by Dr Micheal Collins who showed that a reduction of €5 in social welfare rates would lead to an increase in the poverty rate of 0.4%.

CORI Justice notes that:

• Almost a third of all households at risk of poverty are headed by a person with a job (31.3% in 2007, up from 29.5% in 2006).  These are the working poor.  Government has failed to take the necessary initiatives to tackle this working poor issue.
• More than half of all those at risk of poverty (55.9%) live in households headed by a person who is outside the labour force (i.e. people who are older or ill, or have a serious disability or are in caring roles).
• 19% of children are at risk of poverty.
• In Budget 2007 the lowest social welfare rate was benchmarked at 30% of GAIE.  This marked major progress. We were confident that its implementation would lead to further reductions in poverty rates complementing those already achieved and this has happened.

What should Ireland do now?

Unemployment is rising at a dramatic rate
The rapid turnaround of the Irish economy in recent months has lead to a sudden return to the phenomenon of wide-spread unemployment. Live Register data  show how unemployment began to climb throughout 2008 and is projected to increase to a figure of 450,000 people by mid to late 2009.

While the increase has, and will be, spread across people of all ages and sectors, it is important to highlight the very rapid increase on the Live Register of those aged less than 25 years. In January 2008, 36,900 in this category were unemployed. A year later in January 2009 this had increased to 70,600.

Previous experience, in Ireland and elsewhere, has found that many of those under 25 and over 55 find it challenging to return to employment after a period of unemployment. This highlights the danger of major increases in long-term unemployment in the coming years and suggests a major commitment to retraining and re-skilling will be required.

In the long-run Irish society can ill afford a return to the long-term unemployment problems of the 1980s. In the short-run the new-unemployed will add to the numbers living on low-income in Ireland and will impact on future poverty figures.

What should Ireland do now?
Where should Ireland go from here? We have argued already that Ireland requires a clear, coherent, credible and integrated plan to address the five crises it now faces. Only in this way will it succeed in dealing with the fury felt by so many at home and with the scepticism of international financial institutions.

In this Policy Briefing focusing on Budget Choices we give priority to issues concerning the forthcoming Budget.

We recognise that waste in the public service, where it actually exists, should be eliminated. Likewise, we acknowledge the need for greater efficiency and getting better value for public expenditure.

We also recognise that a pause on foreclosures and other measures to maintain household living standards would improve both social and economic outcomes.

CORI Justice believes that the following proposals should inform Government in its April Budget this year and in its Budgets in the years immediately ahead.

1. Don’t try to ‘cut’ our way out of these crises
Tackling these crises will involve financial measures but, more importantly, it requires a re-orientation of the economy towards

• Development of productive and innovative firms,
• Creating a more sustainable tax base,
• Significant investment in the skills and well being of the population, and
• Securing social services and infrastructure at levels that Irish people wish to see.

This crisis is so severe that we cannot ‘cut’ our way out. CORI Justice acknowledges that cuts will be necessary but the core of any effective strategy has to be investment.

2. Change Government’s parameters on borrowing
Government argues that Ireland’s borrowing in 2009 must not exceed 9.5 per cent of Gross Domestic Product. To achieve this target they argue that €4.5bn or more should be taken out of the economy through a combination of tax increases and public expenditure reductions.  These parameters are seriously problematic. 

The target of 9.5 per cent is in stark contrast to the borrowing of some other countries.  For example the comparable figure for the USA in President Barak Obama’s first Budget is 12 per cent (cf. A New Era of Responsibility: Renewing America’s Promise, Office of Management and Budget, US Government Printing Office, 2009, Figure 12, p 14).

Making adjustments of €4.5bn through cuts in expenditure and increases in taxation over an eight-month period is likely to have a very negative impact on Ireland’s economy.

These adjustments are being proposed in addition to the  initiatives taken in the Budget of October 2008 and the series of subsequent adjustments most recently the pension levy imposed on the public sector in February 2009.

While a substantial part of the adjustment sought can be achieved by raising the total tax-take CORI Justice believes that Government should also adjust its borrowing parameters. 

Ireland has a low debt/GDP ratio by international standards. For more than a decade it has run an Exchequer surplus and reduced this ratio dramatically

There are a number of concerns that must be considered when a country is running a deficit.

The first of these is that such a development would weaken the value of the currency. In the context of the euro Ireland is so small that this is not a problem.

A second concern is that it would cause inflation. Again, this is not a concern in the present situation.

A third concern is that too much public spending goes to pay the interest charges. While Ireland is being charged a higher interest rate than other members of the euro area it is a long way from spending as high a proportion of its public expenditure on this as many other countries.  

The final concern in this context is that general interest rates will go up. Again, euro interest rates are not set on the basis of what Ireland does.  We are a very small part of the euro area.

On the other hand if we reduce spending dramatically we can be sure that such a move will cause the economy to shrink.

Ireland needs to do both i.e. reduce spending and increase its total tax-take. However, the balance between these is the key issue. CORI Justice believes that the bulk of the adjustment should be borne by increasing the total tax-take in a fair and equitable manner. We outline our detailed tax proposals in section  5 below.

The NDP, unemployment and taxation

3. Recognise that economic and social development are two sides of the one coin.
Government must recognise the complementarity of the economic, social and environmental dimensions of development.  Economic development is crucial if the required social development is to be put in place.  At the same time, however, it should also be recognized that the economy requires good social services and infrastructure if it is to develop to its full potential.  For example, Ireland’s economy will suffer if the education system is not of sufficient quality or if Ireland’s adult literacy problems are not addressed.

Ireland has failed to recognise this complementarity in the past particularly at moments that were especially challenging for Government’s budget.  We should not repeat these past mistakes.

4. Revise and re-prioritise the National Development Plan (NDP)
The National Development Plan (NDP) was originally developed and published on the basis of a consistent growth rate of 4% per year.  It now needs to be revised in light of changing circumstances.

In making its decisions on the NDP government should give priority to:

• Resourcing initiatives that are good for the vulnerable and good for the economy.
• Prioritising initiatives that play a key role in ensuring that broader societal goals are met.

An example of resourcing an initiative that would be good for the vulnerable and good for the economy would be funding the continuation of the social housing programme contained in the Towards 2016 national agreement and in the National Development Plan (NDP). 

Investment in social housing at this time would help address the housing waiting list which has been growing. This would be good for the vulnerable. It would also make economic sense. Given the huge slow-down in construction this is a good time to get maximum value from the resources invested in building social housing. Construction is also employment-intensive which would be welcome in a time of growing unemployment.

An example of prioritising an initiative that plays a key role in ensuring broader societal goals are met would be funding the commitment to have 500 Primary Care teams in the health system. Primary care has been recognised as a cornerstone of the healthcare system for many years. The national agreement Towards 2016 recognises this and commits Government to engage in ongoing investment to ensure integrated, accessible services for people within their own community with a target of 300 primary care teams by 2008, 400 by 2010 and 500 by 2011.  Progress towards this target has been unacceptably slow but this kind of initiative should be prioritised in the revised NDP.

Addressing unemployment
In revising and re-prioritising the NDP it is essential that priority be given to initiatives that address the rise in unemployment that we have already noted.  This involves sustaining employment and providing practical supports for people who become unemployed. Initiatives could include:

• Providing supports for sustaining people in employment.
• Re-training and improving skills in an appropriate manner.
• Developing and implementing targeted responses for those in high-risk sectors e.g. white collar workers, new graduates, socially disadvantaged workers and foreign workers.
• Reviewing current processes to ensure people can access social welfare payments quickly.
• Securing education and training opportunities for those newly unemployed as well as for people who are long-term unemployed.
• CORI Justice also supports the NESC proposal that Government should convene a Jobs and Skills Summit to identify and implement a set of measures aimed at addressing the current challenges in this area.

5. Increase the tax-take and make the tax system fairer
CORI Justice believes that Ireland’s total tax take could be raised to a level that is 1.5% below the EU-average between now and 2013 thus providing two-thirds of the adjustments sought by Government over that period.  In the recent talks with social partners Government claimed that total adjustments of €16.5bn were required by 2013.  Raising the total tax-take to the level we propose would still keep Ireland’s tax system competitive.

CORI Justice points to the following:

• The EU-average tax-take is 37.4% of GDP (and rising) according to the most recently-published statistics.
• The proposed change would mean an increase in the total tax-take in Ireland to 35.9%.
• Using the Department of Finance’s most recent estimates this would mean an increase of €11.7bn on the notional level included in Department of Finance’s Stability Programme 2009.

CORI Justice proposes a number of options for adjusting the tax-system that would help broaden the tax base and make the tax system fairer.  These include the following:

• Standard rate all discretionary tax expenditures (i.e. make all tax breaks available only at the 20% rate).
• Where the cost of a tax break cannot be calculated then it should be eliminated.
• Move towards the introduction of a tax on property preferably through the introduction of a land value tax (i.e. a tax based on the annual rental value of land so places with major public facilities e.g. easy access to public transport, would pay more while those with fewer public facilities would pay less).
• Introduce a carbon tax (while ensuring adequate compensation for poorer households and rural households is provided simultaneously).

Minimum wage, social welfare, services and infrastructure
On standard rating tax breaks: Despite some recent reforms, the Irish tax system still incorporates a sizeable number of tax expenditures (i.e. tax breaks). In November 2004 the Revenue Commissioners estimated that the annual cost of tax reliefs was €8.4 billion, a value that is equal to 22% of the total taxation collected each year in Ireland. They also indicated that they were unable to provide complete information on 44 individual tax relief schemes. In few other contexts would such lack of information on public expenditure (albeit via taxation revenue forgone) be acceptable.

On introducing a land value tax: Ireland is the only country in Europe without some form of residential property tax.  A land value tax is based on the annual rental value of land - the rental value that a particular piece of land would have if there were no buildings or improvements on it. CORI Justice believes that such a tax should be introduced.  This is not the re-introduction of rates.

On introducing a carbon tax: One of the objections presented to the introduction of new environmental taxes is that they would substantially damage the economic position of poor households and rural households. However, it should be possible to insulate poorer households from the effects of these new taxes. CORI Justice believes that environmental taxes should be introduced and that the compensation mechanism proposed for poorer households and rural households should be simultaneously implemented.

The minimum wage and the working poor
As noted earlier almost a third of all households at risk of poverty in Ireland are headed by a person with a job. These are the working poor.

• CORI Justice believes that the minimum wage should be kept out of the tax net.  Despite much commentary recently indicating this is a regressive situation this claim is not borne out by the facts. 30% of all the households at risk of poverty in Ireland are headed by a person with a job.  These are the ‘working poor’.  Their situation is not helped by making them pay tax on what in fact is a relatively small income. Such a tax deduction would have the net effect of driving substantial numbers of people with jobs into poverty.
• If the working poor issue is to be tackled effectively then it is crucial that all those with a job who are at risk of poverty should be able to benefit from the full value of the tax credits to which they are entitled.  It is very simple to do this and it would not be very costly.  The costings supplied by the Department of Finance for this initiative are simply not credible.

6. Protect and enhance social welfare rates as a key to tackling poverty
As we have noted already more than half of all those at risk of poverty (55.9%) live in households headed by a person who is outside the labour force (i.e. people who are older or ill, or have a serious disability or are in caring roles).  These are Ireland’s most vulnerable people and they depend completely on social welfare payments for survival.

CORI Justice notes that Government has said it is committed to protecting the most vulnerable in these difficult economic times. If it is to do this credibly then it must ensure that the value of social welfare payments are protected and enhanced over time.  Otherwise poverty will grow in Ireland.

In its Budgets over the next few years Government should:

• Continue benchmarking the lowest social welfare rates.
• Make additional resources available to support households at risk of poverty by targeting further welfare increases at the second adult and the children in these households.
• Increase child benefit and do not tax it.  It should be noted that Ireland’s support for children is low by international standards. Ireland also has a high child poverty rate.
• Take initiatives to tackle the working poor issue, the rising level of unemployment and issues such as food poverty that were not addressed in Budget 2009.

7. Protect social services and social infrastructure
CORI Justice recognises that poverty is about much more than income adequacy although income is of critical importance.  Unfortunately social services and social infrastructure have come under systematic pressure since the middle of 2008.  Large amounts of resources that were previously committed to these areas have been withdraw. Services are suffering and the infrastructure that underpins these social services is in danger of being eroded.  In previous difficult economic times failure to maintain social services and protect the social infrastructure resulted in years of development potential being lost when the economy recovered and the services had to struggle to regain their losses.

Other countries who have endured recession in recent decades have sought to ensure that social services and infrastructure were protected. Finland, for example, in 2001/2 suffered the worst recession experienced by any country since the Second World War. It deliberately protected its social services and infrastructure to a point where these consumed a much larger proportion of the country’s GDP. Today, however, Finland claims that was a most enlightened prioritisation at the worst of times.

• It is important that the deficits in social services that Ireland continues to experience be addressed in the period ahead. Deficits in services need to be addressed in the areas of: education, health, childcare, eldercare, housing, transport and training, among others.
• People providing services such as teachers and nurses should not be made redundant in the coming years if they will have to be re-employed or replaced in subsequent years.
• Likewise it is critically important that activation programmes for people who are unemployed or at risk of becoming unemployed be supported adequately.
• It is also important to ensure that appropriate activation programmes for people with disabilities, for children and others should also be supported adequately.

The common good should have primacy over the market

8. Give primacy to the common good over the market
There are deeper values issues to be considered as Ireland reviews the series of crises it is currently facing. Much of these crises are rooted in a philosophy of individualism that does not value community or connectedness and sees the individual as the primary unit of social reality. This philosophical approach sees the person principally in economic terms and considers the market to be the key place for advancement and development.

Such a view of the person leads to endless struggle in the ‘rat race’ of achievement which in turn produces endless anxiety, about the market and about oneself. The individual constantly feels threatened, insecure, in danger. The standard response is to gather more, to have more, so as to be in control of both the present and the future.

The contrast with the Gospel and with the Catholic Social Thought (CST) tradition is striking. A recent book on CST is entitled Rediscovering Abundance. It analyses wealth and income across the world and concludes that there is an abundance of resources but that the distribution of these resources is problematic.  

We need to move from a world that is built on individualism, anxiety and greed to a world that is built on the reality of abundance, the need for generosity, the dignity of the person and the centrality of the common good.

This analysis is not new.  St Basil, a fourth century theologian and monastic wrote: “If one had taken what is necessary to cover one’s needs and had left the rest to those who are in need, no one would be rich, no one would be poor, no one would be in need.”

While much of economics starts with a focus on scarcity, biblical faith is rooted in the generosity of God’s abundance and in recognising the need to share with brothers and sisters across the world.

An alternative to the present dominant view of the world and how it should function is required. We need to move from a world that is built on individualism, anxiety and greed to a world that is built on the reality of abundance, the need for generosity, the dignity of the person and the centrality of the common good.

Conclusion
The Government’s second Budget for 2009 needs to be clearly situated within a clear, coherent, credible plan to address the five crises Ireland is currently facing. 

It should outline the steps Government intends to take during the remainder of this year and in the period to 2013.

Policy Briefing on Taxation 2008

Ireland faces difficult choices in the months and years ahead. On the one hand services in areas such as health, education and welfare are not at the level expected of a country with Ireland’s level of wealth. Likewise Ireland’s infrastructure in areas such as public transport and broadband is very inadequate. 

On the other hand Government plans to borrow €13.4bn in 2009 of which €4.7bn will go towards meeting day to day expenses.  This situation cannot continue for long.

Undoubtedly, a certain amount of improvement in Ireland’s fiscal situation could be achieved by getting better value for money in both services and infrastructure. However, such improvements will  go nowhere near meeting the levels of expenditure that will be required if services and infrastructure are to reach the levels demanded by most Irish people.

So, Ireland faces a crucial choice - whether to reduce the levels of services and infrastructure or to increase the tax-take to pay for these.

CORI Justice believes that Ireland needs:

• Agreement on what level of services and infrastructure it wishes to have in five to seven years time;
• A clear, coherent and credible plan to reach that destination;
• A fairer tax system in which those who have more pay more while those who have less pay less;
• A public sector providing good public services and real value for money.
• To move in this direction Ireland also needs to recognise that:
• Ireland’s tax take is low by EU standards whether measured as a percentage of GDP or GNP;
• Ireland’s tax take is falling under both these measures in 2008/9;
• Ireland’s total Government expenditure is low by EU standards.

If Government were to seek agreement on what level of services and infrastructure Ireland wishes to have in the medium-term it already has a detailed outline in the national agreement Towards 2016. This agreement sets out a series of high-level goals to be achieved by the end of 2015 - a seven year period. But that is only part of what is required.

This Policy Briefing addresses the issue of how Ireland can finance public services and infrastructure in the long term.  CORI Justice recognises that this is just one aspect of the challenge facing Irish society at this time but it is an important one.

It is extremely important that the issue of taxation be addressed from a long-term perspective. Otherwise short-term decisions may only increase the problems being faced in the long term. 
Our proposals on taxation are regularly presented in our annual budget publications and Socio-Economic Review.

This Policy Briefing draws heavily on the submission CORI Justice made to the Government’s Commission on Taxation.  The full text of our 80-page submission is available on our website.

CORI Justice Submission to the Commission on Taxation

CORI Justice submitted a substantial document to assist and inform the Commission on Taxation in its work. The table of contents from this document are outlined below. Our submission is 81 pages long and is intended to address most of the areas being considered by the Commission (see the terms of reference at the bottom of this page).

The complete document is available from our website www.cori.ie/justice

INTRODUCTION

CONTEXT OF THE COMMISSION’S WORK

2.1 The Current Fiscal Position
2.2 Economic Change Ahead
2.3 Demographic Change Ahead
2.4 Social Change Ahead
2.5 Future Taxation Needs

KEY CONSIDERATIONS TO INFORM THE COMMISSION’S WORK

3.1 Supporting Economic Activity
3.2 The Need for a Fairer Taxation System
3.3 Addressing Environmental Challenges through the Taxation System
3.4 Integrating the Taxation and Social Welfare System
3.5 The Requirement for Evidence Based Policy Making and Evaluation
3.6 Enhancing the Simplicity of the Taxation System
3.7 Reporting and Promoting Effective Taxation Rates

TAXATION REFORM

4.1 Reforming and Broadening the Tax Base
4.1.1 Tax Expenditures / Tax Reliefs
4.1.2 Corporation Taxes
4.1.3 Financing Local Government
4.1.4 Financial Speculation Taxes
4.2 Building a Fairer Taxation System
4.2.1 Standard Rating Discretionary Tax Expenditures
4.2.2 Keeping the Minimum Wage Out of the Tax Net
4.2.3 Increasing Tax Credits Rather Than Decreasing Tax Rates
4.2.4 Increasing Tax Credits Rather Than Widening Tax Bands
4.2.5 Introducing Refundable Tax Credits
4.2.6 Introducing a Refundable Tax Credit For Children
4.2.7 Reforming Individualisation

4.3 Introducing Environmental Taxes

4.3.1 Carbon Taxes
4.3.2 Cap and Share
4.3.3 Environmental Taxes and Poor Households
4.3.4 Environmental Taxation and Tax Credits

CONCLUSION

REFERENCES

APPENDICES 1-6

Terms of Reference of the Commission on Taxation

The Minister for Finance announced the establishment of the Commission on Taxation on February 14th 2008.The following were set out as the terms of reference for the commission:

Having regard to the commitments on economic competitiveness and on taxation contained in the Programme for Government, in particular, the commitments:

• to keep the overall tax burden low and implement further changes to enhance the rewards of work while increasing the fairness of the tax system

• to ensure that our regulatory framework remains flexible, proportionate and up to date,

• to introduce measures to further lower carbon emissions and to phase in on a revenue neutral basis appropriate fiscal measures including a carbon levy over the lifetime of the Government, and

• the guarantee that the 12.5% rate of corporation tax will remain.

The Commission is invited, in the context of maintaining an equitable incidence of taxation and a strong economy, to consider the structure of the taxation system and specifically to:

• consider how best the tax system can support economic activity and promote increased employment and prosperity while providing the resources necessary to meet the cost of public services and other Government outlays in the medium and longer term;

• consider how best the tax system can encourage long term savings to meet the needs of retirement;

• examine the balance achieved between taxes collected on income, capital and spending;

• review all tax expenditures with a view to assessing the economic and social benefits they deliver and to recommend the discontinuation of those that are unjustifiable on cost/benefit grounds;

• consider options for the future financing of local government, and,

• investigate fiscal measures to protect and enhance the environment including the introduction of a carbon tax.

As the introduction of a carbon tax requires a completely new tax charge and structure, the Commission is asked to commence work in this area immediately. The Commission is requested to report by 30 September 2009.

Context of the Taxation Commission’s Work

Ireland’s Tax Burden
The most recent data on the size of the Irish tax burden has been produced by Eurostat and is detailed alongside a selection of other EU states in the table below. The tax burden of each country is established by calculating the ratio of total taxation revenue to national income as measured by gross domestic product (GDP).

The table makes comparisons against the average EU tax burden of 37.4 per cent. Of the EU-27 states, the highest tax ratios can be found in Sweden, Denmark, Belgium and France while the lowest appear in Lithuania, Latvia, Ireland, Slovakia and Estonia. Overall, Ireland possesses the fifth lowest tax burden at 30.8 per cent, some 6.6 per cent below the EU average.

For some time, CORI Justice has been to the fore in calling for Ireland to increase its tax take towards that of other European countries. Small increases in taxation are certainly feasible and are unlikely to have any significant negative impact on the economy.

Economic Change Ahead

Data from Budget 2009, alongside that from recent OECD and ESRI reports, point towards the Irish economy experiencing more sustainable levels of economic growth once it recovers from the current recession. Projections from the ESRI Medium Term Review for the period up to 2020 (see table below) suggest lower national income growth for the overall economy compared to the high levels of the past decade. Coupled with this adjustment is a slowdown in the rate of job creation and higher rates of unemployment.

While these changes mark a change of pace for the Irish economy, CORI Justice believes that it is important that they should not be used as impediments to achieving further improvement in our national infrastructure and social provision. In that context we note the ESRI’s conclusion on the importance of “a good urban infrastructure, high quality health care and education and a clean environment” in Ireland’s further development and in the attraction/retention of the high skilled workers.

Population Change Ahead

An essential element of any society is its ability to plan for the future. In that context an important insight into Ireland’s future was provided during April 2008 as part of the Central Statistics Office report on expected population trends. Entitled Population and Labour Force Projections, 2011-2041 the report signalled a dramatic demographic transformation due to occur in Ireland over the next three decades.

The report’s main findings forecast that Ireland’s population will climb from approximately 4.3 million people in 2006 to 5.4 million people by 2121 and will exceed 6 million people in 2036. By 2041 the population will have grown by almost 60 per cent compared to 2002 – reaching almost 6.25 million people.

Clearly, there are both revenue and expenditure implications for government taxation levels arising from these projections. Similarly, there are major implications for many other public policy areas. Where will all these extra people be housed? How will they travel around? What additional education and health facilities are required to provide for such additional numbers? How can Ireland ensure that we build a fair and inclusive society which can adequately cater for all these extra people?

CORI Justice believes that the Commission on Taxation need to take these issues into account in their deliberations.

Social Change Ahead
Our responsibility is to fuel the engine of community – to lead the charge away from the promotion of exclusive self interest towards a superior value of a wider community interest. The pre-eminence of community and participation over self promotes social harmony and a better quality of life for all.  This is what will allow us develop a society of social inclusion - Brian Cowen T.D. following his election by Dáil Eireann as Taoiseach.

The increasing awareness of the interdependence between economic and social development is reflected in the first of the Commission on Taxation’s terms of reference (see p2 of this briefing). Achieving further social progress and enhancing Ireland’s social infrastructure are key challenges for the next decade. Guiding that process is the NESC report entitled The Developmental Welfare State. Reflecting some of the challenges associated with the successful implementation of this strategy are government commitments to reduce poverty, raise pensions and maintain minimum social welfare payments at 30% of GAIE. Similarly, there is a need to further improve public services, through achieving greater efficiency and greater funding. The political and policy commitments to achieve these changes are welcome. However, they all carry some implications for government expenditure and the level of taxation required “to meet the cost of public services and other Government outlays in the medium and long term” (extract from Commission’s Terms of Reference).

Key Considerations for the Commission on Taxation
Supporting Economic Activity

The taxation system plays an important role in supporting economic activity and rewarding work in Ireland. This is an important role and one of the system’s key functions. However, reflecting its terms of reference, it is important that the Commission be conscious that this is not the only role of the taxation system (see p1 of this briefing).

Maintaining Ireland’s status as a country with a low burden of taxation is also important and is a welcome inclusion in the Commissions’ terms of references. CORI Justice is conscious that economic success provides much of the resources necessary to enhance and maintain Irish society and a low overall taxation burden is an element of this success. As we have indicated on p2 of this briefing, Ireland’s taxation burden is low relative to that of other countries. It is important that the Commission be conscious of the fact that the Irish taxation burden would continue to be regarded as low even were it to increase by a few percentage points of national income.

While there is no agreed international (or national) definition of ‘low taxation’ it seems fair to assume that Ireland would still not be a high taxation economy if it collected taxation totalling less than 40 per cent of GDP (equivalent to approximately > 45 per cent of either GNI or GNP).
Suggesting that any country’s tax take should increase normally produces negative responses. People think first of their incomes and increases in income tax, rather than more broadly of reforms to the tax base.

It is the latter approach CORI Justice proposes (and more details are outlined later in this briefing and in section 4 of our submission).

The Need for a Fairer Taxation System

The need for fairness in the tax system was clearly recognised in the first report of the Commission on Taxation more than twenty-five years ago. In that volume it stated:

“…in our recommendations the spirit of equity is the first and most important consideration. Departures from equity must be clearly justified by reference to the needs of economic development or to avoid imposing unreasonable compliance costs on individuals or high administrative costs on the Revenue Commissioners.” (1982:29)

The role of taxation, and the need to reform the current structures of the taxation system, have been central to the work of CORI Justice for many years. To date we have published numerous documents addressing taxation reforms and in 2004 we hosted a conference (and published a book) on the theme of A Fairer Tax System for a Fairer Ireland, (Reynolds and Healy, 2004). All these publications have been guided by our core policy objective in this area:

To collect sufficient taxes to ensure full participation in society for all, through a fair tax system in which those who have more, pay more, while those who have less, pay less.

The need for fairness is very obvious today and CORI Justice believes that this should be a central objective of the current Commission on Taxation.

Addressing Environmental Challenges Using Taxation

Our environment is a priceless asset. Its protection is of major importance not just to current times but also to the generations that will follow us. However, the environment is regularly taken for granted; it is often mistreated and excessively exploited.

Over time, Ireland’s air has become more and more polluted. Between 1990 and 2006 the EPA reported that Ireland’s greenhouse gas emissions grew by 25.5 per cent. Recent figures indicate that the current levels of emissions now exceed the limits agreed under the Kyoto protocol. Major changes are required if we are to reduce our emissions towards this target and minimise the associated fines that accompany exceeding it. The scale of these exchequer costs (in either fines or purchases of carbon credits) further underscores the need to significantly address the nature and extent of Ireland’s greenhouse gas emissions.

Measures to protect the environment have necessarily involved intervention in the market, because market forces do not themselves provide for environmental protection. Up to now this “intervention” has been by legislated regulatory measures. In the long run, however, a more comprehensive approach is required. In recent years the sheer increase in the volume of economic activities has often negated regulatory gains.

A key step should be to include in prices – and thereby internalise – the environmental costs occasioned by economic activity. Environmental taxes offer a key way of introducing this consideration to people’s decision making. The success of the plastic bag tax and the structure of the recent VRT/Motor Tax reforms reflect this. CORI Justice hopes that the Commission on Taxation will recommend further carbon and anti-pollution taxes; including the introduction of cap and share. In doing so the principle of “the polluter pays” should be central.

Reporting and Promoting Effective Taxation Rates

CORI Justice believes that the Commission on Taxation should strongly advocate the use and reporting of effective taxation rates for both individuals and corporations. These rates provide far greater clarity for taxpayers and policy makers. The reporting and use of these rates plays an important part in the further development of a fairer taxation system.

For individuals, these rates are calculated by comparing the total amount of income tax a person pays with their pre-tax income. For example, a person earning €50,000 who pays €10,000 in taxation will have an effective tax rate of 20 per cent. Calculating the scale of income taxation in this way provides a more accurate reflection of the burden of income taxation faced by earners.

Our submission to the Commission on Taxation (and our annual Socio-Economic Review) details the levels of effective taxes in Ireland today and during the last decade. As the situation stands the burden carried by those on different income levels is small but fair given that those earning more, pay more. Of course, income taxation is not the only form of taxation and there are many in Ireland not paying their fair share and there may be ways of substituting tax revenue from income for that raised through other taxation mechanisms.

We regret that there is little or no information available for effective taxation rates as experienced by companies/corporations in Ireland. The Taxation Commission should address this important information deficit. As part of its work CORI Justice recommends that the Commission should strongly advocate the use and reporting of effective taxation rates for both individuals and corporations.

Enhancing the Simplicity of the Taxation System

Our tax system is not simple. In a book reviewing Ireland’s taxation system Bristow (2004) argues that “some features of it, notably VAT, are among the most complex in the world”. The reasons given to support this complexity vary but they are focused principally around the need to reward particular kinds of behaviour which is seen as desirable by legislators. This, in effect, is discrimination in favour of one kind of activity or against another. There are many arguments against the present complexity and in favour of a simpler system.

Discriminatory tax concessions in favour of particular positions are often very inequitable. They often contribute far less to equity than might appear to be the case. On many occasions they fail to produce the economic or social outcomes which were being sought. Sometimes they generate very undesirable effects. At other times they may be a complete waste of money since the outcomes they seek would have occurred without the introduction of a tax incentive. Having a complex system also has other down-sides. It can, for example, have high compliance costs both for tax-payers and for the Revenue Commissioners who are responsible for collecting tax.

For the most part society at large gains little or nothing from the discrimination contained in the tax system. In some cases this discrimination causes very negative effects. Mortgage interest relief, for example, and the absence of any residential or land-rent tax have contributed to unjustified increases in house prices.

Complexity makes taxes easier to evade, invites consultants to devise avoidance schemes and greatly increases the cost of collection. It is also inequitable because those who can afford professional advice are in a far better position to take advantage of that complexity than those who cannot afford to do this. A simpler taxation system would serve Irish society and all individuals within it better.

Integrating Tax & SW

One impediment to the efficient operation of the Irish redistribution system (taxation and social welfare) is the absence of adequate integration between the Revenue Commissioners taxation records and the PRSI records of the Department of Social and Family Affairs. We note the current Programme for Government commitment to:

CORI Justice believes that this would be a worthwhile and beneficial reform and we believe that the Commission on Taxation should recommend it to occur.

Evidence Based Policy

There is now little challenge to the idea that good policy requires good information. This is particularly true in an era where public policy is becoming increasingly complex, diverse and interconnected.

In response to this development there is a need to establish, through analysis and evaluation, ‘what works’ in terms of policy responses. There is a need to review existing policy responses in order to establish whether such interventions are working effectively, whether they are worth continuing. Equally, it is important to examine new ways of doing things. For these reasons, it is now generally accepted that an evidence-based approach to policy-making, one where policy is made on foot of factual information, is required. CORI Justice believes that as the Commission undertakes its work it should adopt an evidence based approach.

Taxation Reform

Building a Fairer Taxation System
The need for fairness is very obvious today and CORI Justice believes that this should be a central objective of the Commission on Taxation. All the issues raised in this section and the next have a fairness dimension. We commence with some issues that arise particularly in the present income tax system. Each reform is addressed in brief; a more extensive assessment is available in the submission document available at www.cori.ie/justice

Standard Rating Discretionary Tax Expenditures
One crucial step towards achieving a fairer tax system is to standard rate all discretionary tax reliefs/expenditures, making them available at the 20 per cent rate only. If there is a legitimate case for making a tax relief/expenditure available then it should be made available in the same way to all. It is unfair that some people can claim certain tax reliefs at a rate of 20 per cent (the standard tax rate) and others with higher incomes can claim it at a higher rate.

As part of preparing our November 2005 Policy Briefing on Taxation, CORI Justice estimated that the exchequer could collect an additional €2 billion in revenue if all tax relief schemes were made available only at the standard rate. While the available data is less than desirable, a feature which the Revenue Commissioners acknowledge, we suspect that this estimate understates the additional revenue which the exchequer would collect. Standard rating tax expenditures offers the potential to simultaneously make the tax system fairer and fund these necessary developments without any significant macroeconomic implications.

Budget 2009 made significant progress in this area by standard rating medical expenses. We believe the Commission should recommend a continuation of that process and that relief on all discretionary tax expenditures where available should be at the standard rate only.

Keeping the Minimum Wage Out of the Tax Net
A major achievement of Budget 2005 was the decision by the Minister of Finance to remove those on the minimum wage from the tax net. This decision, which was updated in subsequent Budgets, has an important impact on the growing numbers of working-poor and addresses an issue CORI Justice has highlighted for some time. As the minimum wage increases it is important that tax credits are adjusted to retain this welcome situation. We recommend that the Commission on Taxation endorse this policy.

Increasing Tax Credits Rather Than Decreasing Tax Rates
CORI Justice believes that the Commission on Taxation should recommend that any future income tax changes should be concerned with changes to either tax credits or tax bands rather than tax rates. Simply, these are fairer options.

To explain this point further, we start by comparing a change in tax credits against a change in tax rates (the next section makes a comparison with tax bands). One of the initiatives announced in Budget 2007 was a cut in the top tax rate of one per cent (from 42 to 41 per cent). In his Budget speech the Minister indicated that the full year cost of this change was €186m. The Budget documentation also indicated that the full-year cost of a €90 increase in the tax credits of every tax payer equaled €185m. Therefore, both policy changes would have roughly the same exchequer cost.

An increase in tax credits would provide the same value to all taxpayers across the income distribution; provided they are earning sufficient to pay more than €90 in income taxes. Therefore, the increased income received by an earner on €25,000 and on €80,000 is the same – an extra €90. However, a decrease in the top tax rate only benefits those paying tax at that rate. Therefore, the earner on €25,000 gains nothing from this change while those on €50,000 gain €160 per annum and those on €80,000 gain €460 per annum. The higher your income the greater the gain.

In terms of fairness, increasing tax credits is a fairer option than decreasing the top tax rate. CORI Justice believes that the Commission on Taxation should point this fact out and indicate that future Budgets should always take this option when there is money available to reduce income taxes.

Increasing Tax Credits Rather Than Widening Tax Bands
If €535 million were available for distribution in a Budget it could be used to either (i) increase the 20 per cent tax band by €5,000 (full year cost €536.1m) or (ii) increase personal tax credits by €250 a year (full-year cost €533.75m). While the exchequer cost of these two alternatives is roughly the same, their impact is notably different:

1. Increasing the tax band by €5,000 would be of no benefit to anyone with incomes at or below the top of the current band (i.e. €35,400 for a single person) but would provide a benefit of €1,000 a year to a single person earning more than €40,400. Single people with incomes in the €35,400-40,400 range would benefit by a proportion of the €1,000.
2. Increasing the tax credit by €250 a year would mean that every earner with a tax bill in excess of €250 a year would benefit by that amount.

In terms of fairness, increasing tax credits is a fairer option than widening the standard rate tax band. Again, CORI Justice believes that the Commission on Taxation should point this fact out and indicate that future Budgets should take this option when it has money available to reduce income taxes.

Introducing Refundable Tax Credits
The current tax credit system has one problem that needs to be addressed; and particularly so in the context of the working poor issue. If a person does not earn enough to use up his or her full tax credit then he or she will not benefit from any tax reductions introduced in a budget.

A simple solution exists to rectify this problem: make tax credits refundable. This would mean that the part of the tax credit that an employee did not benefit from would be “refunded” to him/her by the state. The major advantage of making tax credits refundable would lie in addressing the disincentives currently associated with low-paid employment. CORI Justice believes that the Commission should recommend this reform. 

Reforming and Broadening the Tax Base

Under this heading our submission proposed four reforms:

Tax Expenditures / Tax Reliefs
Despite some recent reforms, the Irish tax system still incorporates a sizeable number of these tax expenditures. In November 2004 the Revenue Commissioners estimated that the annual cost of tax relief’s was €8.4 billion, a value that is equal to 22% of the total taxation collected each year in Ireland. They also indicated that they were unable to provide complete information on 44 individual tax relief schemes. In few other contexts would such lack of information on public expenditure (albeit via taxation revenue forgone) be acceptable. Our submission outlines a detailed set of reforms we believe should be implemented in this area.

Corporation Taxes
CORI Justice is of the opinion that corporation taxes are a relevant issue for any assessment of the Irish tax system. Across the relevant literature no evidence of substance 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 corporation tax for all sectors is questionable. In the last year there has been some improvement in this situation with special, and higher, tax rates being charged on natural resource industries. The Commission on Taxation should examine the possibility of further expanding this approach. As the European Union expands corporation tax competition is likely to intensify. We believe that an alternative direction is to set a minimum rate for all EU countries. Finally, as we highlighted earlier, the Commission on Taxation should also give greater attention to the levels of effective taxation paid by corporate bodies in Ireland.

Financing Local Government
Our submission address this issue under 4 headings.

1. Indecon Report: CORI Justice believes that these recommendations, though challenging, should be endorsed.
2. Land Rent Taxes: A land rent tax is based on the annual rental value of land - the rental value that a particular piece of land would have if there were no buildings or improvements on it. CORI Justice believes that the Commission should recommend its introduction with its revenues used to finance and support local government.
3. Second Homes: We believe that the Commission on Taxation should recommend that people purchasing second houses should have to pay the full infrastructural costs.
4. Taxing Windfall Gains: We believe that a substantial tax should be imposed on windfall profits earned from rezoning decisions.

Financial Speculation Taxes
CORI Justice believes that the Commission on Taxation needs to consider other methods of reforming and broadening the tax base. Within this area our submission proposes the introduction of a financial speculation tax.

Introducing Environmental Taxes
The CORI Justice submission to the Commission on Taxation considered this issue under four headings:

Environmental Taxation and Poor Households
One of the objections presented to the introduction of new environmental taxes is that they would substantially damage the economic position of poor households. Indeed research by the ESRI has confirmed this. However, a series of research papers by the ESRI has shown that it is possible to insulate poorer households from the effects of these new taxes.

CORI Justice believes that environmental taxes should be introduced and that the compensation mechanism proposed for poorer households should be simultaneously implemented. In these circumstances the argument that these carbon taxes would substantially damage the economic position of poor household cannot be justified or used as an objection to the policy.

Carbon Taxes
The Commission on Taxation has been asked to consider the introduction of carbon taxes. CORI Justice supports this policy reform and we look forward to a carbon tax being introduced as committed to in the current FF/Green/PD Programme for Government.

Cap and Share
Another approach in this area is called ‘Cap and Share’. CORI Justice has previously urged government to investigate the potential of this approach which appears to us to have good potential in addressing issues in this context. We hope the Commission on Taxation will examine it as part of its considerations.

Environmental Taxation and Tax Credits
Earlier in this briefing we outlined the merits of using tax credits. The recent ESRI Medium Term Review 2008-2015 suggests that any increase in environmental taxes should lead to a parallel reduction in income taxation levels. Were this revenue neutral approach to be adopted, CORI Justice believes that any reductions in overall income tax levels should be fairly distributed via the tax credit system (and ideally via a refundable tax credit for all).

Ireland’s Level of Public Expenditure

A recurring myth about Ireland and its economy suggests that its level of government expenditure is excessive and unsustainable. However, as the table  shows, this opinion does not hold up to scrutiny. The table summarises the most recent figures from Eurostat, the EU’s statistical agency, which report the total expenditure by governments across the EU-27 in 2006. It shows that across all 27 member states Irish government expenditure is well below the EU average of 43.6% of GDP. Only Latvia and Lithuania record lower levels of government expenditure.
It remains a myth that Irish government spending is too high.

Download Pdf of Briefing on Taxation

Download Pdf of CORI  Justice Commission Taxation Submission

Budget Choices - 2008

The latest Policy Briefing from CORI Justice argues that a fairer tax system would be good for the economy and good for the vulnerable.  The Briefing identifies many tax breaks that are of far greater benefit to the better off than to those on average incomes.  Reforming these would provide Government with the additional resources needed to protect the vulnerable at this difficult time when new resources are scarce.

The Briefing also identifies the choices Government should make if it is to protect the vulnerable.

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Briefing on Lisbon Treaty

We have publshed a briefing on the Lisbon Treaty. We offer this briefing as a contribution to the current debate as people inform themselves on the issues in preparation to vote in the Referendum on June 12, 2008.

The Lisbon Treaty Briefing on Lisbon Treaty Pdf

On June 12th, 2008 Irish people will again have their say on a European Treaty. Ireland is the only country of the 27 Member States in the EU holding a referendum on this Treaty.

This Policy Briefing on the Lisbon Treaty seeks to provide a short summary of the key proposals contained in the 271-page treaty.
In response to requests from our members CORI Justice is continuing its tradition of publishing a briefing in advance of the referendum as was done on each of the European Treaties. We offer this Briefing as a contribution to the current debate as people inform themselves on the issues in preparation to vote.

We never recommend how people should cast their vote but we strongly believe that people should vote.

The Lisbon Treaty is the latest in a series of treaties stretching back to the Treaty of Rome in 1957 that established the European Community.

The Merger Treaty came into force on July 1, 1967 and provided for a single Commission and a single Council of the then three European Communities.

The Single European Act came into force on July 1 1987and provided for the adjustments required to achieve the internal market.

This was followed by the Maastricht Treaty which came into force on November 1, 1993. It changed the title to the European Community and introduced new forms of co-operation between the Member States.

Next up was the Amsterdam Treaty which came into force on May 1, 1999. It amended the EU and EC Treaties and produced consolidated versions of the EU and EC Treaties.

Finally the Nice Treaty came into force on February 1, 2003. It reformed the European institutions so that the EU could function efficiently after its enlargement from 15 member states.

The Lisbon Treaty (also called the EU Reform Treaty) was agreed by European Heads of State and Government at a meeting in Lisbon on October 18-19, 2007.

This treaty represents the latest updating of the EU's basic legal documentation.

The text of the Treaty is very difficult to follow since it requires constant cross-referencing to the current treaties.

However, a wide range of bodies have produced detailed and often lengthy outlines of what the treaty proposes to do. The most useful sources for further information are the Forum on Europe and the Referendum Commission (contact details on page 6). A wide range of viewpoints have been articulated on the Treaty - some very positive, others very negative.

For this Treaty to come into effect it must be ratified by all 27 Member States. Ireland is the only country holding a referendum on the issue.

The issues addressed in this Treaty are important and they will have implications for Ireland.

Consequently it is important that all those eligible to vote familiarise ourselves with the Treaty and exercise our franchise.

How the Lisbon Treaty was developed

The fundamental rules and institutions of the European Union are set out in various treaties that have been agreed among the member states. The most recent of these was the Nice Treaty which preceded the accession of ten new Member States during Ireland's presidency of the Union in 2004.

The member states established a Convention on the Future of Europe made up of 205 members. This body contained one Government representative and two parliamentary representatives from each Member state as well as representatives from the European Commission and the European Parliament. The Irish Government's representative was Dick Roche TD. The Oireachtas was represented by John Bruton TD and Proinsias De Rossa, TD. MEP. The alternates were Bobby McDonagh (Department of Foreign Affairs), John Gormley TD and Pat Carey TD.

The Convention completed its work in 2003 when it presented its 'Draft Treaty establishing a Constitution for Europe' to the Council of Ministers. The subsequent Inter-Governmental Conference proposed an agreed European Constitution. This sought to consolidate the previous treaties into a single text. The Constitution was defeated in referendums in France (May 2005) and the Netherlands (June 2005).
A new Inter-Governmental Conference was mandated to develop a new Treaty based on the previous Treaties but not having 'constitutional characteristics'. The finalised the text of the current Treaty was agreed on the fringes of the European Council in Lisbon on October 18-19 2007 (hence the title Lisbon Treaty). It will not come into force until it is ratified by all 27 Member States.

Structure of the Lisbon Treaty

Currently there are two key treaties that embody the EU's fundamental rules. These are:

• The Treaty on European Union (TEU) i.e. the Maastricht Treaty (1992) as it has been amended.
• The Treaty establishing the European Community i.e. the Treaty of Rome (1957) as amended. This treaty's title will change to the Treaty on the Functioning of the European Union (TEFU).

The Lisbon Treaty (officially called The EU Reform Treaty) will change the format of both of these existing Treaties.

New format of TEU
If the Lisbon Treaty is approved the Treaty on European Union (TEU) will have six parts:
Title I - Common Provisions
Title II - Democratic Principles
Title III - Institutions
Title IV - Enhanced Cooperation
Title V - External Actions and Common Foreign and Security Policy
Title VI - Final Provisions

Title II on Democratic Principles and Title III on Institutions are new, although many of their provisions reflect existing rules, and the provisions on Freedom, Security and Justice have been moved to the Treaty on the Functioning of the European Union.

New format of TFEU
The Treaty on the Functioning of the European Union (TFEU), which will contain the detailed rules on the workings of the EU, will have the following format:

Part One - Principles
Part Two - Non-discrimination and citizenship of the Union
Part Three - Union Policies and Internal Actions
Parts Four - Overseas Countries and Territories
Part Five - External Action by the Union
Part Six - Institutional and Budgetary Provisions
Part Seven - General and Final Provisions

The bulk of the Treaty is contained in Part Three and Part Six. A notable change in the Treaty's structure is the addition of Part Five dealing with the EU's external action, which is linked to Title V of the Treaty on European Union (TEU).

Protocols and Declarations
The Lisbon (Reform) Treaty also contains a series of Protocols and a number of Declarations have been made regarding the Treaty.
A number of these protocols and declarations are directly relevant to Ireland, particularly the protocol and declaration relating to the Irish and UK opt-out on judicial cooperation in criminal matters and police cooperation.

Moving Beyond Three Pillars
Currently the EU's structure has three 'Pillars':

• First Pillar: The Single Market
• Second Pillar: Common Foreign and Security Policy
• Third Pillar: Police and Judicial Cooperation in criminal matters.

The Lisbon Treaty would abolish this inter-governmental pillar system but would retain special voting procedures for the Common Foreign and Security Policy.

It also provides the European Union with a single legal personality which has treaty-making powers.

Values and objectives in the Lisbon Treaty

The Lisbon Treaty sets out the values on which the EU is founded and which are common to its member states. For the first time it includes a reference to "the cultural, religious and humanist inheritance of Europe, from which have developed the universal values of inviolable and inalienable rights of the human person, freedom democracy equality and the rule of law" (article 1.1a).

This is the only paragraph of the preamble to the Constitutional Treaty which has been retained and added to the existing preamble to the Treaty on European Union.

In article 1.3 the Lisbon Treaty spells out the core values and ethos of the EU stating that the Union is founded on the values of:

• Respect for human dignity
• Freedom
• Democracy
• Equality
• The rule of law
• Respect of human rights, including the rights of persons belonging to minorities.

It goes on to state that "These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail".

The Treaty then states that "The Union's aim is to promote peace, its values and the well-being of its peoples" (article 1.4.1).

This article goes on to state that the Union "shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child" (article 1.4.3).

EU institutions

The Treaty adds both the European Council and the European Central Bank to the existing institutions of the European Union.
These institutions are meant to promote the EU's values, and to advance its objectives, and interests. The EU will therefore be served by the following seven institutions working in co-operation:

• The European Parliament
• The European Council
• The Council
• The European Commission
• The Court of Justice of the European Union
• The European Central Bank
• The Court of Auditors.

For details on the Parliament and the European Council cf. below.

The Council is made up of one Government Minister from every Member State. It takes different formations e.g. agriculture, environment etc. Decisions on what the council formations should be will in future be made by the European Council. It will continue to be the key decision-making body along with the European Parliament.

From 2009 the Commission will be made up of one member from each Member State. From 2014 only two thirds of Member States will have seats on the Commission at any given time. There will be strict rotation so Ireland will have a Commissioner for 10 out of every 15-year cycle.

The other institutions will continue more or less as they do at present with some minor adjustments.

Ireland will have 12 seats in the European Parliament - one less than at present if this Treaty is ratified.

The European Parliament

The new Treaty gives the European Parliament a significantly enhanced role. The Parliament will exercise legislative and budgetary powers jointly with the Council and it will exercise functions of political control and consultation as laid down in the Treaties.

The Parliament will elect the President of the Commission (at present, its assent is required for this appointment). It will have a maximum of 750 members plus its President (compared to 732 normally at present). Each Member State will have at least six Members of the European Parliament (MEPs) and no Member State will have more than 96. Within these limits, national representation will be broadly in proportion to population but with more favourable treatment for the smaller Member States.

The European Council

The European Council gives the EU its political direction and sets its priorities. It is made up of the most senior political representatives of the Member States - Prime Ministers and Presidents with executive powers. The President of the European Commission is also a member of the European Council. The European Council, which does not have power to make laws, normally makes its decisions by unanimity.

This Treaty creates a new position of 'President of the European Council who will chair its meetings, drive forward its work and represent the EU abroad at the highest level. The initiative will put an end to the rotating presidency process which saw Member States taking responsibility for the presidency for a 6-month period.

How Lisbon Treaty will impact on EU decision-making

The Lisbon Treaty makes clear that it is the Member States who confer powers (competences) on the EU in order to attain objectives which they have in common . Powers not conferred upon the EU remain with the Member States and the new Treaty strengthens controls on actions which could better be taken at the level of the Member States.

Powers (competences)
The EU has exclusive competence in some areas (i.e. only the EU may legislate). These include: customs union, competition rules necessary for the internal market; monetary policy for countries whose currency is the euro; conservation under the common fisheries policy and common commercial policy.

The EU will have shared competence with the Member States in a wide range of other areas. In these areas the Member States may take action if the EU does not act. If the EU takes action on some particular elements of the area then the Member States are free to take action on other elements of that area. The areas where shared competence applies include: internal market; social policy for the aspects defined in the Lisbon Treaty; economic, social and territorial cohesion; environment, consumer protection; transport; trans-European networks; energy and common safety concerns in public health matters, for the aspects defined in the Lisbon Treaty.
In addition to areas where the EU has exclusive or shared competence, the EU will have competence to support, coordinate or supplement the actions of the Member States in the areas of : protection and improvement of human health; industry; culture; tourism; education, vocational training, youth and sport; civil protection; administrative cooperation.

Decision-making
If the Lisbon Treaty is ratified then the general rule concerning decision-making will be that European legislation will be decided by the Council and the European Parliament interacting on an equal footing, on the basis of proposals made by the Commission. In the great majority of areas, only the Commission could put forward proposals. These arrangements are termed, in the new Treaty, the Ordinary Legislative Procedure.

There are a small number of exceptions. Foreign policy is one such area where separate, specific decision-making procedures will apply.

Other important exceptions relate to the areas of:

• judicial cooperation in criminal matters;
• police cooperation.

In these areas, legislative proposals can be made by Member States numbering at least one-quarter of the total (currently, seven Member States).

The new Treaty also changes the procedures under which the EU budget will be adopted by the European Parliament and the Council.

Subsidiarity and proportionality
The use of EU powers is governed by the principles of subsidiarity and proportionality. Under the principle of subsidiarity, the EU acts only where its objectives could not be sufficiently achieved by the Member States, whether at central, regional or local level, but could be better achieved at EU level.

This principle does not relate to a situation where the EU has exclusive powers.

Under the principle of proportionality the type and substance of EU action should not go any further than what is necessary to achieve the aims of the treaties. For example, a regulation should not be proposed where a recommendation would suffice. If a regulation is needed, it should only cover what is strictly necessary.

National Parliaments are given new functions in the Lisbon Treaty in certain areas, particularly to ensure respect for 'subsidiarity' and in future revisions of the Treaties. They will be given at least eight weeks in which to consider any proposed EU legislation before it is put to the Council and will be free to issue a 'reasoned opinion' on the proposal.

Provision is also made for Citizens Initiatives.

Parliament, Council, Co-decision and QMV

The European Parliament is given co-decision powers in many additional areas. The voting system in the Council will also change from unanimity to qualified majority voting (QMV) in more areas.

The Treaty also creates special procedures which would extend QMV and/or co-decision under the Treaty if the European Council so decides unanimously.

From November 1, 2014 a new definition of QMV would come into operation. From then on a qualified majority, also known as 'double majority' would be defined as 55% of the members of the EU comprising at least 15 Member States representing 65% of the population of the EU.

On the other hand, a proposal could be blocked if it was opposed by at least four Member States (a blocking minority).

This new way of calculating a QMV or 'double majority' means that where this applies support would be required from:

• 15 of the 27 Member States. And
• These Member States must represent a total population of at least 322 million out of an EU total of 495 million.

Areas such as taxation, social security and common defence will still be governed by unanimity.

A full list of the Articles in the Lisbon Treaty which either involve some change from unanimity to QMV or which are new and in regard to which QMV would be the standard decision-making method are listed in Annex B of the Government's White Paper on the Lisbon Treaty pp.96-98.

The EU Charter of Fundamental Rights

The EU Charter of Fundamental Rights sets out the political, economic, social and civil rights recognised by the EU.
The rights contained in the charter are divided into 54 Articles organised into eight chapters. These chapters cover rights related to dignity, freedoms, equality, solidarity, citizens' rights, justice and a chapter of general provisions.

This Charter was developed in a special Convention during 1999 and 2000. It was revised to clarify its scope and its limits and was proclaimed by the EU institutions (Parliament, Council and Commission) on December 12, 2007.

The content of the Charter is broader than that of the 1950 European Convention for the Protection of Human Rights and Fundamental Freedoms (EHCR). It draws on previous European Social Charters developed by the EU and the Council of Europe. While the ECHR is limited to civil and political rights, the Charter of Fundamental Rights also includes social and economic rights thus following the movement towards recognition of social, economic and cultural rights which has been strongly advocated by many organisations and groups in recent decades.

The text of the Charter is not contained within the Treaty. However through Article 1.8 of the Lisbon Treaty, this Charter will take effect, with the same legal value as the Treaties, if the Lisbon Treaty is ratified.

Rights contained in the Charter of Fundamental Rights

Chapter I: Dignity, which includes:
- human dignity;
- the right to life;
- the right to the integrity of the person;
- prohibition of torture and inhuman or degrading treatment or punishment;
- prohibition of slavery and forced labour.

Chapter II: Freedoms, which include:
- the right to liberty and security;
- respect for private and family life, protection of personal data;
- the right to marry and found a family;
- freedom of thought, conscience and religion;
- freedom of expression and information;
- freedom of assembly and association;
- freedom of the arts and sciences;
- the right to education;
- freedom to choose an occupation and the right to engage in work, freedom to conduct a business;
- the right to property;
- the right to asylum, and protection in the event of removal, expulsion or extradition.

Chapter III: Equality, which includes:
- equality before the law;
- non-discrimination;
- cultural, religious and linguistic diversity;
- equality between men and women;
- the rights of the child;
- the rights of the elderly;
- integration of persons with disabilities.

Chapter IV: Solidarity, which includes:
- workers' right to information and consultation within the undertaking;
- the right of collective bargaining and action;
- the right of access to placement services;
- protection in the event of unjustified dismissal;
- fair and just working conditions;
- prohibition of child labour and protection of young people at work;
- protection regarding the family and professional life;
- social security and social assistance;
- health care;
- access to services of general economic interest;
- environmental protection;
- consumer protection.

Chapter V: Citizens' Rights, which include:
- the right to vote and stand as a candidate at elections to the European Parliament;
- the right to vote and stand as a candidate at municipal elections;
- the right to good administration;
- the right of access to documents;
- Right of reference to the EU Ombudsman;
- the right to petition the European Parliament;
- Freedom of movement and residence;
- diplomatic and consular protection.

Chapter VI: Justice, which includes:
- the right to an effective remedy and a fair trial;
- the presumption of innocence and the right of defence;
- principles of legality and proportionality of criminal offences and penalties, the right not to be tried or punished twice in criminal proceedings for the same criminal offence.

Chapter VII: General provisions

Common Foreign, Security and Defence Policy

If the Lisbon Treaty is ratified then Common Foreign and Security Policy (CFSP) will have special decision-making rules. The EU's action in the wider world will be guided by a set of principles which include democracy, the rule of law and respect for the UN Charter. Decisions in regard to the Common Foreign and Security Policy would, in general, continue to be made by unanimity.

However, there would be two exceptions. Firstly, the Treaty specifically provides for the possibility of QMV where a particular decision relates to a policy previously decided at summit level or, alternatively, to details of implementation. But, even in these cases, a Member State could, for vital and stated reasons of national policy, veto any resort to decision by QMV.

Secondly, there is a general clause, under which the European Council could decide unanimously to transfer decisions from unanimity to the QMV category in any Common Foreign and Security Policy domain, other than military and defence aspects (detailed below).

Common Security and Defence Policy (CSDP)
The Common Foreign and Security Policy would enable the EU to draw on civil and military resources provided by the Member States to take part in missions outside its borders.

These would be: joint disarmament operations; humanitarian and rescue tasks; military advice and assistance tasks; conflict prevention; peace-keeping; tasks of combat forces in crisis management (including peacemaking and post-conflict stabilisation); to strengthen international security, in line with the principles of the United Nations Charter.

Such missions would only be authorised by a unanimous vote of the Council on a proposal from the High Representative of the Union for Foreign Affairs and Security Policy or a Member State.

Enhanced Co-operation

Enhanced co-operation is a set of arrangements which could have effect where some Member States, but not all, want to co-operate more closely in a particular area. Enhanced co-operation, which currently requires one-third of Member States, will require at least nine Member States under this Treaty and:

• would have to be open, then and later, to all Member States;
• where it related to internal EU matters, external economic relations and humanitarian aid, would have to get the backing of the Commission, be approved by the Council and be accepted by the European Parliament;
• where it related to common foreign and security policy, would have to be approved by the Council acting unanimously;
• could only be a last resort (where it is clear that the objectives in view could not be achieved by the EU as a whole within a reasonable timeframe);
• cannot be used with respect to areas of exclusive competence.

It would also have to

• Avoid undermining the single market or regional policy in the EU;
• Avoid being a barrier to, or lead to discrimination in trade between, Member States;
• Avoid distorting competition.

Under the new Treaty, the previous ban on enhanced cooperation being used in the security and defence area no longer applies. The Treaty allows for members with bigger military capabilities to commit to taking part together in the most demanding missions within the external tasks listed above under CSPD. This will be called structured co-operation.

General Clauses

A short series of articles seeks to ensure that wider EU objectives are taken fully into account when defining and implementing each specific policy of the EU.

These objectives include: gender equality, opposition to discrimination on multiple grounds, protection of the environment, the fight against social exclusion, consumer protection, reduction of regional disparities and widespread access to services of general economic interest.

Provision is also made in the Treaty for the adoption of legislative measures if and as necessary, to combat discrimination on any of a range of grounds.

Further information

CORI Justice is glad to acknowledge a wide range of sources which were of assistance in preparing this Briefing. We wish to acknowledge in particular the excellent guide to the Treaty of Lisbon prepared by the Forum on Europe (published in January 2008 - available at www.forumoneurope.ie).

Other websites you may find of interest include:
The Government's White Paper on the EU Reform Treaty (published April 2008 - available at www.reformtreaty.ie).
The Referendum Commission is also providing substantial material explaining the Treaty at www.lisbontreaty2008.ie

Freedom, Security and Justice

The European Union defines itself as an area of freedom, security and justice.

In a Europe where people move freely across borders, police and judicial cooperation is required to protect people from terrorism and serious crime.

The Lisbon Treaty sets out to do this by including provisions that would

• give the EU more powers in the Justice and Home Affairs area;
• enhance the EU's effectiveness in fields where it has already been active - external border control, visas, asylum and immigration, judicial cooperation in criminal matters and police cooperation;
• extend the EU's field of action in the fight against serious cross-border crime, police co-operation, mutual recognition of decisions by courts and judges and the creation of a EU public prosecutor, with functions in defined areas.

The Lisbon Treaty goes on to state that the EU would among other things:

• ensure the absence of border controls inside the EU;
• frame a common policy, including passing legislation on asylum, immigration and control at the EU's outside borders based on solidarity, financial and otherwise, between Member States and also fairness to the people of countries outside the EU;
• promote and take measures to prevent and fight crime, racism and hatred of foreigners.

Police and Judicial Co-operation
Under the Lisbon Treaty, the handling of the areas of police co-operation and judicial co-operation would be more in line with normal EU procedures, where the Commission makes proposals, the European Parliament and Council co-legislate on an equal footing (including qualified majority voting in the Council).

The legislation adopted will be subject to greater scrutiny by the Court of Justice. One special feature: a quarter of Member States could propose a measure, in the same way as the Commission.

Ireland's Opt Out/Opt In
Ireland and the UK have special opt-out/ opt-in arrangements in this field. The provisions of this Treaty in the areas of criminal law and police cooperation are based on the proposals in the European Constitution. However, during the negotiations leading to the Treaty of Lisbon, the UK decided to exercise an opt-out in this area which created important implications for Ireland's position, particularly as Ireland and Britain both have common law systems which are quite distinct from other European legal systems. In a situation where the UK has opted-out, Ireland would be acting alone in seeking to shape proposals to take account of our legal practice and tradition. The opt-out arrangement includes a provision which allows Ireland (and the UK) to opt into future measures on a case-by-case basis.

In a separate Declaration on these arrangements, Ireland has indicated its intention to opt-in to all such measures to the maximum extent it deems possible. Ireland also declared its intention to review the operation of these arrangements within three years (i.e. as early as 1 January 2012).

Acting on Budget Deficits?

The Treaty proposes to strengthen the powers given to the European Commission where Member States have excessive budget deficits. In the future, the Council would only be able to diverge from a Commission proposal concerning the existence of an excessive deficit, by unanimous vote, as opposed to the present situation where the Commission makes a recommendation which Finance Ministers do not have to accept.

The proposals also include a new set of articles specific to Member States which are part of the Euro area. A related protocol is annexed to the Treaty, under which, among other things: (1) provision is proposed for specific economic policy guidelines for those Member States; and (2) provision is made for the Eurozone Ministers to settle common positions on matters arising in international financial institutions and conferences that are relevant to the euro and its management.

A Protocol is included on 'Services of General Interest' which makes clear that the competence of Member States is not affected by the Treaty.

Future Amendments?

The Treaty of Lisbon sets out two procedures for amending the EU Treaties, the 'Ordinary Revision Procedure' which is equivalent to the traditional procedures, and the 'Simplified Revision Procedures' which are limited in scope.

The 'Ordinary Revision Procedure' would see proposals being considered by the European Council. If, after consulting the European Parliament the European Council voted in favour of proceeding, then an Inter-Governmental Conference could be convened or, alternatively, a Convention along the lines of the Convention that produced the European Constitution would take the matter forward. If one or more countries had difficulties in ratifying such an amendment the matter would revert to the European Council.

The 'Simplified Revision Procedures' relate to specific, limited aspects of the Treaties. Amendments to Part III of the TFEU (EU Policies and Internal Actions) could be decided by the European Council, approved by all Member States.

However, any national parliament could block such a change within six months.

Key Changes introduced in the Lisbon Treaty

If the Lisbon Treaty is ratified the following will be the key changes:

• Qualified majority voting (QMV) will become the normal rule for the Council of Ministers. National vetoes will be removed in many areas.
• Decisions by qualified majority (QMV) will require a 'double majority' in the Council (55 per cent of Member States representing 65 per cent of the EU's population);
• The European Parliament will gain co-decision powers in many policy areas;
• A European Council President will chair the European Council for up to five years;
• A High Representative of the Union for Foreign Affairs and Security Policy will combine two existing jobs - Vice-President of the Commission and High Representative for Foreign and Security Policy;
• The number of Commissioners will be reduced (each Member State would have a Commissioner for ten out of every fifteen years);
• The number of MEPs is set at a maximum of 750, plus the Parliament's President (with a minimum of six and a maximum of 96 MEPs per country);
• National parliaments get the right to raise objections against draft EU legislation where national or local action would be more effective;
• The EU is given a single legal personality;
• An exit clause provides procedures for Member States wishing to leave;
• Asylum, immigration, police and judicial cooperation will no longer have a separate status but Ireland, with the UK, will have an opt-out/opt-in;
• Foreign and Security Policy will be integrated with other areas of the EU but special procedures still apply, including unanimity for policy decisions;
• The Treaty will maintain full respect for Ireland's policy of military neutrality. It mandates Member States to increase their own military capabilities with a view to increasing the capabilities available for the EU's Common Security and Defence Policy;
• New challenges, such as climate change and energy solidarity, will be recognised;
• A Protocol will be added on services of general interest, including economic services of general interest;
• The EU will be given additional tools to curb Member States with excessive budget deficits;
• The Charter of Fundamental Rights is given Treaty status.

Briefing General Election 2007

General Election, May 24 2007 - CORI Justice publishes Election Briefing

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Policy Briefing: Budget Choices 2007

2006 September 26 - CORI Justice publishes Policy Briefing on Budget Choices

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Ireland’s economy is doing very well but a range of social problems persist. Budget 2007 provides Government with a golden opportunity to address these social problems while ensuring that economic development is supported.

It is ironic that in the past those proposing that social problems be addressed were told that the resources did not exist to tackle these problems. Now that the resources are available in abundance we are told that again they cannot be addressed because such expenditure might damage the economy. The new national agreement Towards 2016 rejects this approach, pointing out that economic and social development are complementary, being two sides of the one coin.

The persistence of social problems is no longer acceptable when Ireland has the resources to address these problems. It’s a question of society’s priorities. Budget 2007 should take a number of initiatives aimed at making Ireland a fairer society where every person has the resources required to live life with dignity.

In practice it would involve:

• Increasing social welfare rates;
• Tackling the ‘working poor’ issue;
• Increasing the allocation for social provision generally;
• Increasing the allocation for infrastructure such as social housing and public transport and
• Developing a fairer tax system where those who have more pay more while those who have less pay less.
• Budget 2007, among other initiatives, should:
• Increase the lowest social welfare rates by €20 a week for single people;
• Provide the resources to increase the social housing provision by 9,000 units in 2007;
• Standard rate all tax expenditures;
• Increase tax credits rather than widen the standard rate tax band;
• Resource 100 additional primary care teams;
• Expand the programme to finance services being provided to local communities.
• Increase funding for ODA to 0.5% of GNP.

Budget 2005 and 2006 took steps in the right direction. The new national social partnership agreement provides a balanced development framework that should be honoured in Budget 2007.

The following pages address a wide range of budgetary issues. They identify core policy objectives and outline budgetary proposals that would move towards achieving these objectives. All the proposals are made within a responsible fiscal stance.

Main Policy Recommendations For Budget 2007

• Taxation
• Make tax credits refundable.
• Increase tax credits so as to keep the minimum wage out of the tax net.
• Further expand the levy on financial institutions introduced in Budget 2003.
• Introduce a speculative tax on windfall gains from land rezoning.
• Commit to increasing Ireland’s total tax take towards the EU average.
• Increase the tax on wealth (e.g. through increasing DIRT tax)
• Increase the tax-take from property (e.g. through a land rent tax)
• Restructure motor taxes
• Standard rate all discretionary tax expenditures.
• Income Distribution
• Increase the lowest social welfare rates by €20 a week for a single person.
• Increase child benefit substantially and do not tax it.
• Move towards individualisation of social welfare payments.
• Introduce a cost of disability allowance.
• Expand the recently announced increase in free electricity units so that it goes to all social welfare and FIS recipients.
• Work/Unemployment/Job-Creation
• Place an ongoing emphasis on preparing and enabling unemployed people to access jobs. This would involve providing additional resources to support:
• Increased numbers of places providing quality education and training, retraining and up-skilling.
• Expanded opportunities for unemployed people to gain work-place experience, and
• Adequate numbers of places on programmes such as Community Employment.
• Expand the programme providing direct funding for community and voluntary organisations that provide services and do not make this funding dependent on C+V organisations employing people who do not have the requisite skills.
• Provide resources to conduct a survey to discover the value of all unpaid work in the country (including community and voluntary work and work in the home).

Public Services

• Target funding strategies to ensure that far greater priority is given to providing an easy-access, affordable and high quality public transport system.
• Provide substantial additional resources for the development of library services.
• Adopt further information technology programmes to increase the skills of school children, early school-leavers and the unemployed.
• Take initiatives to ensure equality of access across all public services.
• Housing and Accommodation
• Acknowledge that everyone has a right to appropriate accommodation and develop policy from this perspective.
• Provide the resources to local authorities and to the voluntary/non-profit housing sector to ensure an increase of 9,000 social housing units in 2007.
• Provide sufficient resources to address the housing problems of those with a disability

Healthcare

• Fund 100 additional primary care teams as committed to in Towards 2016.
• Give far greater priority to community care and increase the resources for core community care services for older people with priority to be given to home care.
• Raise the eligibility level for the full medical card.
• Work towards universal access in primary care.

Education

• Prioritise funding for primary and family-based pre-school education.
• Provide ‘early start’ programmes in all disadvantaged communities (including those outside disadvantaged areas).
• Further prioritise Adult and Community Education
• Introduce a Basic Educational Allowance for full-time and part-time education for persons between ages 18 and 40 who do not proceed to third level from school.

Rural Development

• Ensure the provision of basic infrastructure and services based more on equity and social justice, rather than on cost effectiveness
• Provide support for rural housing.
• Provide additional resources for the development of rural public services.

Environment

• Allocate the necessary resources to achieve waste reduction targets by implementing the relevant sections of the Waste Management Act.
• Allocate substantial additional resources to develop and reward recycling.

O. D. A.

• Honour the commitment to increase Ireland’s ODA budget for poor countries to the UN target of 0.7% of GNP by 2012. In doing so, reach the interim target of 0.5% of GNP in Budget 2007.

SW Increase of €20 Needed to Meet NAPS Commitment

In 2002, the National Anti-Poverty Strategy (NAPS) Review set the following as a key target: “to achieve a rate of €150 per week in 2002 terms for the lowest rates of social welfare to be met by 2007”. Subsequently, the national agreement Sustaining Progress further endorsed this target.

CORI Justice welcomed this target. It was a major breakthrough in social, economic and philosophical terms. The target of €150 a week is equivalent to 30% of Gross Average Industrial Earnings (GAIE) in 2002. This means that social welfare rates will be benchmarked to increases in average industrial wages from now on.

CORI Justice has calculated the projected growth in €150 between 2002 and 2007 when it is indexed to the estimated growth in GAIE (detailed calculations are presented on pages 49-51 of our Socio Economic Review, Developing a Fairer Ireland). To complete the transition to this benchmark, Budget 2007 should increase the lowest social welfare rates for single people by €20 per week to €185.80 (see table 1). That figure will be equivalent to 30% of GAIE.

Budget 2005 marked a major step towards achieving this target. CORI Justice welcomed the decision of the Government to deliver a €14 increase in the minimum social welfare rates. We also welcomed the commitment by the Minister for Finance that he intends to deliver on all commitments made by government. Budget 2006 followed suit, delivering an increase of €17 per week to those in receipt of the minimum social welfare rate.

CORI Justice strongly urges government to honour its commitment in this area. Delivering an increase of €20 per week to minimum social welfare rates will mark a fundamental turning point in Irish public policy and underscore the emergence of a long overdue commitment to sharing the fruits of this country’s recent economic success.

Maintaining lowest social welfare rates at 30% of GAIE

The National Anti-Poverty Strategy (NAPS) commits Government to increasing the lowest social welfare rates for a single person to 30 per cent of Gross Average Industrial Earnings (GAIE) by 2007.

An important element of this NAPS commitment to increasing social welfare rates is the acknowledgement that the years from 2002-2007 mark a period of ‘catch-up’ for those in receipt of welfare payments. Once the existing gap has been bridged the increases necessary to keep social welfare payments at a level equivalent to 30 per cent of GAIE become much smaller.

To make this point, CORI Justice has calculated the increases necessary from Budget 2008 (delivered in December 2007) onwards to 2010 to maintain the link with 30 per cent of GAIE. Reflecting the current budgetary process these increase have been calculated, and revised, over a period of three years.

Table 2 shows the increases required over the period from 2008-2010 calculated using ESRI projections of increases in average industrial earnings. These suggest an average annual increase of €10.10 over these three years.

Developments along these lines would address a number of inter-connected concerns:

• The need to ensure that people who depend on social welfare payments receive a level of income that is sufficient to live life with dignity.
• The need to ensure that people depending on social welfare payments are not the first targets when there are competing demands on public expenditure.
• The concern that increased welfare rates on their own are seen as the way to take people out of poverty.
• The concern that forcing people into extreme poverty is seen as an appropriate means to incentivise employment.

Funding Social Housing Commitments

A central conclusion of the 2004 housing report produced by the National Economic and Social Council (NESC) is that the supply of social housing will have to rise dramatically if the needs of Irish society are to be addressed in the years ahead. The main recommendation of the council on the issue of social housing called on Government to “create an expanded and more flexible stock of social housing - adding in the order of 73,000 permanent social housing units to bring the stock to 200,000 dwellings by 2012 - in a manner that is consistent with other public investment needs and sound public finances”.

The figure of 200,000 social housing units was calculated based on the projected increases in the Irish population over that period and in the context of limited responses to existing social housing needs (e.g. homelessness, community based accommodation for disabled and elderly persons). NESC concluded that to achieve the target of 200,000 units over the eight year period between 2005 and 2012, an annual increase in excess of 9,000 units is necessary. They also pointed out that an estimated capital investment of €1.4bn a year would be required to achieve a net increase of 73,000 units by 2012. Given the present level of capital expenditure this would mean an additional investment per annum of the scale of €500m to €600m on what is already projected.

CORI Justice welcomed the commitment in Towards 2016 to provide 27,000 new social housing units by 2009. We also welcomed the acknowledgement in that agreement of the 2012 NESC target of 73,000 new units. Reaching that target during the lifetime of the next National Development Plan (i.e. by 2013) is essential if Ireland is to achieve the goal of ensuring that everyone in the country has appropriate accommodation. Budget 2007 must move to allocate funds towards this need.

Housing Policy

The rezoning of land by local authorities continues to provide excessive windfall gains for land speculators. As rezonings are made by elected representatives in the interest of society generally, it seems appropriate that a sizeable proportion of the windfall gains they generate should be made available to local authorities and used to address the ongoing housing problems they face. Budget 2007 should introduce a new tax which internalises these gains for the state.

The Budget should also move to address the issue of second homes and ensure that in future all such dwellings are required to pay the full infrastructural costs, much of which is currently borne by society through the Exchequer.

Rural Public Services

Rural Ireland continues to change dramatically. The shape of its future, however, is hotly contested. Traditional agriculture and its related industries are in decline. Ireland’s air and water have become more polluted and agriculture is the single largest contributor to the overall emissions. More people are at risk of poverty in rural areas compared to urban areas. The challenges facing rural Ireland are substantial. Radical policy change is required.

CORI Justice examined these issues in our July 2006 Policy Briefing entitled Rural Ireland (available from www.cori.ie/justice). One area we highlighted was the need to ensure that public services in rural areas are protected and enhanced over time.

One key element of policy in this area is the existence of so-called ‘public service obligations’. These obligations require services to be made available on a nationwide basis and as a policy play an important role in ensuring the possibility and sustainability of rural communities. For service providers, be they public or private, there are additional costs associated with these obligations and therefore there is a clear incentive for them to seek their removal.

CORI Justice believes that Government policy should ensure that these obligations remain and that permanent residents of rural areas are not disadvantaged through their removal. Budget 2007 should establish a fund to assist public services in continuing this commitment.

Primary Care

Primary care has been recognised as one of the cornerstones of the health system. Overall, between 90 and 95 per cent of the population are treated by the primary care system. Its importance was given recognition by the publication of the 2001 Primary Care Strategy entitled Primary Care - A New Direction.

The recent national agreement, Towards 2016, addressed the primary care issue and set out the following commitment:

Developing primary care services drawing on the Primary Care Strategy. This will entail ongoing investment to ensure integrated, accessible services for people within their own community with a target of 300 primary care teams by 2008, 400 by 2009 and 500 by 2011. A review of these targets will be undertaken in 2008 (page 52).

CORI Justice called for, and welcomed, this commitment in Towards 2016. As part of meeting this commitment Budget 2007 should allocate sufficient funding to allow these targets to be met. A total of 100 new primary care teams are needed in 2007 to reach an overall total of 300 teams by 2008.

Implementing this commitment should speed up a process that will see the whole country served by primary care teams. The principle underlining the primary care team model should be a social determinants model of health. This would be in keeping with the WHO definition of health.

Building a Fairer Taxation System

CORI Justice believes that building a fairer taxation system is an important part of building a fairer Ireland. Budget 2007 offers Government the potential to implement a number of changes to the taxation system which will make it fairer.

Taxation and Minimum Wages

The most recent EU-SILC poverty figures indicate that 132,000 workers (7% of all those employed) live in poverty. Therefore, the Budget 2005 decision to remove all those on the minimum wage from the tax net was welcome as a move towards addressing this ‘working poor’ issue. Budget 2006 updated this position.

Towards 2016 indicates that the rate will increase once again, from the current level of €7.65, on January 1st 2007. Budget 2007 should further adjust tax credits to ensure these low paid workers remain outside the tax net.

Tax Credits or Tax Bands?

During 2005, both the Taoiseach and the Minster for Finance indicated that there would be no more cuts in income tax rates. CORI Justice welcomes this commitment. Any future income tax changes will now be concerned with changes to either tax credits or tax bands. In the context of achieving fairness in the taxation system, changes to tax credits rather than tax bands are more desirable.

To illustrate this: say the Government has €700m available for distribution in Budget 2007, it could either (i) increase the 20% tax band by €5,500 or (ii) increase tax credits by €512 a year. Option (i) would be of no benefit to anyone with incomes at or below the top current band but would provide a benefit of €1,210 a year for a single person earning more than €34,900. Option (ii) would mean that every earner paying in excess of €512 a year would benefit by that amount.

Making Tax Credits Refundable

One problem with the tax credit changes outlined above is that a person who does not earn enough to use up their full tax credit will not benefit from any tax reductions introduced in Budget 2007.

A simple solution to rectify this problem is to make tax credits refundable. The main beneficiaries of this move would be low-paid employees.

Tax Expenditures/Tax Reliefs

In Budget 2006 the Minister for Finance introduced welcome and long overdue reforms to the system of tax reliefs in Ireland. In November 2004 the Revenue Commissioners estimated that the annual cost of tax reliefs was €8.4 billion, a value that is equal to 22 per cent of the total taxation collected each year in Ireland.

In Budget 2007 the trend of reforming these tax reliefs should be continued; in particular some of the limits on these expenditures should be revised downwards. We also believe that the Budget should move to standard rate all of these breaks.

Other Tax Changes

Elsewhere in this document we have outlined changes that Budget 2007 should implement with regard to speculative taxes, second home charges and motor tax.

Redistribution: Budget 2007 Should be Fair

Budgets involve governments taking important decisions on the allocation of resources in society. The implications of these decisions can be very significant. Each year, CORI Justice examines the impacts of the budget on the distribution of income in society. Taken together the impacts of changes in social welfare and tax credits and bands can be very significant and amount to hundreds of millions of euro.

The tax and welfare decisions taken in Budget 2006 reflected the agenda CORI Justice has been advocating for some time. Consequently we welcomed the Budget and commented at the time on the positive effects it would have on the income distribution and the general fairness agenda. As chart 1 shows, that budget saw a single person who is long term unemployed gain more from the Budget than did a single person who was earning €100,000. This was the first time in many years that a budget had had such a positive impact on the income distribution.

Chart 1: Income Distribution and Budget 2006

Through implementing the social welfare and tax policies highlighted throughout this Policy Briefing, we hope that a similar redistribution effect can be achieved in Budget 2007.

Large Current Budget Surpluses Offer Major Potential

An assessment of the state of Ireland’s exchequer finances is revealing. Projections for the years 2006-2008 indicate that budget deficits are being driven by sustained levels of capital account investment (of over €7bn a year). However, over that period the Department of Finance has calculated that current account surpluses will average at least €5.55 billion annually.

The reality of this fiscal position is that the Irish Economy is in a position that other European countries regard as the ‘optimal’.

The figures published in the Department of Finance Monthly Economic Bulletin (September 2006 p11) and the detailed projections from last year’s Budget documentation clearly show this. In macroeconomic terms the Irish exchequer’s present position is seen as super-healthy.
It is clear from the Department of Finance projections that there remains significant room for further current account spending over the next few years.

In Budget 2007 the Minister for Finance has the potential to free up resources rom the current
account and use these funds to address the ocio-economic problems persisting in Ireland today.

Additional spending of up to €1.5 billion a year is more than feasible. Its effect would only be to reduce the sizeable current account surpluses and to increase marginally the scale of overall budget deficits. Following such a move, the General Government Balance as a % of GDP would remain well below 3% (the key indicator used by the European Central Bank to judge fiscal policy control). The percentages would be: -1.4% in 2006; -1.65% in 2007; and -1.5% in 2008. These outcomes comfortably comply with the limits in the Stability and Growth Pact.

Based on these figures, it is clear that in Budget 2007 the Minister for Finance has the potential to free up resources from the current account and use these funds to address the socio-economic problems persisting in Ireland today.

Old Age Pensions

Among those groups that are most at risk of poverty, the elderly are one of the largest groups. In 1994 5.9% of those aged over 65 years were recorded as being in poverty. This increased to 32.9% in 1998 and peaked at 44.1% in 2001. The most recent figures, for 2004, show a reduction to 27.1%. This reduction is welcome. But over one in four of Ireland’s elderly still live at risk of poverty. As many of the elderly depend on state pensions, the level of these pensions is important. Towards 2016 reiterated the Government commitment to raise the old age pension to €200 per week in 2007. Budget 2007 should deliver these increases.

The Budget and the Poor

Despite the advances in employment and economic growth achieved over the last few years, the phenomenon of poverty remains large. Its sustained existence undermines many of the improvements of recent years. The most up-to-date detailed data available on the nature and extent of poverty in Ireland comes from the 2004 EU-SILC results. Its results showed that 19.4% of the Irish population, some 780,000 people, live on income below the poverty line. Budget 2006 took some important steps towards addressing these problems. We ask that Budget 2007 continues that trend and adopts strategies to address these vulnerable groups.

Fuel Allowances

Those living life on a low income are very exposed to the effects of price increases. With little, if any, income to spare price increases imply cutting back on the essentials. Increases in fuel prices have posed significant difficulties for many people. In October gas will increase in price by 33% and electricity will increase in 2007 by almost 20%. These increases add to others which have emerged over the last two years. The recent move by the government to increase the number of free electricity units to some social welfare recipients is welcome. CORI Justice believe that Budget 2007 should expand this scheme to all social welfare and FIS recipients.

Motor Tax

At a time of increasing fuel prices, infrastructural capacity difficulties and pollution levels in excess of Kyoto limits CORI Justice believes that the time is right to radically reform the structure of motor tax. Reflecting the principle of ‘the polluter pays’ we believe motor taxes should be substantially raised on all private cars at or in excess of an engine capacity of 2,000 c.c. Rates for these vehicles should double, such that for example the annual tax on a car with a 2,200 c.c. engine capacity would rise from €755 per annum to €1510. Simultaneously taxes on cars with low engine capacities and on electric/hybrid cars should be considerably reduced.

Taxation

Ireland’s total tax take as a percentage of gross domestic product (GDP) is the second lowest of 25 EU countries, only Lithuania collects less. Total tax and social insurance revenue in Ireland was equal to 30.2% of GDP (36.1% of GNP), well below the EU average of 37.9% of GDP. Ireland is not a high-tax country.

In the context of these figures, the question needs to be asked: if we expect our economic and social infrastructure to catch up to that in the rest of Europe, how can we do this while simultaneously gathering less taxation income than it takes to run the infrastructure already in place in most of those other European countries? Simply, we will never bridge the social and economic infrastructure gaps unless we gather a larger share of our national income and invest it in building a fairer and more successful Ireland.

INCREASING THE TAX-TAKE

Small increases in taxation are certainly feasible and are unlikely to have any significant negative impact on the economy. An increase of just one per cent in the GDP to tax ratio (from 30 to 31) would produce an extra €1.5bn each year in taxation income for the government.
As a means of increasing the total tax-take towards the EU average level, we propose that Budget 2006 should:

• Further expand the levy on financial institutions introduced in Budget 2003
• Introduce a speculative tax on windfall gains from land rezoning
• Introduce the promised carbon and environmental taxes
• Increase the tax on wealth (e.g. through increasing DIRT tax)
• Increase the tax-take from property (e.g. through a land rent tax)
• Continue to reform the sizeable number of tax breaks (i.e. tax expenditures), many of which serve minimal social or economic purpose.
• Increase capital gains tax

TAX CREDITS AND THE WORKING POOR

If Ireland is to have an equitable income tax system and address the issue of the ‘working poor’ there are two issues to be addressed in the tax credits area i.e. tax credits should be made refundable and tax credits should be increased instead of widening the 20% tax band.
At present people in the lowest paid jobs who are already outside the tax net do not gain from changes in the annual Budget. Many of these are among the ‘working poor’. To ensure they benefit from future Budgets, tax credits should be made refundable in Budget 2007.

Making the current income tax credits refundable would result in most of the benefit going to the lowest 30% of income earners. This is a development that should be introduced in Budget 2007.

Likewise, increasing tax credits would be a fairer option than widening the 20% income tax band. It would ensure that everyone paying income tax benefited by the same amount in the Budget.

STANDARD RATING DISCRETIONARY TAX EXPENDITURES

Discretionary tax expenditures (e.g. Business Expansion Scheme, pension contributions, medical expenses) are an inappropriate means of achieving policy objectives. In general these expenditures are neither efficient nor fair. They are used to provide huge gains to the better off. This is unfair. Accordingly, we propose that Budget 2007 should move to ensure that relief on all discretionary tax expenditures should be available at the standard rate only.

Proposals for Budget 2007

• Commit to increasing Ireland’s total tax take towards the EU average.
• Standard rate all discretionary tax expenditures.
• Continue to review the costs and benefits of discretionary tax expenditures.
• Introduce a speculative tax on windfall gains from land rezoning.
• Make tax credits refundable.
• Adjust tax credits so as to keep the minimum wage out of the tax net.
• Integrate Family Income Supplement (FIS) with the tax system.
• Proceed with individualisation in the income tax system in a fair + equitable manner.
• Poverty-proof all budget tax packages to ensure they do not further widen the rich/poor gap.
• Increase capital gains tax.
• Increase the corporate tax rate to 17.5%.
• Move decisively to shift the burden of taxation from income tax to eco-taxes and taxes on consumption.
• Reform the structure of motor tax along the lines suggested on page 6.
• Expand the levy on financial institutions introduced in Budget 2003
• Investigate policies which allow taxation on wealth and land to be increased.

Income Distribution

UPDATING THE POVERTY LINE

Using information gathered in the EU-SILC Survey for 2004, the CSO established that the median income per adult equivalent in Ireland during 2004 was €309.18. They also calculated the official European Poverty Line, set at 60% of median income, as €185.51 per week. Updating this line to 2006 levels, using actual and predicted increases in average industrial earnings, produces a relative income poverty line of €203.55 for a single person. In 2006, any adult below this weekly income level will be counted as being in poverty (more details are contained in out 2006 Socio-Economic Review p21-23). One immediate implication of this analysis is that the poverty line exceeds the current level of most social assistance rates by €37.75 per week.

INCOME POVERTY

Income poverty is a reality for a great many people in Ireland. The number of people in poverty now stands at 19.4% of the population; almost 785,000 individuals.

There are also substantial numbers of people in low-paid jobs who are living on incomes below this poverty line. In this briefing’s section on taxation the issue of low paid people (i.e. the working poor) living in poverty has been addressed. The most efficient and effective way of tackling this problem is by making tax credits refundable.

POVERTY & SOCIAL WELFARE

The plight of people depending on social welfare needs a major response. Six out of every ten people living in relative income poverty lives in a household headed by a person who is not in the labour force. Consequently, the level at which social welfare rates are set is of crucial importance in tackling relative income poverty.

We strongly urge Government to take another step in Budget 2007 towards honouring its commitment to raise the lowest social welfare payment for a single person to 30% of Gross Average Industrial Earnings by 2007. In practice, this requires an increase of €20 a week for single people in Budget 2007.

ASYLUM-SEEKERS

Asylum-seekers are among the most excluded and marginalised in Ireland, yet they are treated in a very unjust way by Irish society. In particular, Government has introduced a policy of ‘direct provision’ through which many asylum-seekers receive accommodation and board, together with €19.10 per week per adult and €9.60 per child. Clearly, this is an inadequate amount of money and Budget 2007 should increase these amounts immediately to at least €60 a week for an adult and €30 for a child. This policy proposal is an interim one as ultimately this unfair system of ‘direct provision’ should be eliminated.

TAXATION & INCOMES

It is important to note that changes in the taxation system have substantial impacts on income distribution patterns. Consequently, the proposals contained in this Briefing under the ‘taxation’ heading apply here as well.

CHILD POVERTY

One of the most vulnerable groups in any society are children and consequently the issue of child poverty is one that deserves particular attention. In 2004 1 in every 5 Irish children, almost 190,000, live in poverty. Budget 2007 should adopt policies to address this unacceptable situation.

Proposals for Budget 2007

• Provide a fair income distribution between people on different incomes. To achieve this the combined impact of the tax and social welfare packages should favour those on low incomes whether they depend on social welfare or are in low-paid employment.
• Increase the lowest social welfare rates by €20 a week for a single person.
• Commit Government to continue benchmarking the lowest social welfare payments for single people at 30% of gross average industrial earnings (GAIE).
• Increase child benefit substantially and do not tax it.
• Move towards individualisation of social welfare payments.
• Introduce a cost of disability allowance.
• Increase the weekly allowance for asylum seekers in ‘direct provision’ to €60 a week for an adult and €30 for a child.
• Develop a national programme, on an inter-departmental basis, to address fuel poverty. (This is of greater urgency because of substantial increases in the cost of electricity and fuel in the past three years) [cf. story on p. 6]
• Abolish claw-back rules so that social welfare recipients will get the full value of the Budget increases.
• Update tax credits so as to keep the minimum wage out of the tax net.
• Adopt policies to address child poverty.

Work, Unemployment and Job Creation

One of the major achievements of recent years has been the increase in employment and the reduction in unemployment, especially long-term unemployment. In 1991, there were 1,156,000 people employed in Ireland. Today that figure has increased to over 2,017,000. During the same period, the number of people unemployed (measured on an International Labour Office [ILO] basis) had gone from 198,500 to 91,400. In the intervening years, the number unemployed has exceeded 220,000 (in 1993). This transformation is remarkable. It provides new challenges and raises new questions.

THE CHALLENGE OF UNEMPLOYMENT

The issue of unemployment remains a challenge and is likely to remain so as further job losses appear likely. The number of long-term unemployed people now stands at 29,600, equivalent to 1.4% of the labour force. Youth unemployment is also a growing problem with a high proportion of the increase in unemployment consisting of people aged less than 25. It is necessary that government confront this situation by providing the necessary resources to prepare and enable unemployed people to access jobs.

This should involve providing:

• additional resources to support education and retraining.
• expanded opportunities for work-place experience.
• adequate numbers of places on programmes such as Community Employment (CE).

ALMPs

Problems persist with active labour-market programmes (ALMPs). There are three aspects to these programmes. CE is an active labour market programme providing experience and training to people seeking employment in the labour market. Secondly, the Job Initiative programme (JI) provides sheltered employment for a large number of people. Thirdly, these programmes play a major role in providing services in local communities, delivered mostly by organisations in the community and voluntary sectors. As the number of places have been reduced and the composition of those unemployed has changed. Community and voluntary organisations are unable to continue providing services that used to be delivered with the help of CE. It is essential that Government act to ensure that all three aspects of these programme are adequately addressed.

SOCIAL ECONOMY (SE)

The Social Economy Programme needs to be substantially overhauled as it is not addressing many of the issues for which it was originally proposed and developed.

As well as overhauling the current Government SE programme there is need to expand the new initiative that resources the services etc. being provided for the most part by the community and voluntary sector and which used to depend on CE funding. This funding should not be dependent on employing people who do not have the requisite skills.

THE NEED TO RECOGNISE ALL WORK

Current developments challenge us to analyse our assumptions. One such assumption concerns the priority given to paid employment over other forms of work. Most people recognise that a person can work very hard even though they do not have a job. Much of the work done in the community and in the voluntary sector fits under this heading. So too does much of the work done in the home.

We believe that all work should be valued, recognised and rewarded. Consequently, we believe that Budget 2007 should provide resources to conduct a survey to discover the value of all unpaid work in Ireland.

Proposals for Budget 2007

• Place an ongoing emphasis on preparing and enabling unemployed people to access jobs. This would involve providing additional resources to support:
• Increased numbers of places providing quality education and training, retraining and up-skilling.
• Expanded opportunities for unemployed people to gain work-place experience.
• Adequate numbers of places on programmes such as Community Employment.
• Expand the programme providing direct funding for community and voluntary organisations that provide services which was initiated in Budget 2005 and do not make this funding dependent on C+V organisations employing people who do not have the requisite skills.
• Reform and adequately resource the Social Economy programme to ensure it has a real social economy focus.
• Increase the education/training grants for participants in active labour market programmes.
• Resource life long learning.
• Recognise the right to work of asylum seekers.
• Provide resources to conduct a survey to discover the value of all unpaid work in the country.
• Allocate resources to address the youth unemployment problem.
• Maintain the number of ALMP places for LTUs.

Public Services

Increasingly Ireland is being identified as a country whose public services are underdeveloped. Given the wealth of the economy, this is a situation that is far from acceptable. Because poorer people rely on public services more than those who are better off, it is they who are most acutely affected by this shortage.

PUBLIC TRANSPORT

Despite the development of LUAS and the development of major road initiatives, transport remains a most problematic area. Bottlenecks throughout the country are adding to the difficulty and cost experienced by everybody in conducting their lives. Budget 2007 needs to support a new transport policy which would prioritise easy access, affordable and high-quality public transport. This is essential given the high costs of ownership and use of private vehicles. Additional resources to the national rail services and public transport schemes in rural Ireland are also needed.

LIBRARY SERVICES

Libraries are obvious centres to support Government commitments to life-long learning. They can provide access to information and to modern means of communication. To play this role, an expansion of the library service is essential. Increases in Budget 2006 were minimal (1%). Budget 2007 should increased funding significantly. Failure to support this service properly is short-sighted.

INFORMATION TECHNOLOGY

Increasingly the ability to use information and communications technology (ICT) is becoming a central requirement in modern society. The phenomenon of a technological divide is becoming evident. In particular it is of concern that a number of young people, including early school-leavers, have little or no skill in ICT. Consequently initiatives are necessary to improve information technology provision in schools, as well as to increase its availability in areas such as public libraries and community centres. Budget 2007 needs to show greater commitment to this area.

It also needs to address the issue of including everybody in the information society. In addressing this issue it is crucial that priority is given to ensuring access is available to those who currently cannot afford the market costs. Ignoring this will widen the ‘digital divide’ and increase social exclusion. Budget 2007 should allocate resources to ensure that further progress is made in this area.

SPORTS FACILITIES

Recent studies indicate a declining level of participation by Irish people, and in particular young people, in sports activities. Alongside this is a growing problem of obesity among young people. These developments have significant health consequences. There is a special case to be made for poor areas, most of which have limited, if any, sports facilities. The National Sports Council has introduced a creative initiative of local sports partnerships. Some of these are working effectively already and Budget 2007 should take steps to expand the funding available for these most worthwhile initiatives.

OTHER PUBLIC SERVICES

While we address some public services in this section others, in particular housing and accommodation, healthcare and education, are considered in other sections.

Proposals for Budget 2007

• Target funding strategies to ensure that far greater priority is given to providing an easy-access, affordable and high quality public transport system.
• Provide substantial additional resources for the development of library services throughout the country.
• Increase the provision of open-access information technology in public libraries and meet the commitment in the national agreement to “include everybody in the information society”.
• Introduce a system (e.g. a swipe card) that ensures people on low incomes can access information communications technology on an ongoing basis.
• Adopt further information technology programmes to increase the skills of school children, early school-leavers and the unemployed.
• Regulate the removal of public payphone services. This is particularly necessary for poor areas and rural areas where the revenue generated by a pay-phone can give a misleading interpretation of its significance in the community.
• Provide additional funding to the Sports Partnership initiative.
• Take initiatives to ensure equality of access across all public services.
• Increase the allocation for the local sports partnerships developed by the National Sports Council.

Housing and Accommodation

Issues concerning housing and accommodation have had a major profile in recent years. Most of that profile, however, concerned the provision and cost of privately owned accommodation. A comparison of European housing tenures illustrates the existence of three main models of housing provision: an owner-occupier sector, a rental sector and a social housing sector. Most countries have a mix of housing tenures that reflects the policy choices of government. Irish housing policy supports owner occupation to the detriment of all other forms of housing tenure.

CURRENT AND FUTURE HOUSING NEEDS

The most recent assessment of local authority waiting lists occurred on the 31st of March 2005 and was reported in a Department of Environment, Heritage and Local Government publication in December 2005. It found that there was a total of 43,684 households on local-authority housing waiting lists. This figure represents a decrease of 9.8 per cent since the 2002 assessment – a welcome improvement. However, since 1996 waiting lists have grown by 59.2 per cent and the 2005 figure indicates that across Ireland about 120,000 people are in need of accommodation.

THE PROVISION OF SOCIAL HOUSING

At the end of 2004 the National Economic and Social Council (NESC) published a major report on housing. Entitled Housing in Ireland: Performance and Policy the report spanned over 230 pages and provides guidelines for the future direction of policy in this area.
In particular, the report made important suggestions for policy initiatives focused on social housing. Overall, NESC concluded that it was particularly concerned about two issues. These are:

• the quality of the neighbourhoods, villages, towns and cities being constructed in Ireland, and
• the provision of social and affordable housing

A central conclusion of the NESC housing report is that the supply of social housing will have to rise dramatically if the needs of Irish society are to be addressed in the years ahead The details of their target have been outlined on page 4 of this briefing.

CORI Justice believes that reaching the NESC target for social housing in 2013 is essential if Ireland is to achieve the goal of ensuring that everyone in the country has appropriate accommodation. Furthermore, we welcome the acknowledgement of this in Towards 2016. Budget 2007 must allocate sufficient resources to ensure an increase of 9,000 social housing units in 2007.

HOUSING & PEOPLE WITH A DISABILITY

CORI Justice welcomes the recognition by NESC in its review of housing policy that “a particular gap is the lack of a strategic framework to support the provision of tailored housing and housing supports for people with disabilities”. A feature of having a disability is additional housing costs. Primarily these costs are for adjustments to residences to ensure access and continued use.

For some years local authorities have provided a disabled persons housing grant. However, during 2002 the Irish Wheelchair Association reported that an estimated six thousand people with disabilities across the state were waiting for these grants. Little progress has been made since. Budget 2007 should allocate funds to reduce these unnecessarily long waiting lists.

Proposals for Budget 2007

• Acknowledge that everyone has a right to appropriate accommodation and develop policy from this perspective.
• Acknowledge that social housing provision needs to reach 200,000 units by 2013.
• Provide the resources to local authorities and to the voluntary/non-profit housing sector to ensure an increase of 9,000 social housing units in 2007.
• Allocate sufficient resources to the Rental Accommodation Scheme (RAS).
• Provide sufficient resources to address the housing problems of those with a disability.
• Provide sufficient resources to the rent supplement programme and to the housing support programme to ensure that both programmes are adequate to meet current needs.
• Set a target of reducing the time spent on waiting lists to a maximum of 6 months.
• Provide new resources for the security and management of local authority housing.
• Give a special focus to tackling issues concerning accommodation for refugees and asylum seekers.
• Provide the resources required to ensure implementation of the Travellers Accommodation programme.
• Allocate significant additional resources to reduce the unnecessarily long waiting lists for a disabled persons housing grant.

Healthcare

Healthcare is a social right that every citizen should enjoy. People should be assured that care in their times of vulnerability is guaranteed. The standard of care is dependent on the resources made available which in turn is dependent on the expectations of the society. The obligation to provide healthcare as a social right rests on all people. In a democratic society this obligation is transferred through the taxation and insurance systems to government and other bodies who assume/contract this responsibility.

HEALTH INEQUALITIES

Recently a very welcome insight into the extent of health inequalities in Ireland was provided by the Public Health Alliance Ireland (PHAI). Entitled “Health in Ireland – An Unequal State” the report gathered together the baseline information on health inequalities in Ireland and its findings are worthy of serious attention. Among these findings were the following:

• Between 1989 and 1998 the death rates for all causes of death were over three times higher in the lowest occupational class than in the highest
• The death rates for all cancers among the lowest occupational class is over twice as high for the highest class, it is nearly three times higher for strokes, four times higher for lung cancer, six times for accidents
• Perinatal mortality is three times higher in poorer families than in richer families

Primary Care has been recognised as one of the cornerstones of the health system. Between 90 and 95 per cent of the population are treated by the primary care system. The importance of paying attention to local people’s own perspective on their health and to understand the impact of the conditions of their lives on their health is essential to community development and to community orientated approaches to primary care. There needs to be a community development approach to ensure that the community can define its own health needs, work out how these needs can best be met collectively and decide on a course of action to achieve the outcomes in partnership with service providers. The Government's own Primary Care Strategy acknowledges the need for this “community involvement”. As we have outlined on page 4 of this briefing, Budget 2007 should resource moves to make this possible.

MEDICAL CARDS

The introduction of 30,000 new medical cards and 200,000 ‘doctor visit only’ cards in Budget 2005 was a small step in the right direction. CORI Justice believes that what is required is full medical card coverage for all people in Ireland who are vulnerable. Currently, the income threshold for accessing a medical card is far below the poverty line. Budget 2007 should resource such a change.

MENTAL HEALTH

The National Health Strategy identified mental health as an area to be developed. There is an urgent need to address this whole area in the light of the WHO Report where it is estimated that, in 1990, mental and neurological disorders accounted for 10 per cent of the total Disability-Adjusted Life Years (DALYs) lost due to all diseases and injuries. This was 12 per cent in 2000. This has serious implications for services in all countries in the coming years. Budget 2007 should provide additional resources to address these issues.

Proposals for Budget 2007

• Recognise the considerable health inequalities present within the Irish healthcare system and provide sufficient resources to tackle them.
• Meet the commitment in T2016 to establish an additional 100 primary care teams.
• Raise the eligibility threshold for the medical card.
• Enhance the provision of community care and restructure the healthcare budget accordingly.
• Resource and implement targets on health status within the NAPS.
• Increase the percentage of the health budget allocated to health promotion and education in partnership with all relevant stakeholders.
• Provide the childcare services with the additional resources necessary to effectively implement the Child Care Act.
• Resource the development of nursing care of elderly people in their own community on the model of the hospice care programme.
• Provide additional respite care for elderly people and people with disabilities.
• Resource the development of mental health services, recognising that this will play a key factor in health status.
• Facilitate and fund a campaign to give greater attention to the issue of suicide in Irish society.
• Adequately resource the Local and Regional Drugs Task Forces.

Education

Education can be an agent for social transformation. CORI Justice 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 increased participation and economic boom, the education system continues to mediate the vicious cycle of disadvantage and social exclusion between generations.

While there are a number of programmes and initiatives to tackle educational disadvantage, many of these initiatives simply involve providing additional resources for disadvantaged schools. Our policy approach in this area is based on a belief that early school leaving is a particularly serious manifestation of wider inequality in education, which is embedded in and caused by structures in the system itself. It is from this perspective that we make our recommendations for Budget 2007.

PRE-SCHOOL EDUCATION

There is need for the establishment, co-ordination and monitoring of early education and childcare to ensure quality provision of opportunities for holistic child development for all disadvantaged. Budget 2007 should take steps to support such an initiative.

EARLY SCHOOL LEAVING

Some 3% of young people leave school without any qualification. However, this figure is unevenly distributed reaching 30% in some seriously disadvantaged communities. Research on the marginalisation of young men and boys highlights the close link between under-achievement in school and the spiral of exclusion that leads to homelessness and other social problems.

The Back to Education Initiative (BTEI) is a programme with the potential to address this problem. It should target as a priority early school leavers with few or no formal qualifications or low literacy and numeracy skills.

In particular this initiative should target young early school leavers who have been alienated from the school-based educational system. To achieve this further resources are needed. Budget 2007 should provide these.

EQUITY IN EDUCATION FUNDING

The exchequer invests 2.5 times more money per capita in the education of those who complete three years of third-level education than it does for those who leave school before the completion of post-primary education.

In light of the barriers to educational participation of the more disadvantaged people, especially at post-school level, consideration should be given to establishing a basic educational allowance. Budget 2007 should adopt policies to make this possible.

LITERACY DIFFICULTIES

Access to education for those with literacy difficulties is largely dependent on the services of voluntary literacy instructors under the guidance of adult education officers. The current policy of supporting the full cohort of such adults on a part time basis is ineffective. Further priority must be given to generating effective levels of support for adults with literacy difficulties, with work friendly arrangements being put in place where necessary. Budget 2007 should provide funds to achieve this.

Proposals for Budget 2007

• Prioritise funding for Primary education and family based pre school.
• Provide early start programmes in all disadvantaged communities. This means extending the initiative outside disadvantaged areas to communities within which there are marked pockets of disadvantage.
• Introduce a Basic Educational Allowance for full-time and part-time education for persons between ages 18 and 40 who does not proceed to third level from school.
• Adopt the National Adult Literacy and Numeracy Implementation Plan developed by NALA, enabling an increase to 10% participation of the target group.
• Extend early start initiatives beyond school year framework to an all year support initiative anchored in the host community, with especial links to family units.
• Research PTR allocations in all Primary and Post Primary schools with a view to ensuring equity of provision.
• Exchequer funded pre-school initiatives should include ongoing credentialised training for providers and should include ongoing evaluation of the outcomes of these initiatives for children and their families.
• Extend current two year timeframe and greater flexibility for completion of modular Leaving Certificate Applied to facilitate certain workers and parents.

Rural Development

Rural Ireland continues to change dramatically. The 1996 census recorded that 46 per cent of Ireland’s population lived in small villages and in the open countryside. This figure declined to 40.4 per cent (1,582,921 people) according to the results of census 2002. A factor in that reduction is the sustained decline in farm numbers. Agriculture, forestry and fishing now account for only 5.8 per cent (115,300 people) of the overall labour force. At present those in farming comprise one-quarter of the rural labour force, and are a minority of the rural population. Furthermore fewer farm children seek a future in farming.

LOW RURAL INCOMES

Among its many characteristics rural Ireland has high dependency levels, increasing out-migration and many small farmers living on very low incomes. Only a minority of farmers are at present generating an adequate income from farming and, even on these farms, incomes lag considerably behind the national average. The National Farm Survey estimates that the average family farm income (excluding off-farm income) was €15,557 in 2004.

Off-farm income is extremely important among farm families, especially in the western region. The National Farm Survey indicates that on 52 per cent of farms the farmer and/or spouse had an off-farm job and that overall on over 78 per cent of farms the farmer and/or spouse had some source of off farm income be it from employment, pension or social assistance. This situation is likely to intensify in the coming years, thus increasing the importance of additional off-farm income being available if rural poverty and social exclusion are to be addressed.

LONG-TERM STRATEGIES

Long-term strategies to address the failures of current policies on critical issues such as infrastructure development, the national spatial imbalance, public transport and local involvement in core decision-making are urgently required. A recognition that current development policies are largely city-led is also necessary and this approach needs to be re-balanced.

There have been many welcome initiatives aimed at rural development. The context of current rural development policy, however, is one where

EU policies in particular ensure that production is concentrated among larger producers, and where regulations, policies and financing all militate against small local producers,

• direct payments favour large volume, higher income farmers,
• there is a dominance of the agri-model of rural development,
• there is very limited progress in achieving balanced regional development. Areas such as the western region have been losing ground to the rest of the country in recent years.

Our recent Policy Briefing on Rural Ireland examined a number of appropriate long-term strategies.

STATE INVESTMENT

It is clear that the scale of the infrastructure and investment deficit in rural Ireland is unacceptably high. In recent years there have been major spatial changes and there are major spatial disparities as well. The failure of current policies in so many crucial areas requires that long-term strategies be developed to address these failures. Far more is required if rural Ireland is to be viable in the twenty-first century. Budget 2007 should address this.

Proposals for Budget 2007

• Ensure the provision of basic infrastructure and services based more on equity and social justice, rather than on cost effectiveness. In this context, the Budget should take particular account of rural disadvantage.
• Ensure that decoupled payments are maintained as an ongoing basic income for all farmers in Ireland.
• Provide support for rural housing.
• Provide additional resources for the development of rural public transport strategies and initiatives tailored to meet the needs of people in local communities.
• Support additional special outreach education programmes in rural areas, particularly those where no major third level colleges are located.
• Double the number of places on the rural social scheme and make it available to people without herd numbers.
• Support policies that encourage alternative farm enterprises through the promotion of quality (including organic) food production and processing.
• Reverse the trend of centralising services away from local communities in areas such as healthcare, education, post offices, etc.
• Support programmes to create employment for part-time farmers with a view to effectively targeting the needs of smaller farmers.

Environment and Sustainability

Sustainable development has not been a major concern of the dominant economic models. Their emphasis on GNP/GDP as scorecards of wealth and progress, more or less ignored the environment. Consequently it is scarcely surprising that this neglect is now causing major problems.

WASTE DISPOSAL AND RECYCLING

The management of Ireland’s waste remains a problem. In 2003 28.3% of our waste was recycled, while the remaining 71.7% was going to landfill (EPA, 2004). At this rate of growth it is of no surprise that our landfill capacity will soon be reached.

While our recycling rates are increasing, and this is long overdue, they still remain very low. Studies suggest that almost 80% of household waste and 94% of industrial waste can be recycled. Furthermore Ireland has agreed to an EU obligation to recycle 50% of our waste.
If we are to meet this target, major changes are required. Both industry and households need to change their attitude towards recycling.

Industry in all sectors will have to use fewer material inputs and emit fewer wastes. To facilitate this, government needs to move towards making material inputs and waste disposal far more expensive, and towards making increasing demands for the durability, repairability and recyclability of goods.

EU moves which will force white goods and car companies to take back their products at the end of their useful lives is a welcome step in this direction. However, more needs to be done.

To meet our EU obligation Budget 2007 must provide further funds to assist in providing incentives to recycle rather than landfill.

CLIMATE AND GREENHOUSE GASES

Ireland’s air is becoming more and more polluted. Between 1990 and 2004 the EPA reveal that Ireland's greenhouse gas emissions grew by 23.1%. Total combined Irish emissions of the three main greenhouse gases regarded as having global warming potential amounted to 68.5m tonnes of CO2 equivalent in 2004, up from 55.6m tonnes in 1990.

These emissions now exceed the limits agreed under the Kyoto protocol. Major changes are required if we are to reduce our emissions and reach this target. Central to this is the need for full implementation of the National Climate Change Strategy.

CARBON TAXES

CORI Justice believed that the recent decision by government to abandon their commitment to introducing carbon taxes in Budget 2005 was a mistake and a missed opportunity. Its rejection was based on a weak argument that the tax would have minimal impact.
However the policy for its introduction, as outlined by the ESRI and others, suggested that the tax be introduced at a small level and subsequently increased over time.

CORI Justice believes this decision should be reversed and these taxes introduced as proposed as a matter of priority in Budget 2007.

THE BUDGET AND SUSTAINABLE DEVELOPMENT

In promoting sustainable development it is important to reward activities that are socially and environmentally benign (and not the reverse, as is the case in many situations at present). Our 2005 Policy Briefing on Sustainability considered this issue in detail (see: www.cori.ie/justice). Budget 2007 should promote this approach.

Proposals for Budget 2007

• Allocate the necessary resources to achieve waste reduction targets by implementing the relevant sections of the Waste Management Act.
• Allocate substantial additional resources to develop and reward recycling.
• Provide additional resources to ensure that water pollution is reduced.
• Undertake to review the water pollution acts so as to increase the penalties associated with water pollution. (It remains a concern that over 30% of Ireland’s river channels are classified as polluted to some extent).
• Reverse the decision to abandon carbon taxation and introduce a coherent series of initiatives aimed at reducing dependence on oil, gas, coal and other fossil fuels.
• Resource the development of ‘satellite’ national accounts that include the costs of items such as environmental damage and resource consumption, and the value of a range of traditionally ‘uncounted’ items such as unpaid work.
• Introduce public purchasing policies that encourage contractors to adopt sustainable practices.
• Target funding strategies in the transport area to ensure far greater priority is given to public transport initiatives.
• Provide substantial additional resources for the development of library services throughout the country.

Overseas Development Assistance: 2007 Target

The international challenge to significantly increase levels of Overseas Development Assistance (ODA) was recently set out by the UN Secretary General Kofi Annan when he stated that:

“We will have time to reach the Millennium Development Goals – worldwide and in most, or even all, individual countries – but only if we break with business as usual…So we must start now. And we must more than double global development assistance over the next few years. Nothing less will help to achieve the Goals”.

These comments lay down a clear challenge to the international community and CORI Justice believes that Ireland can lead the way in responding to that challenge. We welcome the announcement by the Taoiseach that Ireland will reach the UN target of 0.7% of GNP on overseas aid by 2012. We also welcome the re-iteration of this commitment in Towards 2016 and in the recent White Paper. It is important that the Government, Irish Aid and Irish society generally are aware of the scale of these ODA allocations.

In Budget 2007 an additional €104m must be allocated to ODA

In 2005 a total of €545m (0.4% of GNP) was allocated to ODA. Budget 2006 allocated €675m, equivalent to 0.466% of GNP. This increase was a welcome endorsement of the Taoiseach’s commitment to ODA at the UN. It is important that Government stay focused on reaching 0.7% of GNP by 2012.

The interim commitment to reach 0.5% of GNP must be met in 2007. Based on the Department of Finances own figures, published in the Budget 2006 documentation, in Budget 2007 an additional €104m must be allocated to ODA bringing that Budget to €779m. Such an increase will achieve the interim target and it will underscore that over time Ireland has achieved sizeable increases in our ODA allocation.

Policy Briefing Monitoring Social Partnership 2007

Policy Briefing Monitoring Social Partnership 2007 . In the latest edition of Policy Briefing, CORI Justice publishes its first review of progress in implementing the national agreement Towards 2016. Download Pdf

Monitoring Social Partnership

Government’s current target on illiteracy undermines a central commitment of the National Agreement Towards 2016. The target is contained in the Government’s ational Action Plan for Social Inclusion and states that by 2016: the proportion of the population aged 16-64 with restricted literacy will be reduced to between 0-15% by 2016 (restricted literacy being defined as Level 1 on the International Adult Literacy Survey scale, or equivalent).

The Towards 2016 agreement strongly emphasises the fact that economic and social development are complementary; two sides of the one coin. It recognises that a good economy is required to ensure good social development. But it also recognises that good social policies are required if economic development is to be sustained.

For example, if Ireland’s economic and social situation is to improve, Ireland’s labour force must be up-skilled and educated to play a full part in such development. If the government’s target on illiteracy is achieved (and targets are not always reached) then 10-15% of Ireland’s labour force will be illiterate in 2016. This would have a very negative effect on Ireland’s economic development. It would also produce a situation marked by high unemployment levels, high poverty rates and substantial social exclusion.

This is totally unacceptable in a society which, for the first time in its history, has the resources to tackle these problems effectively and comprehensively. The target on illiteracy should be revised downwards dramatically and the necessary resources committed to ensuring that the revised target is met.

In this edition of Policy Briefing CORI Justice publishes its first review of progress in implementing the national agreement Towards 2016. The situation is mixed. Some commitments have been honoured most notably the raising of the lowest social welfare rate for a single person to 30% of gross average industrial earnings in Budget 2007. The commitments on primary care units, on social housing and on third world aid are among others that have been progressed satisfactorily. These are substantial commitments and have involved major additional exenditure.

But there is much that is not maintaining the pace required to honour commitments. The Carers’ Strategy, child poverty and childcare and the development of shadow national accounts are just a few examples.

In this report we provide an assessment of progress on implementation of almost 100 key commitments contained in the national agreement on a wide range of issues. Two further points need to be emphasised. Firstly, all national plans, strategies and agreements should be fully integrated and not be working at cross purposes.

Secondly, a more comprehensive monitoring and review process is required. Otherwise the commitments made are not likely to be honoured on time.

Background to Towards 2016

A central guiding element of the Towards 2016 national agreement was the adoption of the lifecycle framework, as set out by the National Economic and Social Council (NESC) in its report The Developmental Welfare State (2005).

Chart 1 presents the core structure of the model NESC presented. It comprises three interrelated areas: services, income supports and participation/activist measures. In building the developmental welfare state NESC has argued that Irish society should take a ‘life-cycle’ approach. This approach places the individual at the centre of policy development and delivery, by assessing the risks facing him/her, and the supports available to him/her to address those risks, at key stages in his/her life.

Chart 1: The Core Structure of the Developmental Welfare State

This approach places he individual at the centre of policy development and delivery...for each group we should focus
on securing an effective combination of income supports, services and social innovations...successfully implementing
this approach will underscore each of these groups ability to play a real and sustained role in Irish society

As table 1 shows, such an approach would focus on identifying the needs of children, young adults, people of working age, older people and people challenged in their personal autonomy such as those in care. The council has suggested that for each group we should focus on securing an effective combination of income supports, services and social innovations.

CORI Justice believes that successfully implementing this approach will underscore each of these groups ability to play a real and sustained role in Irish society and thereby play an important role in tacking social exclusion.

This approach provides each sector involved with key challenges if the best options are to be taken and if the approach is to be successfully developed as a template for policy.

Social Welfare Payments: Target Reached & The Future

Over recent years there has been major progress on benchmarking social welfare payments. As we detail in table 2 below, Budget 2007 delivered on the Towards 2016 commitment to benchmark the minimum social welfare rate at 30 per cent of Gross Average Industrial Earnings (GAIE); equivalent to €185.50 in 2007.

CORI Justice warmly welcomed the achievement of this benchmark. It has been a key element of the policy programme CORI Justice has outlined over recent years. We are confident that its implementation will lead to further reductions in poverty rates, complementing those already achieved and detailed earlier.

An important element of this commitment was to acknowledgement that the years from 2002-2007 marked a period of ‘catch-up’ for those in receipt of welfare payments. Now that this income gap has been bridged, the increases necessary to keep social welfare payments at a level equivalent to 30 per cent of GAIE become much smaller.

Looking to the future, it is important to note that the national agreement states that “the value of the rates will be maintained at this level over the course of the agreement”. Reflecting this commitment table 3 outlines the increases from Budget 2008 (delivered in December 2007) onwards to 2010 to maintain the link with 30 per cent of GAIE. These increases are calculated using ESRI projections of increases in average industrial earnings and suggest an average annual increase of €10.10 over these three years. Reflecting the current budgetary process these increases are calculated, and revised, for a period of three years.

Structural Change Required to Ensure Implementation

The national agreement Towards 2016 recognises that “implementation of the lifecycle approach poses a significant challenge to Government and to all other stakeholders”.

It goes on to state that “making progress towards the long-term goals of the agreement will require a capability to adapt flexibly to required institutional and service delivery changes at both national and local level, learning from the insights provided by the lifecycle framework and evidence about effectiveness of different interventions in terms of outcomes”.

In the agreement Government commits itself to involving the social partners in the development of policy through effective consultation and giving sufficient notice, information and appropriate processes for engagement. On the other hand social partners commit themselves to engaging constructively with Government Departments and recognise the need for government to deal with urgent matters quickly. To date there has been insufficient progress on developing the mechanisms to meet these commitments.

Traditionally policy has been developed in single-issue 'silos' working along parallel lines on these issues e.g. healthcare, education, labour market, transport, housing, etc.

The Towards 2016 agreement is intended to build an integrated approach, recognising that all of these issues are inter-connected and impact on each other. The agreement highlighted the importance of inter-connectedness when it adopted a life-cycle approach to social policy and when it acknowledged the complementarity of economic and social policy.

CORI Justice believes that new initiatives are required if the complementarity is to go beyond mere rhetoric. We hope that government can move to implement these reforms and allow a more adequate policy making process to emerge – one that reflects the intentions set-out in Towards 2016.

A Lot Still To Be Delivered

T he shared overall goal for this new ten-year framework agreement covering the period 2006- 2015 is to realise the NESC vision for Irish society by:

• Nurturing the complementary relationship between social policy and economic prosperity;
• Developing a vibrant, knowledge based economy and stimulating enterprise and productivity;
• Re-inventing and repositioning Ireland’s social policies;
• Integrating an island-of-Ireland economy, and;
• Deepening capabilities, achieving higher social and economic participation rates and more successfully handling diversity, including immigration.

The agreement identifies the key foundations as:

• a dynamic, internationalised, and
• a participatory society and economy with a strong commitment to social justice, where
• economic development is environmentally sustainable and is internationally competitive.

The Towards 2016 agreement set out what needed to be done to reach this destination. While some progress has been made, many areas are lagging behind

or have not got going. Overall, CORI Justice believes that a great deal remains to be done if the commitments made in Towards 2016 are to be delivered. This Policy Briefing identifies the progress, or otherwise, on almost one hundred of these commitments.

The gaps, problems and deficiencies, we have highlighted should be addressed immediately.

T2016 on the Web

If you wish to access a copy of Towards 2016 it can be found at the following website: www.taoiseach.gov.ie and there click on the link for Towards 2016 (on the right hand side of the webpage). A copy of this national agreement, all of the Towards 2016 review documents issues by CORI Justice and all other related documents can be found at a special section of the CORI Justice website. To access this go to: www.cori.ie/justice and then click on the link for Social Partnership - on the right hand side of the page.

Monitoring Towards 2016

The National Agreement, Towards 2016, marked an important development in the Irish policy formation process. As suggested by CORI Justice, among others, government moved to develop policies and strategies over a 10 year period. Such a duration is necessary for the successful development of complex new policies aimed at bringing Ireland’s infrastructure and social provision up to a comparable level with that of our fellow EU countries.

As a signatory to that agreement, CORI Justice takes seriously the need to achieve progress on the goals and intentions signed-off on in Towards 2016. As part of that process, CORI Justice has committed itself to invest a substantial amount of time and resources each year into monitoring the progress of the agreement. We intend to publish on an annual basis an edition of this document and through it will continue to monitor, and evaluate delivery, on the commitments made.

Resources and Economic Outlook

Ireland’s economy continues to perform well above the EU average. Sustained economic growth coupled with very significant job creation has transformed the country. Most significantly, unemployment has fallen to low levels and the era of forced emigration has ended.

In 2007 the Department of Finance expects Ireland to achieve a GDP growth rate of around 5% and to create an extra 72,000 jobs. Looking to the future, the ESRI has projected an average GNP growth rate of 4.4% for the period 2008-2012.

The public finances also remain in good shape. On a day-to-day basis the exchequer continues to collect more taxation revenue than it is spending in the current account. Over the next 3 years the Department of Finance expects the state to record current account surpluses averaging €9.06 billion annually. When the large levels of expenditure on Ireland’s capital investment programme is taken into account the government is likely to record small overall budget deficits over this and the next two budgetary years.

All commentators, national and international, expect the economy to slow down over the next few years. As Ireland adjusts to a slower, and more sustainable, economic growth level a number of economic challenges arise.

Fiscal policies must evolve so that it is understood as acceptable that the nation borrows to fund capital investments. We must also realise that even with a slowdown, the current resources available to government are significant and that a shift to normal levels of economic growth is not a reason by itself to reduce, or restrict, commitments in Towards 2016 to enhance our under-developed infrastructural and social provision.

Policy Briefing Housing and Accommodation 2005

2005 March 7 - CORI Justice Commission publishes Policy Briefing on Housing and Accommodation (pdf)

Download PDF

Ireland urgently needs a comprehensive, integrated national housing policy. The need for such a policy is crystal clear given the challenges currently being faced in the provision of accommodation. While private housing output is one of the highest in the EU, Ireland’s social housing output is one of the lowest. Waiting lists persist while a quarter of all new houses built are second (i.e. holiday) homes. Even more significantly Ireland’s population, which reached the four million mark in the past year is set to exceed five million within the next fifteen years.

The past year has seen a major positive development with the publication by the National Economic and Social Council (NESC) of its major study on housing entitled Housing in Ireland; Performance and Policy. This report highlights the importance of social housing and advocates a target of 200,000 social housing units to be reached by 2012. This would increase the present supply (127,000 units) by 73,000 over an eight year period. This NESC recommendation is strongly supported by CORI Justice Commission.

Increased social housing provision is essential if Ireland is to have a viable future. The current pace at which this increase is being provided is completely inadequate. Voluntary/non-profit and co-op housing associations are managing 16,500 units at present and have a major contribution to make to achieving the NESC target. Local authorities, however, have the primary responsibility to ensure that all people have access to appropriate accommodation.

But resources are required. NESC estimates that, given the present level of capital expenditure, an additional investment per annum of €500m to €600m would be required to meet the target by 2012. Provision for this increased expenditure should be made in Government’s planning for each of the years ahead.

This should be seen as a good investment, not as another ‘cost’ to the Exchequer. It would go some way towards addressing Ireland’s current infrastructure deficit.

This increased expenditure could be part-funded by ensuring that people purchasing second homes should have to pay the full infrastructural costs (e.g. roads, water, sewage, electricity), much of which is currently borne by society through the Exchequer.

Vulnerable groups are of particular concern in developing housing policy. Many such groups (people with disabilities, Travellers, homeless people as well as some older people and some rural dwellers), have a high risk of being in poverty and are doubly-disadvantaged by their lack of appropriate accommodation. Housing policy needs to be integrated with other social and care supports to enable vulnerable people to live independent lives.

For the first time in its history Ireland has sufficient resources to ensure that everyone here has appropriate accommodation. All it requires is political will.

NESC report on housing in Ireland

At the end of 2004 the National Economic and Social Council (NESC) published a major report on housing. Entitled Housing in Ireland: Performance and Policy the report spans over 230 pages and provides guidelines for the future direction of policy in this area.

In particular, the report makes important suggestions for policy initiatives focused on social housing (see below).

Overall, NESC concluded that it was particularly concerned about two issues. These are:

• the quality of the neighbourhoods, villages, towns and cities being constructed in Ireland
• and the provision of social and affordable housing

They also stress that adequately addressing these two issues will not be easy and that “the magnitude and significance of this challenge needs to be recognised”.

In reviewing the current situation of the Irish housing system the Council pinpointed three anxieties. These are:

Stability: the stability of the housing sector in the next few years will be important. This sector is now a major employer in the economy and the projected declines in the number of house completions in the coming years needs to be managed. Simultaneously, the ongoing existence of unmet need for social housing threatens to produce instability.

Inequality: the housing sector has generated inequality through being unable to meet the housing needs of many of those on low incomes and a number of other social groups. Furthermore, recent changes in property prices has been the source of very significant changes in the distribution of wealth and income in Irish society.

Sustainability: the study also identified concerns about the patterns of settlement, neighbourhood design and density in the Irish housing system. NESC found that a strong case can be made that we are storing up significant social, environmental, budgetary and economic problems for the years to come.

Taking these three issues together NESC concluded that “the Irish housing system has been dynamic, but unbalanced”.

Overall, the report identifies four key policy challenges:

• To achieve high quality, sustainable, development in both urban and rural areas
• To provide an effective range of supports to those households that fall below the affordability threshold
• To assist the market to continue to provide a high level of supply
• To ensure a tax and subsidy regime that supports these goals

Emphasising the importance of social housing

A central conclusion of the NESC housing report is that the supply of social housing will have to rise dramatically if the needs of Irish society are to be addressed in the years ahead. The main recommendation of the council on the issue of social housing calls on Government to:

Create an expanded and more flexible stock of social housing - adding in the order of 73,000 permanent social housing units to bring the
stock to 200,000 dwellings by 2012 - in a manner that is consistent with other public investment needs and sound public finances (p221).

The year 2012 was chosen as it will mark the year when the next National Development Plan concludes. The figure of 200,000 social housing units has been calculated based on the projected increases in the Irish population over that period and in the context of limited responses to existing social housing needs (e.g. homelessness, community based accommodation for disabled and elderly persons).

The scale of the challenge facing Irish society can be gauged from the fact that at the end of 2004 the total stock of social housing (including units managed by both local authorities and the voluntary and cooperative housing sector) stood at about 127,000.

NESC concluded that to achieve the target of 200,000 units over the eight year period between 2005 and 2012, an annual increase of in excess of 9,000 units is necessary.

The NESC study notes that an estimated capital investment of €1.4bn a year would be required to achieve a net increase of 73,000 units by 2012. Given the present level of capital expenditure this would mean an additional investment per annum of the scale of €500m to €600m on what is already projected.

CORI Justice Commission believes that reaching the NESC target for social housing in 2012 is essential if Ireland is to achieve the goal of ensuring that everyone in the country has appropriate accommodation.

Waiting lists: how many people and for how long?

The most recent assessment of local authority waiting lists occurred on the 28th of March 2002 and was reported in the September 2002 Housing Statistics Bulletin from the Department of Environment, Heritage and Local Government. It found that there was a total of 48,413 households on local-authority housing waiting lists. This figure represents a growth rate of 76.5 per cent since 1996, and indicates that across Ireland about 130,000 people are in need of accommodation.

A closer examination of the 48,413 households on the waiting lists is presented in table 2 below. It shows that the largest category of households on the lists are those labelled as being not able to meet costs of existing accommodation. This group accounts for 44 per cent of the waiting list or 21,452 households. The Housing Statistics Bulletin further indicates that since an earlier assessment in 1999 this group has grown from a situation where it accounted for 34 per cent of the list.

This growth can be directly related to the excessive house price and rent increases over recent years. A comparison with the 1999 figures also reveals that all bar two of the categories experienced a growth in the number of households on the waiting lists. These are “existing accommodation unfit” and “elderly persons”.

Analysis of the 2002 figures also reveals that 32 per cent (15,522) of all those households on the waiting lists consist of single-person households. Single-parent households, consisting of one adult and one child, make up a further 29 per cent (14,039) of the waiting list.

When the 48,413 households are classified by the length of time they have spent on the waiting list the figures reveal that 25 per cent of all households have been waiting for more than three years. A further 14 per cent are on the list for between 2-3 years while 22 per cent are waiting for between 1-2 years. The remaining 38 per cent have been waiting for less than a year (including those classified as first time).

An update on these waiting list figures is due during 2005 and it is expected that they will show some decrease. However, in the context of such large waiting lists more progress needs to be made. Achieving that progress requires a greater commitment to providing social housing. Implementing NESC’s social housing recommendation (see page 2) will significantly address this problem and move Ireland closer to achieving CORI Justice Commissions core policy objective of ensuring that appropriate accommodation is available for all.

Population growth and housing needs

Recently the Central Statistics Office (CSO) published a report on expected population trends for Ireland. Entitled Population and Labour Force Projections, 2006-2036 the detail of the report is relevant to our assessments of future housing needs.

As table 3 shows the CSO forecast that Ireland’s population will climb from approximately 4 million people today to 5 million people by 2121 and on to 5.8 million people in 2036. In simple terms, this implies that our population will increase by almost 2 million people in just 34 years (2002-2036).

There are major implications for housing and accommodation policy as a result of these projections. Accommodation will have to be provided for these extra people, many of whom the CSO project will be migrants coming to live and work in Ireland (at 38,000 per year for the next decade). Privately owned accommodation will play a major part in providing these accommodation places but so too will social housing and these projections further underscore the critical need to increase this stock.

Housing completions

The latest figures for house completions derive from 2003. In that year there was a record increase in total house completions of over 19% producing 68,819 new homes.

However, in spite of the significant growth in the number of houses, the experience of the private and public sectors are very different.

In 2003 the vast majority of new houses (91 per cent) were built by the private sector. Local authorities built 4,516 new homes in 2003, an increase of 113 since 2002. While this increase is welcome, the rate of increase has slowed dramatically over recent years and a larger rate of growth must be achieved in the years to come if commitments given by Government in the National Development Plan are to be met.

In spite of the significant growth in the number of houses the experience f the private and public sectors are very different

The figures for 2003 do reveal a continued growth in voluntary/non-profit and co-op housing. These organisations built 1,617 houses during that year. They now account for over one third of all publicly assisted housing completions. Currently they are managing a stock of over 16,500 dwellings. This trend is very welcome and underscores the growing role this sector is playing. CORI Justice Commission believes this sector has a major contribution to make in addressing the current housing crisis and that government must give further assistance to facilitating its continued growth.

More households were joining the waiting list each year than there were houses being made available

Further figures from 2003 show the inadequacy of local authorities’ response. At a time of such need, the total number of local authority completions plus acquisitions (456 houses) remains low at 4,972. In fact this figures marks a decrease from the 2002 and 2001 total figures (of 5,073 and 5,022 respectively). The fact that these figures report a decrease is a major disappointment. However current indications for 2004 suggest that the total figure will climb again to approximately 6,363 units. In spite of this, more households were joining the waiting list each year than there were houses being made available. Clearly additional government investment in social housing is urgently required.

Report on housing stock

A special report from the CSO in 2004 reviewed households in Ireland assessing levels of rents, mortages and ownership patterns. Table 4 presents results from that survey which tell us the structure of home tenure patterns across the 1.38 million households that are in Ireland

The proportion of owner occupiers remains high at 72.3 per cent and that figure becomes even higher if you include those in the process of acquiring their homes from local authorities. Some 44,220 households (3.2 per cent) are in this category. In all just over 220,000 households (16.1 per cent) rent their homes.

Rent supplement

There have been substantial changes to the rent supplement programme over the past year. Following on the furore caused by the changes introduced as part of Budget 2004, Government has now taken a number of initiatives to address the concerns raised by CORI Justice Commission and others at that time. The work done by the Social Partnership Working Group on this issue has been crucial in this regard.

Some of the most contentious initiatives, such as the imposition of a six-month rule, have been replaced by more user-friendly procedures.

Of greater importance, however, is the recognition by Government that the rent supplement programme, originally designed as an emergency intervention, had expanded into a housing payment for a great many people who had spent several years in receipt of rent supplement. The introduction of the new Rental Accommodation Scheme (RAS) is a welcome move in the right direction.

The dilemma facing Government was whether to invest in ‘bricks and mortar subsidies’ to provide more social accommodation, or to use personal rent subsidies for accommodating low-income households. This is a dilemma being faced by many EU countries. The Irish Government’s decision to develop RAS and provide the first allocation of funding is welcomed by CORI Justice Commission.

Poverty and housing status

The first results of a new pan-European survey on income and living conditions was published in late January 2005. It found that Ireland had experienced a sustained increase in the number of those classified as living in poverty. In 2003, the year for which latest figures are available, some 22.7 per cent of all those living in Ireland were at risk of poverty. This figure has increased from just less than 20 per cent in 1998.

The link between low income and housing status was best illustrated in the results of the 1999-2000 Household Budget Survey. They revealed that when all the state’s households are classified by tenure (ownership /rent status) those households who rented from local authorities had the lowest income. These households recorded an average disposable income of €306.85 per week. This income level was 44.4% below the national average of €551.60.

Another study published in November 2002 by Dublin City Council provided a very informative report profiling its tenants. The report entitled Profile of Households Accommodated by Dublin City Council presented an insight into the socio-demographic, income and spatial patterns of 24,073 households and 67,960 individuals during 2001. The survey’s finding are quiet stark.

Using an updated 50% of median income poverty line for 2001, the report found that 62.5% of all households accommodated by Dublin City Council were in poverty. This figure is enormous when compared to the corresponding figure for the overall population in 2000. When income levels were assessed by person, the report concluded that 60.7% of all those living in Dublin City Council accommodation were at risk of poverty. This figure is three times the equivalent percentage in the national population for 2000.

The poverty status of children living in City Council accommodation is particularly startling. Of the 25,050 children living in these households, 65.9% were living in households at risk of poverty. This equates to approximately 16,500 children. Again when a comparison is made between this situation and the national picture the extent of the poverty recorded becomes more visible. In 1998, 26% of Ireland’s children lived in households with income below the poverty line. Therefore child poverty among the population housed by Dublin City Council runs at 2.5 times the national level.

Fuel poverty

Increasingly, assessments of poverty in Ireland have attempted to broaden our understanding of those who experience it. In particular, a greater focus is being placed on measuring deprivation. Although there is currently limited data available, one area that has received recent attention is deprivation of heat in the home often labelled as fuel poverty.

A study by Jonathan Healy of the Combat Poverty Agency found that 227,000 homes in Ireland experience fuel poverty. This equates to approximately 17.5 per cent of the total housing stock.

The risk of being in fuel poverty was found to be highest among social welfare recipients, lone parents, local authority tenants, households with children and among the elderly. The repercussions of not having enough heat in the home can be severe for many and in particular for the elderly. The report suggests that the presence of fuel poverty could be a factor in as many as 2,000 winter deaths each year.

Addressing this issue, like all issues associated with poverty and deprivation, requires a multi-faceted approach. Clearly, living on a low income is a major factor and underscores the need to continue to increase the income levels of those dependent on state pensions, unemployment benefit or living on the minimum wage. A further policy is to target households that require assistance in becoming more energy efficient. In particular many older local authority houses need to be upgraded.

Children and housing

Living in housing that is overcrowded, damp, in disrepair or in a poor neighbourhood can be damaging to people of all ages. However, its impact on children's welfare tends to be very significant.

A study produced for the Children's Research Centre at Trinity College Dublin by Simon Brooke found that between 1991 and 2002 the numbers of children living in these conditions doubled. According to the report entitled Housing Problems and Irish Children there are now 50,000 children living in such conditions. The report found that there is a concentration of these problems among children in one-parent families and among those living in rented accommodation. In response to this problem the report suggested that local authorities need to create a specific fund to provide regular maintenance of their dwellings. Furthermore the report called for the current minimum standards set for the private rented sector to be raised and that these be enforced by local authorities. Finally the report suggested that the National Children's Strategy be revised to included housing as a “basic need”.

CORI Justice Commission welcomes the recommendations of this report. As we have previously highlighted Ireland has a serious problem with child poverty (1 in every 4 children live in households at risk of poverty). Continually research has pointed out that low income and low accommodation standards are associated with poor health levels and poor future educational and life opportunities. More resources need to be allocated to this area.

Disability and housing

As we have highlighted over the last number of Policy Briefings people with disabilities in Ireland have very high risks of being in poverty, experience sustained difficulty in securing work and are a group with a high exposure to social exclusion.

The most recent data on the number of people with a disability in Ireland was produced by the CSO as part of their Quarterly National Household Survey in the first quarter of 2004. These results were published in December 2004.

“a particular gap is the lack of a strategic framework to support the provision
of tailored housing and housing supports for people with disabilities” NESC (2004)

They found that almost 11 per cent of all adults in Ireland had a long standing health problem or disability. This equates to 298,300 people.

Housing issues are very important for those with a disability. CORI Justice Commission welcomes the recognition by NESC in its recent review of housing policy that “a particular gap is the lack of a strategic framework to support the provision of tailored housing and housing supports for people with disabilities” (2004:157). In the past we have given attention to the severe difficulties many people with disabilities have in securing assistance from their local authorities to cope with the costs of adjusting their residences to ensure access and continued use. Surely this is the most basic of social inclusion policies and the long waiting lists that exist need to be addressed urgently.

Traveller accommodation

Results from the most recent Census of Population show that in 2002 there were 23,700 members of the Travelling community in Ireland. The 2003 Annual Count of Travellers found there were 6,799 Traveller families in the State. As a minority group, Travellers have been very exposed to social exclusion and in particular have experienced continued problems with the provision of accommodation.

Responding to the recent report of The National Traveller Accommodation Consultative Committee (published in January 2005) the Minister of State for Housing, Noel Ahern, admitted that the pace at which Traveller accommodation is provided is too slow. A similar view was expressed by the Council of Europe in May 2004.

Since 1998 all Local Authorities have been required to provide multi-annual Traveller accommodation plans. Traveller organisations have reported that between 2000 and 2003 no Local Authority delivered on its plan in full and that approximately one-third of the accommodation envisaged in these plans was delivered. However, some progress has been made and should be acknowledged. Since 1999 a total of 1,369 Traveller families have been accommodated and the number of families living on the roadside has decreased by one-third from 1,200 to 800. The increase in the Traveller accommodation budget by €5m to €45m is also welcome.

CORI Justice Commission welcomes the new report and the progress made over recent years. However there remains much more to be achieved. We regret that the committee failed to agree to the establishment of a Traveller accommodation agency as recommended by the Task Force in its original report in 1995.

Oireachtas committee report

During 2003 CORI Justice Commission made a submission to the All-Party Oireachtas Committee on the Constitution. Subsequently, an oral presentation of our submission was made. In making the submission CORI Justice Commission approached the issue from: (i) a social justice perspective drawn from the Catholic Social Thought tradition; (ii) a rights-based perspective believing that every person has a range of human rights that incorporates civil, political, economic, cultural and social rights; and (iii) with a special concern for the issue of social housing, the lack of which is now reaching crisis proportions in Ireland.

In April 2004 the Committee published its report and provided a set of wide ranging suggestions to the government on how to handle issues concerning private property. As part of that process the Committee singled out CORI Justice Commission for its clarity in presenting the level of social housing need and complemented the Commission for the energy with which it formulated solutions.

The Commission believes that it is essential that ongoing policy making in this area be informed by the latest information available on the scale of the accommodation problem faced by this country. Publications such as this Policy Briefing play a part in informing all interested parties of that information and thereby fuel a necessary debate on this issue.

A full copy of our submission and of the All-Party report may be found on our website www.cori.ie/justice

Main Policy Recommendations on Accommodation

• Articulate an integrated and comprehensive national housing policy capable of meeting the needs of all people in Ireland as the population of the State is set to expand dramatically in the years immediately ahead.
• Adopt the recommendations of the NESC on the future provision of social housing (i.e. increase the stock by 73,000 units to reach a target of 200,000 units by 2012) and take the necessary steps to ensure this target is reached within the recommended timeframe.
• Develop and support policies focused on mixed housing, mixed communities, choice of tenure, and mix of different-sized housing units.
• Recognise affordable housing as a separate category aimed at a particular income group.
• Set up an independent national agency to oversee and implement a national policy on homelessness.
• Provide sufficient resources to eliminate homelessness by 2007.
• Continue to increase the budget allocation for local authority, co-op and voluntary/non-profit housing.
• Meet the commitment in the NDP to an annual output of 10,200 units of social housing.
• Ensure that 20 per cent of building land is allocated for social housing.
• Provide new resources for the security and management of local-authority housing.
• Actively implement and enforce the legislation on the private rented sector of housing.
• Ensure that nobody remains dependent on rent supplement for more than 18 months. To this end ensure prompt delivery and adequate resourcing of the new Rental Accommodation Scheme (RAS).
• Provide the resources required to ensure implementation of the Travellers’ Accommodation programme.
• Give priority to tackling ongoing issues concerning accommodation for refugees and asylum-seekers.
• Introduce a policy where people purchasing second houses (holiday homes) should pay the full infrastructural costs of these homes.
• Integrate housing policy with other social and care supports to enable vulnerable people (e.g. disability, elderly, homeless) to live independent lives.
• Ensure that sufficient funds are made available to reduce the waiting lists for the disabled persons housing grant.

Second homes: a problem?

Professor PJ Drudy of the Department of Economics at Trinity College Dublin recently presented a very interesting assessment of the Irish housing system. Speaking to a lecture hosted by the Urban Institute Ireland he stated that Ireland now faced “a serious housing crisis” and that that crisis is evident in three ways:

• overpriced private housing
• high priced rents in the private sector
• and a serious shortage of public/social housing

In response to this crisis Professor Drudy outlined three key principals which should guide our way forward. There are:

• Housing, like food, water, health services and education, is a fundamental right in any society. Everyone should have a right to housing appropriate to needs
• Housing should not be treated as a commodity for trading and wealth creation
• Government policies in relation to land ownership, planning, taxation, conveyencing and financing should be redirected to treat housing as a social benefit and a key element in community development, rather than as a commodity for trading or wealth generation.

Housing: a case for change

While addressing Ireland’s housing problem, the National Development Plan Mid-Term Review (2003) pointed out the growing problem of second homes. It established that a quarter of all houses built in 2003 were second (holiday) houses and will have nobody living in them for about nine months of the year.

What is often overlooked when this is being discussed is that the infrastructure to support these houses is substantially subsidised by the tax-payer. Roads, water, sewage and electricity infrastructure are just part of this subsidy which goes, by definition, to those who are already better off as they can afford these second homes in the first place. In addition, the authors of the review point out that the huge growth in demand for second houses is eating up resources and militating against balanced regional development.

Consequently, they recommend that people purchasing second houses should have to pay the full infrastructural costs, much of which is currently borne by society through the Exchequer. CORI Justice Commission supports this recommendation. In the context of the housing problems outlined earlier there seems something perverse in the fact that the taxpayer is providing substantial subsidies to the owners of these unoccupied houses while so many people don’t have adequate accommodation.

Homelessness

Analysis of the information on housing needs enables us to extract information on the homeless - people who are most urgently in need of accommodation. The most recent official data, from March 2002, show that the level of homelessness has risen from 2,501 in 1996 to 5,234 in 1999 and to 5,581 in 2002. Since 1996 the number homeless has increased by 123 per cent. The 5,581 homeless persons comprise 4,176 adults and 1,405 children.

When assessed by household, the homeless figures equal 3,773 households of whom 2,853 are one-person households and 920 are homeless households of more than one person (couples or families). These figures include those who have nowhere to sleep at night, along with those sleeping in hostels and other Health Board accommodation.

Geographically, the homeless are primarily concentrated in Dublin where 4,060 people are homeless comprising of 2,920 adults and 1,140 children.

Other estimates of the extent of homelessness put the numbers at a much higher level. Focus Ireland has suggested that in recent years the number of homeless had risen to 6,000. They also noted that homeless people were now remaining homeless for longer than was the case previously. This they concluded is due to the lack of suitable emergency accommodation. Consequently homeless people are spending longer periods of time in unsuitable accommodation like B&Bs. In their annual report for 2002 Focus Ireland reported that the average length of time spent in emergency B&B accommodation had increased from 20 days in 1993 to a current average of 18 months. Another organisation working with the homeless, Simon, indicated that the number of families in Dublin who are homeless had increased by over 20 per cent since 1999 to a level of 640 families in 2004. Similarly the number of children homeless in Dublin increased 15 per cent to a total of 1,140. They also reported that each night in Dublin 237 people are forced to sleep rough.

The association between homelessness and mental health problems has received added attention during the last year. A study at the Mater Hospital in Dublin found that one-third of all referrals for psychiatric assessment from it’s A&E department are homeless people. In all it is estimated that about 40 per cent of Ireland’s homeless have mental health difficulties. These facts underscore the vulnerability of the homeless and the need for ever greater efforts to solve this problem.

The following documents are available for purchase from the Justice Commission Office:

Analysis and Critique of Budget 2005 - December 2004

A Fairer Tax System for a Fairer Ireland - October 2004

Policy Briefing on Poverty - July 2004

Policy Briefing on Taxation - May 2004

Policy Briefing on Work, Unemployment and Job Creation - February 2004

You may also download these documents, and many more, for free, from our website.

Policy Briefing: Budget Choices 2006

2005 October 17 CORI Justice Commission publishes Policy Briefing on Budget Choices.

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Ireland’s population is projected to grow to 4.5 million by 2011 and to 5.5 million by 2030 from its current level of just over 4 million. This highlights the scale of the challenge facing Ireland in the coming years. It also highlights the need to take the window of opportunity currently available to address Ireland’s infrastructure and social provision deficits.

Most Irish people would like to see fairness and wellbeing as core characteristics of Irish society. If such a society is to be attained it has Budgetary implications. In practice it would involve:

• Increasing social welfare rates;
• Tackling the ‘working poor’ issue;
• Increasing the allocation for social provision generally;
• Increasing the allocation for infrastructure such as social housing and public transport and
• Developing a fairer tax system where those who have more pay more while those who have less pay less.

Budget 2006, among other initiatives, should:

• Increase the lowest social welfare rates by €17 a week for single people;
• Substantially increase the allocation for social housing;
• Standard rate all tax expenditures;
• Increase tax credits rather than widen the standard rate tax band;
• Begin resourcing an infrastructure of care;
• Expand the programme to finance services being provided to local communities.

Budget 2005 marked a step in the right direction. In his Budget speech the Minister for Finance, Mr Brian Cowen TD, said Government has a responsibility to ensure that the benefits of our economic performance permeate society as a whole. Proper budgetary policy involves careful evaluation and our task is to put together an economic model that builds a society of which we can be justly proud.” We support such an approach and strongly urge the Government to approach the framing of Budget 2006 from the same perspective.

In macro-economic terms the Irish Exchequer’s present position is seen as super-healthy. Additional current spending of €1.5 billion is feasible while comfortably complying with the limits of the Stability and Growth Pact (cf. p.5).

Ireland has a window of opportunity. The resources currently available should be used to build a fairer society by eliminating the current infrastructure and social provision deficits.

The following pages address a wide range of budgetary issues. They identify core policy objectives and outline budgetary proposals that would move towards achieving these objectives. All the proposals are made within a responsible fiscal stance.

Main Policy Recommendations for Budget 2006

Taxation

• Commit to increasing Ireland’s total tax take towards the EU average.
• Make tax credits refundable.
• Increase tax credits so as to keep the minimum wage out of the tax net.
• Increase the corporate tax rate to 17.5%.
• Increase capital gains, wealth and eco taxes.
• Standard rate all discretionary tax expenditures.

Income Distribution

• Increase the lowest social welfare rates by €17 a week for a single person.
• Increase child benefit substantially and do not tax it.
• Move towards individualisation of social welfare payments.
• Introduce a cost of disability allowance.
• Increase the weekly allowance for asylum seekers in ‘direct provision’ to €60 a week for an adult and €30 for a child.

Work/Unemployment/Job-Creation

• Place an ongoing emphasis on preparing and enabling unemployed people to access jobs. This would involve providing additional resources to support:
• Increased numbers of places providing quality education and training, retraining and up-skilling.
• Expanded opportunities for unemployed people to gain work-place experience, and
• Adequate numbers of places on programmes such as Community Employment.
• Expand the programme providing direct funding for community and voluntary organisations that provide services which was initiated in Budget 2005.
• Provide resources to conduct a survey to discover the value of all unpaid work in the country (including community and voluntary work and work in the home).

Public Services

• Target funding strategies to ensure that far greater priority is given to providing an easy-access, affordable and high quality public transport system.
• Provide substantial additional resources for the development of library services throughout the country.
• Adopt further information technology programmes to increase the skills of school children, early school-leavers and the unemployed.
• Take initiatives to ensure equality of access across all public services.

Housing and Accommodation

• Acknowledge that everyone has a right to appropriate accommodation and develop policy from this perspective.
• Set a target of reducing the time spent on waiting lists to a maximum of 6 months.
• Increase substantially the resources allocated for the provision of social housing so that the NESC target for 2012 (+73,000) can be met.
• Provide sufficient resources to eliminate homelessness.

Healthcare

• Give far greater priority to community care and restructure the healthcare budget accordingly.
• Increase the resources for core community care services for older people with priority to be given to home care.
• Raise the eligibility level for the medical card.
• Work towards universal access in primary care.
• Resource Local and Regional Drugs Task Forces adequately.

Education

• Prioritise funding for primary and family-based pre-school education.
• Provide ‘early start’ programmes in all disadvantaged communities (including those outside disadvantaged areas).
• Further prioritise Adult and Community Education
• Introduce a Basic Educational Allowance for full-time and part-time education for each person between ages 18 and 40 who does not proceed to third level from school.

Rural Development

• Ensure the provision of basic infrastructure and services based more on equity and social justice, rather than on cost effectiveness
• Provide support for rural housing.
• Provide additional resources for the development of rural public transport services.

Environment

• Allocate the necessary resources to achieve waste reduction targets by implementing the relevant sections of the Waste Management Act.
• Allocate substantial additional resources to develop and reward recycling.

O. D. A.

• Honour the commitment to increase Ireland’s ODA budget for poor countries to the UN target of 0.7% of GNP by 2012.

Budget Impact Assessment

• Assess the impact of the budget to ensure that the gap between rich and poor is reduced.

SW Increase of €17 Needed to Meet NAPS Commitment

In 2002, the National Anti-Poverty Strategy (NAPS) Review set the following as a key target: “to achieve a rate of €150 per week in 2002 terms for the lowest rates of social welfare to be met by 2007”. Subsequently, the national agreement Sustaining Progress further endorsed this target.

CORI Justice Commission welcomed this target. It was a major breakthrough in social, economic and philosophical terms. The target of €150 a week is equivalent to 30% of Gross Average Industrial Earnings (GAIE) in 2002. This means that social welfare rates will be benchmarked to increases in average industrial wages from now on.

CORI Justice Commission has calculated the projected growth in €150 between 2002 and 2007 when it is indexed to the estimated growth in GAIE (detailed calculations are presented on pages 47-48 of our Socio Economic Review, Pathways to Inclusion). By 2007 the lowest social welfare rates for single people should reach €185.80. In that year, that figure will be equivalent to 30% of GAIE.

Budget 2005 marked a major step towards achieving this target. CORI Justice Commission welcomed the decision of the Government to deliver a €14 increase in the minimum social welfare rates. We also welcomed the commitment by the Minister for Finance that he intends to deliver on all commitments made by government.

Following Budget 2005 the current minimum level of social welfare is €148.80 a week. Consequently, the gap to be bridged in the Budget 2006 and Budget 2007 is €37. To fulfill the NAPS commitment the average increase in the minimum level of unemployment assistance across these two budgets must be €18.50 a year. We proposed that these increase be €17 in Budget 2006 and €20 in Budget 2007 (see table 1).

Budget 2006 Should Make the Taxation System Fairer

CORI Justice Commission believes that building a fairer taxation system is an important part of building a fairer Ireland. Budget 2006 offers Government the potential to implement a number of changes to the taxation system which will make it fairer. These changes are discussed below.

Tax Expenditures/ Tax Reliefs

In Budget 2005 the Minister for Finance indicated that he would examine and reform many of Ireland’s tax relief schemes. CORI Justice Commission had called for such a move and welcomed its announcement. As part of a consultation process initiated by the Minister, we submitted a detailed document with suggestions for reform in March 2005.

In November 2004 the Revenue Commissioners estimated that the annual cost of tax reliefs was €8.4 billion, a value that is equal to 22 per cent of the total taxation collected each year in Ireland. The distribution of these tax expenditures is primarily in the direction of the better off elements of Irish society. CORI Justice Commission believes that all of these reliefs should be standard rated.

Taxation and Minimum Wages

The most recent EU-SILC poverty figures indicate that 160,000 workers (9.2% of all those employed) live in poverty. Therefore, the Budget 2005 decision to removed all those on the minimum wage from the tax net was welcome and a move towards addressing this ‘working poor’ issue. Since then the minimum wage has increased from €7 to €7.65 per hour. Budget 2006 should further adjust tax credits to ensure these low paid workers remain outside the tax net.

Tax Credits or Tax Bands

If income tax changes are to be made in Budget 2006 they should result in increases in tax credits rather then widening the standard rate tax band. Such a move would be fairer. To illustrate this, say the Government has €700m available for distribution in Budget 2006, it could either (i) increase the 20% tax band by €5,500 or (ii) increase tax credits by €512 a year. Option (i) would be of no benefit to anyone with incomes at or below the top current band but would provide a benefit of €1,210 a year for a single person earning more than €34,900. Option (ii) would mean that every earner paying in excess of €512 a year would benefit by that amount.

Making Tax Credits Refundable

One problem with the tax credit changes outlined above is that a person who does not earn enough to use up their full tax credit will not benefit from any tax reductions introduced in Budget 2006. A simple solution to rectify this problem is to make tax credits refundable. The main beneficiaries of this move would be low-paid employees.

The Budget and the Poor

Despite the advances in employment and economic growth achieved over the last few years, the phenomenon of poverty remains large. Its sustained existence undermines many of the improvements of recent years.

The most up-to-date detailed data available on the nature and extent of poverty in Ireland comes from the 2003 EU-SILC results published last January. Its results showed that 22.7% of the Irish population live in poverty. As it is sometimes easy to overlook the sheer scale of Ireland’s poverty problem it is useful to translate the poverty percentages into numbers of people. These poverty figures indicate that in 2003 just over 900,000 people were poor. Of these, approximately 225,000 were children, implying that 1 in every 4 Irish children lives in poverty.

The groups at highest risk of poverty are: those who are ill/disabled and those who are retired. In both these cases 1 in every 2 members are in poverty. A large proportion of both these groups depends on social welfare payments and that fact underscores our earlier call to increase these payments in line with the NAPS. Similarly, 42% of the unemployed are also living in poverty.

Budget 2005 took some important steps towards addressing these problems. We ask that Budget 2006 continues that trend and adopts strategies to address these vulnerable groups.

Social Housing

A central conclusion of the recent NESC housing report is that the supply of social housing will have to rise dramatically if the needs of Irish society are to be addressed in the years ahead. The main recommendation of the Council on the issue of social housing called on Government to “create an expanded and more flexible stock of social housing - adding in the order of 73,000 permanent social housing units to bring the stock to 200,000 dwellings by 2012 - in a manner that is consistent with other public investment needs and sound public finances”.

The figure of 200,000 social housing units was calculated based on the projected increases in the Irish population over that period and in the context of limited responses to existing social housing needs. NESC concluded that to achieve the target of 200,000 units over the eight year period between (2005-2012), an annual increase in excess of 9,000 units is necessary.

They also pointed out that an estimated capital investment of €1.4bn a year would be required to achieve a net increase of 73,000 units by 2012. Given the present level of capital expenditure this would mean an additional investment per annum of approximately €500m over what is already projected. Budget 2006 must move to allocate funds towards this need.

Overseas Development Aid

CORI Justice Commission welcomes the recent announcement by the Taoiseach that Ireland will reach the UN target of 0.7% of GNP on overseas aid by 2012.

Although this is two years later than we suggested in our contribution to the consultation process for the Government’s White Paper on ODA (available at www.cori.ie/justice), the detailed nature of that commitment is welcome. In particular we welcome the accompanying funding timetable announced by the Department of Foreign Affairs. Our submission called for such a set of programmed funding increases to accompany any Government commitment. It is important that the Government, Development Co-operation Ireland and Irish society generally are aware of the scale of these ODA allocations.

Budget 2006, and all other Budgets in the future, must live up to this commitment. By 2007 Ireland will be spending 0.5% of GNP and by 2012 this will reach 0.7%, approximately €1.5 billion per year. The increases outlined by the department are detailed in the table opposite.

Rural Development

The number of farms in Ireland declined by 17% in the period 1993-2004. Only 56% of farmers are full-time (down from 74% in 1993). The projections outlined in the Agri-vision 2015 Report suggest that the numbers involved in farming of any kind will fall from 136,000 to 105,000, and that only 30,000 will be on viable holdings. It is clear from this that rural prosperity cannot be achieved by focusing the vast majority of spending on direct farm investment, rather than the development of a diverse rural economy.

A further problem in the West of the country has been the imbalance in recent growth experienced in the Dublin and Eastern region and the consequent widening of the income and opportunity gaps between the East and West. These developments, in turn, are leading to increased pressure to reduce services such as banks and post offices which, in turn, reduces the viability of parts of rural Ireland.

An alternative approach to rural development is required that focuses on replacing traditional manufacturing employment and increasing employment opportunities, develops a more environmentally-focused approach in agriculture (e.g. producing for fuels), expands on programmes such as CLAR and the Rural Social Scheme and resources the community and voluntary organisations that provide so many of the services on which people in rural Ireland depend. Such an approach should be resourced.

Large Current Budget Surpluses Offer Major Potential

An assessment of the state of the Ireland’s exchequer finances is revealing. Projections for the years 2005-2007 indicate that budget deficits are being driven by sustained levels of capital account investment (of almost €6bn a year). However, over that period the Department of Finance has calculated that current account surpluses will average at least €4.5 billion annually.

The reality of this fiscal position is that the Irish Economy is in a position that other European countries regard as the ‘optimal’.

Additional spending of up to €1.5 billion a year is more than feasible...he Minister for inance has the potential to free up
resources rom the urrent account and use hese funds to address the socio-economic roblems persisting in Ireland today.

The figures published in the Department of Finance Monthly Economic Bulletin (September 2005 p12) and the detailed projections from last years Budget documentation clearly show this. In macroeconomic terms the Irish exchequer’s present position is seen as super-healthy.

It is clear from the Department of Finance projections that there remains significant room for further current account spending over the next few years.

Additional spending of up to €1.5 billion a year is more than feasible. Its effect would only be to reduce the sizeable current account surpluses and to increase marginally the scale of overall budget deficits. Following such a move, the General Government Balance as a % of GDP would remain well below 3% (the key indicator used by the European Central Bank to judge fiscal policy control). The percentages would be: -1.8% in 2005; -1.5% in 2006; and -1.4% in 2007. These outcomes comfortably comply with the limits in the Stability and Growth Pact.

Based on these figures, it is clear that in Budget 2006 the Minister for Finance has the potential to free up resources from the current account and use these funds to address the socio-economic problems persisting in Ireland today.

SSIAs

During Budget 2006 the Minister for Finance will have to give details about the future of the Special Savings Incentive Accounts (SSIA’s). The first of these accounts are due to mature in May 2006, with all accounts reaching maturity by April 2007. CORI Justice Commission strongly encourages the Minister to announce that these accounts will not be renewed. Furthermore, we believe that the Minister should also confirm that no further incentive will be provided to holders of these accounts, such as to transfer the money to pension funds.

Figures provided by the Revenue Commissioners show that by the end of 2004 there were 1,094,294 SSIA accounts contained over €8 billion. They also reported that in 2004 the cost to the state of this scheme was €548m. Over the lifetime of the SSIAs this suggests that this scheme will have cost the state over €2.7 billion.

As CORI Justice Commission pointed out when this scheme was first announced, the real winners from this massive transfer of state funds have been those on comfortable incomes. 73% of all SSIA holders have annual incomes in excess of €20,000 and almost 25% have incomes in excess of €50,000. The annual income of an unemployed person is just under €8,000.

Finally, over recent months the Minister has been faced will an ongoing campaign by various financial institutions to provide some incentive to SSIA savers to transfer their savings into pension funds. We believe that these companies, rather then the state, should be providing incentives.

Local Services Fund

Budget 2005 saw the introduction by Government of a new programme to support community and voluntary organisations delivering services in local areas. The decision to fund and develop this programme was a most welcome development.

This initiative recognises that these groups are making a significant contribution to the needs and quality of life of many people. An initial grant of €5 million was made available for 2005.

Many of the local community and voluntary groups who deliver these services had become dependent on Community Employment and related programmes. They had been used by Government for more than a decade to provide unemployed people with work experience and some training when Ireland’s unemployment rates were much higher than they are today. The value of this process for the organisations was that they would have Government-funded support in delivering essential services which were very important in local communities.

This initiative was strongly welcomed by CORI Justice Commission in its critique of Budget 2005. The Commission believed the new programme would go some way towards addressing the problems experienced by these groups as the number of places on Community Employment programmes decreased with the fall in the numbers unemployed.

We strongly urge Government to roll out this programme immediately and to expand its funding by an additional €10 million in Budget 2006. The services are suffering and organisations are under ongoing stress as a result of the Government’s failure to implement the programme to date.

The Rich-Poor Gap and Budget 2006

For some time CORI Justice Commission has monitored the income distribution impact of annual Budgets.

When assessing how much better off people are we include wage increases, tax changes as well as social welfare increases. Unemployed people, for example, gain nothing from wage increases or tax reductions while those with jobs may gain from both. In our calculations we have also included the general wage increase in Sustaining Progress. We have not, however, included the impact of the benchmarking increases for public servants, as they do not apply to everyone.

When compared to previous Budgets introduced by this Government, udget 2005 was a elcome step in the right direction…
Budget 2006 hould once again prioritise the eeds of those who have benefited east from this country’s recent success.

Chart 1 provides details of the effects on the income distribution from last year’s Budget (Budget 2005). When compared to previous Budgets introduced by this Government, Budget 2005 was a welcome step in the right direction. Through increases in social welfare and through taking the minimum wage out of the tax net the Budget directed more benefits towards those who are worse off in Irish society. This was further underpinned by a significant contribution towards addressing the multi-faceted problems faced by those who have a disability in Irish society.

Chart 1: How much better off are people in 2005?

Notes: * Except in LTU case where there is no earner
** LTU: Long Term Unemployed Calculations include the impact of Budget 2005 and wage increase under Sustaining Progress

The impact of Budget 2005 on the distribution of income in Ireland is best assessed by examining the rich-poor gap. This measures the gap between the disposable income of a single person on long-term unemployment and a single person on €50,000 per annum.

Budget 2005 widened the rich-poor gap by €30.93 per week. The disposable income of single people who are long-term unemployed and those on €50,000 a year widened by €16.93 a week (€883 a year). The latter can also gain €14 a week from the government Savings Scheme, widening the gap to €30.93 a week (€1,614 a year).

The impact of that Budget on the take-home income of couples was almost as striking. Couples who were long-term unemployed gained €23.30 a week while a couple on €50,000 gained €40.17 a week (i.e. €2,096 a year). The latter also benefit from the Special Savings (SSIA) Scheme so the gap between them has widened by €30.87 a week (€1,611 a year).

The cumulative impact of the last eight budgets by this Government (since 1997) is to have widened the rich/poor gap by €310.93 a week (€16,224 a year).

In Budget 2006, the Minister for Finance should continue the trend he established last year. Budget 2006 should once again prioritise the needs of those who have benefited least from this country’s recent success.

Taxation

Ireland’s total tax take as a percentage of gross domestic product (GDP) is the second lowest of 25 EU countries, only Lithuania collects less. Total tax and social insurance revenue in Ireland was equal to 30% of GDP (36.2% of GNP), well below the EU average of 38.4% of GDP. Ireland is not a high-tax country.

In the context of these figures, the question needs to be asked: if we expect our economic and social infrastructure to catch up to that in the rest of Europe, how can we do this while simultaneously gathering less taxation income than it takes to run the infrastructure already in place in most of those other European countries? Simply, we will never bridge the social and economic infrastructure gaps unless we gather a larger share of our national income and invest it in building a fairer and more successful Ireland.

INCREASING THE TAX-TAKE

Small increases in taxation are certainly feasible and are unlikely to have any significant negative impact on the economy. An increase of just one per cent in the GDP to tax ratio (from 30 to 31) would produce an extra €1.3bn each year in taxation income for the government.

As a means of increasing the total tax-take towards the EU average level, we propose that Budget 2006 should:

• Increase the corporation tax rate to 17.5%
• Increase capital gains tax
• Further expand the levy on financial institutions introduced in Budget 2003
• Introduce the promised carbon and environmental taxes
• Increase the tax on wealth (e.g. through increasing DIRT tax)
• Increase the tax-take from property (e.g. through a land rent tax)
• Seriously reform the sizeable number of tax expenditures, many of which serve minimal social or economic purpose.

TAX CREDITS AND THE WORKING POOR

If Ireland is to have an equitable income tax system and address the issue of the ‘working poor’ there are two issues to be addressed in the tax credits area i.e. tax credits should be made refundable and tax credits should be increased instead of widening the 20% tax band.

At present people in the lowest paid jobs who are already outside the tax net do not gain from changes in the annual Budget. Many of these are among the ‘working poor’. To ensure they benefit from future Budgets, tax credits should be made refundable in Budget 2006.

Making the current income tax credits refundable would result in most of the benefit going to the poorest 30% of income earners. This is a development that should be introduced in Budget 2006.

Likewise, increasing tax credits would be a fairer option than widening the 20% income tax band. It would ensure that everyone paying income tax benefited by the same amount in the Budget.

STANDARD RATING DISCRETIONARY TAX EXPENDITURES

Discretionary tax expenditures (e.g. Business Expansion Scheme, pension contributions, medical expenses) are an inappropriate means of achieving policy objectives. In general these expenditures are neither efficient nor fair. They are used to provide huge gains to the better off. This is unfair. Accordingly, we propose that Budget 2006 should move to ensure that relief on all discretionary tax expenditures should be available at the standard rate only.

Proposals for Budget 2006

• Commit to increasing Ireland’s total tax take towards the EU average.
• Standard rate all discretionary tax expenditures.
• Abolish many of the current discretionary tax expenditures.
• Make tax credits refundable.
• Adjust tax credits so as to keep the minimum wage out of the tax net.
• Integrate Family Income Supplement (FIS) with the tax system.
• Proceed with individualisation in the income tax system in a fair and equitable manner.
• Poverty-proof all budget tax packages to ensure that tax changes do not further widen the gap between those with low income and the better off.
• Increase the corporate tax rate to 17.5%.
• Increase capital gains tax.
• Move decisively to shift the burden of taxation from income tax to eco-taxes and taxes on consumption.
• Introduced the promised carbon and environmental taxes.
• Develop policies which allow taxation on wealth to be increased.
• Investigate the possibility of introducing a tax on currency transactions such as the Tobin Tax.
• Investigate the possibility of introducing a land-rent or site value tax.

Income Distribution

UPDATING THE POVERTY LINE

Using information gathered in the EU-SILC Survey for 2003, the CSO established that the median income per adult equivalent in Ireland during 2003 was €308.80. They also calculated the official European Poverty Line, set at 60% of median income, as €185.28 per week. Updating this line to 2005 levels, using actual and predicted increases in average industrial earnings, produces a relative income poverty line of €199.43 for a single person. In 2005, any adult below this weekly income level will be counted as being in poverty (more details are contained in out 2005 Socio-Economic Review p20-23). One immediate implication of this analysis is that the poverty line exceeds the current level of most social assistance rates by €50.63 per week.

INCOME POVERTY

Income poverty is a reality for a great many people in Ireland. The number of people in poverty now stands at 22.7% of the population; just over 900,000 individuals.

There are also substantial numbers of people in low-paid jobs who are living on incomes below this poverty line. In this briefing’s section on taxation the issue of low paid people living in poverty has been addressed. The most efficient and effective way of tackling this problem is by making tax credits refundable.

POVERTY & SOCIAL WELFARE

The plight of people depending on social welfare needs a major response. Six out of every ten people living in relative income poverty lives in a household headed by a person who is not in the labour force. Consequently, the level at which social welfare rates are set is of crucial importance in tackling relative income poverty.

We strongly urge Government to take another step in Budget 2006 towards honouring its commitment to raise the lowest social welfare payment for a single person to 30% of Gross Average Industrial Earnings by 2007. In practice, this requires an increase of €17 a week for single people and €27 a week for a couple in Budget 2006.

ASYLUM-SEEKERS

Asylum-seekers are among the most excluded and marginalised in Ireland, yet they are treated in a very unjust way by Irish society. In particular, Government has introduced a policy of “direct provision” through which many asylum-seekers receive accommodation and board, together with €19.10 per week per adult and €9.60 per child. Clearly, this is an inadequate amount of money and Budget 2006 should increase these amounts immediately to at least €60 a week for an adult and €30 for a child. This policy proposal is an interim one as ultimately this unfair system of “direct provision” should be eliminate.

TAXATION & INCOMES

It is important to note that changes in the taxation system have substantial impacts on income distribution patterns. Consequently, the proposals contained in this Briefing under the ‘taxation heading’ apply here as well.

CHILD POVERTY

One of the most vulnerable groups in any society are children and consequently the issue of child poverty is one that deserves particular attention. In 2003 1 in every 4 Irish children, over 223,000, live in poverty. Budget 2006 should adopt policies to address this unacceptable situation.

Proposals for Budget 2006

• Provide a fair income distribution between people on different incomes. To achieve this the combined impact of the tax and social welfare packages should favour those on low incomes whether they depend on social welfare or are in low-paid employment.
• Increase the lowest social welfare rates by €17 a week for a single person and by €27 a week for a couple.
• Commit Government to benchmarking the lowest social welfare payments for single people at 30% of gross average industrial earnings (GAIE) by 2007.
• Increase child benefit substantially and do not tax it.
• Move towards individualisation of social welfare payments.
• Introduce a cost of disability allowance.
• Increase the weekly allowance for asylum seekers in ‘direct provision’ to €60 a week for an adult and €30 for a child.
• Develop a national programme, on an inter-departmental basis, to address fuel poverty. (This is of greater urgency because of substantial increases in the cost of electricity and fuel in the past three years).
• Abolish claw-back rules so that social welfare recipients will get the full value of the Budget increases.
• Update tax credits so as to keep the minimum wage out of the tax net.
• Adopt policies to address Child poverty.

Work, Unemployment and Job Creation

One of the major achievements of recent years has been the increase in employment and the reduction in unemployment, especially long-term unemployment. In 1991, there were 1,156,000 people employed in Ireland. Today that figure has increased to over 1,900,000. During the same period, the number of people unemployed (measured on an International Labour Office (ILO) basis) had gone from 198,500 to 85,600. In the intervening years, the number unemployed has exceeded 220,000 (in 1993). This transformation is remarkable. It provides new challenges and raises new questions.

THE CHALLENGE OF UNEMPLOYMENT

The issue of unemployment remains a challenge and is likely to remain so as further job losses appear likely. The number of long-term unemployed people now stands at 28,000, equivalent to 1.4% of the labour force. Youth unemployment is also a growing problem with a high proportion of the increase in unemployment consisting of people aged less than 25. It is necessary that the government should make provision for this situation by providing the necessary resources to prepare and enable unemployed people to access jobs.

This should involve providing:

• additional resources to support education and retraining.
• expanded opportunities for work-place experience.
• adequate numbers of places on programmes such as Community Employment.

COMMUNITY EMPLOYMENT

Problems persist with the Community Employment (CE) programme. There are three aspects to this programme, of which only the first was originally intended. CE is an active labour market programme (ALMP) providing experience and training to people seeking employment in the labour market. Secondly, it plays a major role in providing services in local communities, delivered mostly by organisations in the community and voluntary sectors. Thirdly, it provides sheltered employment for a large number of people.

As the number of places have been reduced, the composition of those unemployed has changed and community and voluntary organisations are unable to continue providing services that used to be delivered with the help of CE, it is essential that Government act to ensure that all three aspects of the CE programme are adequately addressed.

SOCIAL ECONOMY (SE)

The Social Economy Programme needs to be substantially overhauled as it is not addressing many of the issues for which it was originally proposed and developed.

As well as overhauling the current Government SE programme there is need to expand the new initiative that resources the services etc. being provided for the most part by the community and voluntary sector and which used to depend on CE funding.

THE NEED TO RECOGNISE ALL WORK

Current developments challenge us to analyse our assumptions. One such assumption concerns the priority given to paid employment over other forms of work. Most people recognise that a person can work very hard even though they do not have a job. Much of the work done in the community and in the voluntary sector fits under this heading. So too does much of the work done in the home.

We believe that all work should be valued, recognised and rewarded. Consequently, we believe that Budget 2005 should provide resources to conduct a survey to discover the value of all unpaid work in Ireland.

Proposals for Budget 2006

• Place an ongoing emphasis on preparing and enabling unemployed people to access jobs. This would involve providing additional resources to support:
• Increased numbers of places providing quality education and training, retraining and up-skilling.
• Expanded opportunities for unemployed people to gain work-place experience.
• Adequate numbers of places on programmes such as Community Employment.
• Maintain the number of active labour market programme (ALMP) places available to those who are long-term unemployed.
• Expand the programme providing direct funding for community and voluntary organisations that provide services which was initiated in Budget 2005.
• Reform and adequately resource the Social Economy programme to ensure it has a real social economy focus.
• Increase the education/training grants for participants in active labour market programmes.
• Resource life long learning.
• Recognise the right to work of asylum seekers.
• Provide resources to conduct a survey to discover the value of all unpaid work in the country.
• Allocate resources to address the youth unemployment problem.

Public Services

Increasingly Ireland is being identified as a country whose public services are underdeveloped. Given the wealth of the economy, this is a situation that is far from acceptable. Because poorer people rely on public services more than those who are better off, it is they who are most acutely affected by this shortage.

PUBLIC TRANSPORT

Despite the development of LUAS and the development of major road initiatives, transport remains a most problematic area. Bottlenecks throughout the country are adding to the difficulty and cost experienced by everybody in conducting their lives. Budget 2006 needs to support a new transport policy which would prioritise easy access, affordable and high-quality public transport. This is essential given the high costs of ownership and use of private vehicles. Additional resources to the national rail services and public transport schemes in rural Ireland are also needed.

LIBRARY SERVICES

Libraries are obvious centres to support Government commitments to life-long learning. They can provide access to information and to modern means of communication. To play this role, an expansion of the library service is essential. Increases in Budget 2005 were welcome and Budget 2006 should further increased funding. Failure to support this service properly is short-sighted.

INFORMATION TECHNOLOGY

Increasingly the ability to use information and communications technology (ICT) is becoming a central requirement in modern society. The phenomenon of a technological divide is becoming evident. In particular it is of concern that a number of young people, including early school-leavers, have little or no skill in ICT. Consequently initiatives are necessary to improve information technology provision in schools, as well as to increase its availability in areas such as public libraries and community centres. Budget 2006 needs to show greater commitment to this area.

CORI Justice Commission welcomed the fact that one of the special initiatives of Sustaining Progress addresses the issue of “including everybody in the information society”. In addressing this issue it is crucial that priority is given to ensuring access is available to those who currently cannot afford the market costs. Ignoring this will ensure that the “digital divide” will widen social exclusion. Budget 2006 should allocate resources to ensure that further progress is made in this area.

SPORTS FACILITIES

Recent studies indicate a declining level of participation by Irish people, and in particular young people, in sports activities. Alongside this is a growing problem of obesity among young people. These developments have significant health consequences. There is a special case to be made for poor areas, most of which have limited, if any, sports facilities. The National Sports Council has introduced a creative initiative of local sports partnerships. Some of these are working effectively already and Budget 2006 should take steps to expand the funding available for these most worthwhile initiatives. While we address some public services in this section others, in particular housing and accommodation, healthcare and education, are considered in other sections.

Proposals for Budget 2006

• Target funding strategies to ensure that far greater priority is given to providing an easy-access, affordable and high quality public transport system.
• Provide substantial additional resources for the development of library services throughout the country.
• Increase the provision of open-access information technology in public libraries and meet the commitment in the national agreement to “include everybody in the information society”.
• Introduce a system (e.g. a swipe card) that ensures people on low incomes can access information communications technology on an ongoing basis.
• Adopt further information technology programmes to increase the skills of school children, early school-leavers and the unemployed.
• Regulate the removal of public payphone services. This is particularly necessary for poor areas and rural areas where the revenue generated by a bay-phone can give a misleading interpretation of its significance in the community.
• Provide additional funding to the Sports Partnership initiative.
• Take initiatives to ensure equality of access across all public services.
• Increase the allocation for the local sports partnerships developed by the National Sports Council.

Housing and Accommodation

Issues concerning housing and accommodation have had a major profile in recent years. Most of that profile, however, concerned the provision and cost of privately owned accommodation. A comparison of European housing tenures illustrates the existence of three main models of housing provision: an owner-occupier sector, a rental sector and a social housing sector. Most countries have a mix of housing tenures that reflects the policy choices of government. Irish housing policy supports owner occupation to the detriment of all other forms of housing tenure.

CURRENT AND FUTURE HOUSING NEEDS

New figures due to be published by the Department of the Environment and Local Government during October 2005 will provide an updated assessment of the current needs. When last assessed, in March 2003, there was a total of 48,413 households on local-authority housing waiting lists. This figure represented a growth rate of 76.5% since 1996, and indicated that about 130,000 people and almost 50,000 households are in need of accommodation. Expectations are that these figures will increase.

THE PROVISION OF SOCIAL HOUSING

At the end of 2004 the National Economic and Social Council (NESC) published a major report on housing. Entitled Housing in Ireland: Performance and Policy the report spaned over 230 pages and provides guidelines for the future direction of policy in this area.

In particular, the report made important suggestions for policy initiatives focused on social housing. Overall, NESC concluded that it was particularly concerned about two issues. These are:

• the quality of the neighbourhoods, villages, towns and cities being constructed in Ireland, and
• the provision of social and affordable housing

A central conclusion of the NESC housing report is that the supply of social housing will have to rise dramatically if the needs of Irish society are to be addressed in the years ahead The details of their target have been outlined on page 4 of this briefing.

CORI Justice Commission believes that reaching the NESC target for social housing in 2012 is essential if Ireland is to achieve the goal of ensuring that everyone in the country has appropriate accommodation. Budget 2006 must allocate sufficient resources to allow this to occur.

HOMELESSNESS

The most recent Government data on homelessness show that its level has risen from 2,501 in 1996 to 5,234 in 1999, an increase of 109%. The 5,234 homeless persons comprise 2,593 adult men, 1,399 adult women and 1,242 children.

Other estimates of the extent of homelessness put the numbers at a much higher level. Focus Ireland has suggested that in recent years the number of homeless had risen to 6,000. They also noted that homeless people were now remaining homeless for longer than was the case previously.

It remains a national shame that Ireland, in spite of its prosperity, cannot provide even the most basic accommodation for those who are homeless. Budget 2006 should ensure that addressing this issue remains a central priority.

Proposals for Budget 2006

• Acknowledge that everyone has a right to appropriate accommodation and develop policy from this perspective.
• Acknowledge that a housing crisis exists.
• Set a target of reducing the time spent on waiting lists to a maximum of 6 months.
• Provide the resources to local authorities and to the voluntary/non-profit housing sector to make substantial progress towards reaching this target.
• Allocate resources so that the NESC social housing target can be met.
• Allocate sufficient resources to the Rental Accommodation Scheme (RAS).
• Provide sufficient resources to eliminate homelessness in the coming year.
• Provide sufficient resources to the rent supplement programme and to the housing support programme to ensure that both programmes are adequate to meet current needs.
• Provide new resources for the security and management of local authority housing.
• Give a special focus to tackling issues concerning accommodation for refugees and asylum seekers.
• Provide the resources required to ensure implementation of the Travellers Accommodation programme.
• Resource the establishment of a National Housing Authority as proposed by the NESF.

Healthcare

Healthcare is a social right that every citizen should enjoy. People should be assured that care in their times of vulnerability is guaranteed. The standard of care is dependent on the resources made available which in turn is dependent on the expectations of the society. The obligation to provide healthcare as a social right rests on all people. In a democratic society this obligation is transferred through the taxation and insurance systems to government and other bodies who assume/contract this responsibility.

HEALTH INEQUALITIES

During the last year a very welcome insight into the extent of health inequalities in Ireland was provided by the Public Health Alliance Ireland (PHAI). Entitled “Health in Ireland – An Unequal State” the report gathered together the baseline information on health inequalities in Ireland and its findings are worthy of serious attention. Among these findings were the following:

• Between 1989 and 1998 the death rates for all causes of death were over three times higher in the lowest occupational class than in the highest
• The death rates for all cancers among the lowest occupational class is over twice as high for the highest class, it is nearly three times higher for strokes, four times higher for lung cancer, six times for accidents
• Perinatal mortality is three times higher in poorer families than in richer families

Primary Care has been recognised as one of the cornerstones of the health system. Between 90 and 95 per cent of the population are treated by the primary care system. The importance of paying attention to local people’s own perspective on their health and to understand the impact of the conditions of their lives on their health is essential to community development and to community orientated approaches to primary care.

There needs to be a community development approach to ensure that the community can define its own health needs, work out how these needs can best be met collectively and decide on a course of action to achieve the outcomes in partnership with service providers. The Government's own Primary Care Strategy acknowledges the need for this “community involvement”. Budget 2006 should resource moves to make this possible.

MEDICAL CARDS

The introduction of 30,000 new medical cards and 200,000 ‘doctor visit only’ cards in Budget 2005 was a small step in the right direction. CORI Justice Commission believes that what is required is full medical card coverage for all people in Ireland who are vulnerable. Currently, the income threshold for accessing a medical card is far below the poverty line. Budget 2006 should resource such a change.

MENTAL HEALTH

The National Health Strategy identified mental health as an area to be developed. There is an urgent need to address this whole area in the light of the WHO Report where it is estimated that, in 1990, mental and neurological disorders accounted for 10 per cent of the total Disability-Adjusted Life Years (DALYs) lost due to all diseases and injuries. This was 12 per cent in 2000. This has serious implications for services in all countries in the coming years. Budget 2006 should provide additional resources to address these issues.

Proposals for Budget 2006

• Recognise the considerable health inequalities present within the Irish healthcare system and provide sufficient resources to tackle them.
• Give far greater priority to community care and restructure the healthcare budget accordingly.
• Resource and implement targets on health status within the National Anti-Poverty Strategy.
• Increase the percentage of the health budget allocated to health promotion and education in partnership with all relevant stakeholders.
• Provide the childcare services with the additional resources necessary to effectively implement the Child Care Act.
• Resource the development of nursing care of elderly people in their own community on the model of the hospice care programme.
• Provide additional respite care for elderly people and people with disabilities.
• Resource the development of mental health services, recognising that this will play a key factor in the health status of the population.
• Facilitate and fund a campaign to give greater attention to the issue of suicide in Irish society. In particular, focus resources on educating young people.
• Raise the eligibility threshold for the medical card.
• Adequately resource the Local and Regional Drugs Task Forces.

Education

Education can be an agent for social transformation. CORI Justice Commission 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 increased participation and economic boom, the education system continues to mediate the vicious cycle of disadvantage and social exclusion between generations.

While there are a number of programmes and initiatives to tackle educational disadvantage, many of these initiatives simply involve providing additional resources for disadvantaged schools. Our policy approach in this area is based on a belief that early school leaving is a particularly serious manifestation of wider inequality in education, which is embedded in and caused by structures in the system itself. It is from this perspective that we make our recommendations for Budget 2006.

PRE-SCHOOL EDUCATION

There is need for the establishment, co-ordination and monitoring of early education and childcare to ensure quality provision of opportunities for holistic child development for all disadvantaged. Budget 2006 should take steps to support such an initiative.

EARLY SCHOOL LEAVING

Some 3% of young people leave school without any qualification. However, this figure is unevenly distributed reaching 30% in some seriously disadvantaged communities. Research on the marginalisation of young men and boys highlights the close link between under-achievement in school and the spiral of exclusion that leads to homelessness and other social problems.

The Back to Education Initiative (BTEI) is a programme with the potential to address this problem. It should target as a priority early school leavers with few or no formal qualifications or low literacy and numeracy skills.

In particular this initiative should target young early school leavers who have been alienated from the school-based educational system. To achieve this further resources are needed. Budget 2006 should provide these.

EQUITY IN EDUCATION FUNDING

The exchequer invests 2.5 times more money per capita in the education of those who complete three years of third-level education than it does for those who leave school before the completion of post-primary education.

In light of the barriers to educational participation of the more disadvantaged people, especially at post-school level, consideration should be given to establishing a basic educational allowance. Budget 2006 should adopt policies to make this possible.

LITERACY DIFFICULTIES

Access to education for those with literacy difficulties is largely dependent on the services of voluntary literacy instructors under the guidance of adult education officers. The current policy of supporting the full cohort of such adults on a part time basis is ineffective. Further priority must be given to generating effective levels of support for adults with literacy difficulties, with work friendly arrangements being put in place where necessary. Budget 2006 should provide funds to achieve this.

Proposals for Budget 2006

• Prioritise funding for Primary education and family based pre school.
• Provide early start programmes in all disadvantaged communities. This means extending the initiative outside disadvantaged areas to communities within which there are marked pockets of disadvantage.
• Introduce a Basic Educational Allowance for full-time and part-time education for each person between ages 18 and 40 who does not proceed to third level from school.
• Extend time frame for Even Break initiative to a minimum of seven years, with a review process every three years.
• Extend early start initiatives beyond school year framework to an all year support initiative anchored in the host community, with especial links to family units.
• Research PTR allocations in all Primary and Post Primary schools with a view to ensuring equity of provision.
• Exchequer funded pre-school initiatives should include ongoing credentialised training for providers and should include ongoing evaluation of the outcomes of these initiatives for children and their families.
• Extend current two year timeframe and greater flexibility for completion of modular Leaving Certificate Applied to facilitate certain workers and parents.

Rural Development

Rural Ireland continues to change dramatically. The 1996 census recorded that 46 per cent of Ireland’s population lived in small villages and in the open countryside. This figure declined to 40.4 per cent (1,582,921 people) according to the results of census 2002. A factor in that reduction is the sustained decline in farm numbers. Agriculture, forestry and fishing now account for only 5.9 per cent (112,500 people) of the overall labour force. At present those in farming comprise one-quarter of the rural labour force, and are a minority of the rural population. Furthermore fewer farm children seek a future in farming.

LOW RURAL INCOMES

Among its many characteristics rural Ireland has high dependency levels, increasing out-migration and many small farmers living on very low incomes. Only a minority of farmers are at present generating an adequate income from farming and, even on these farms, incomes lag considerably behind the national average. The National Farm Survey estimates that the average family farm income (excluding off-farm income) was €15,504 in 2003.

Off-farm income is extremely important among farm families, especially in the western region. The National Farm Survey indicates that on 48 per cent of farms the farmer and/or spouse had an off-farm job and that overall on over 60 per cent of farms the farmer and/or spouse had some source of off farm income be it from employment, pension or social assistance. This situation is likely to intensify in the coming years, thus increasing the importance of additional off-farm income being available if rural poverty and social exclusion are to be addressed.

LONG-TERM STRATEGIES

Long-term strategies to address the failures of current policies on critical issues such as infrastructure development, the national spatial imbalance, public transport and local involvement in core decision-making are urgently required. A recognition that current development policies are largely city-led is also necessary and this approach needs to be re-balanced.

There have been many welcome initiatives aimed at rural development. The context of current rural development policy, however, is one where

• EU policies in particular ensure that production is concentrated among larger producers, and where regulations, policies and financing all militate against small local producers,
• direct payments favour large volume, higher income farmers,
• there is a dominance of the agri-model of rural development,
• there is very limited progress in achieving balanced regional development. Areas such as the western region have been losing ground to the rest of the country in recent years.

STATE INVESTMENT

It is clear that the scale of the infrastructure and investment deficit in rural Ireland is unacceptably high. In recent years there have been major spatial changes and there are major spatial disparities as well. The failure of current policies in so many crucial areas requires that long-term strategies be developed to address these failures. The CLAR programme is going a little way towards addressing these problems. Far more is required if rural Ireland is to be viable in the twenty-first century. Budget 2006 should address this.

Proposals for Budget 2006

• Ensure the provision of basic infrastructure and services based more on equity and social justice, rather than on cost effectiveness. In this context, the Budget should take particular account of rural disadvantage.
• Ensure that decoupled payments are maintained as an ongoing basic income for all farmers in Ireland.
• Provide support for rural housing.
• Provide additional resources for the development of rural public transport strategies and initiatives tailored to meet the needs of people in local communities.
• Support additional special outreach education programmes in rural areas, particularly those where no major third level colleges are located.
• Double the number of places on the rural social scheme and make it available to people without herd numbers.
• Support policies that encourage alternative farm enterprises through the promotion of quality (including organic) food production and processing.
• Reverse the trend of centralising services away from local communities in areas such as healthcare, education, post offices, etc.
• Support programmes to create employment for part-time farmers with a view to effectively targeting the needs of smaller farmers.

Environment and Sustainability

Sustainable development has not been a major concern of the dominant economic models. Their emphasis on GNP/GDP as scorecards of wealth and progress, more or less ignored the environment. Consequently it is scarcely surprising that this neglect is now causing major problems.

WASTE DISPOSAL AND RECYCLING

The management of Ireland’s waste remains a problem. To date only 28.3% of our waste is recycled, while the remaining 71.7% is going to landfill (EPA, 2002). At this rate of growth it is of no surprise that our landfill capacity will soon be reached.

While our recycling rates are increasing, and this is long overdue, they still remain very low. Studies suggest that almost 80% of household waste and 94% of industrial waste can be recycled. Furthermore Ireland has agreed to an EU obligation to recycle 50% of our waste.

If we are to meet this target, major changes are required. Both industry and households need to change their attitude towards recycling.

ndustry in all sectors will have to use fewer material inputs and emit fewer wastes. To facilitate this, government needs to move towards making material inputs and waste disposal far more expensive, and towards making increasing demands for the durability, repairability and recyclability of goods.

EU moves which will force white goods and car companies to take back their products at the end of their useful lives is a welcome step in this direction. However, more needs to be done.

To meet our EU obligation Budget 2006 must provide further funds to assist in providing incentives to recycle rather than landfill.

CLIMATE AND GREENHOUSE GASES

Ireland’s air is becoming more and more polluted. Between 1990 and 2002 the EPA reveal that Ireland's greenhouse gas emissions grew by 29%. Total combined Irish emissions of the three main greenhouse gases regarded as having global warming potential amounted to 68.8m tonnes of CO2-equivalent in 2002, up from 53.4m tonnes in 1990.

These emissions now exceed the limits agreed under the Kyoto protocol. Major changes are required if we are to reduce our emissions and reach this target. Central to this is the need for full implementation of the National Climate Change Strategy.

CARBON TAXES

CORI Justice Commission believed that the recent decision by government to abandon their commitment to introducing carbon taxes in Budget 2005 was a mistake and a missed opportunity. Its rejection was based on a weak argument that the tax would have minimal impact.
However the policy for its introduction, as outlined by the ESRI and others, suggested that the tax be introduced at a small level and subsequently increased over time.

CORI Justice Commission believes this decision should be reversed and these taxes introduced as proposed as a matter of priority in Budget 2006.

THE BUDGET AND SUSTAINABLE DEVELOPMENT

In promoting sustainable development it is important to reward activities that are socially and environmentally benign (and not the reverse, as is the case in many situations at present). A policy briefing issued earlier this year by CORI Justice Commission considered this issue in detail. Budget 2006 should promote this approach.

Proposals for Budget 2006

• Allocate the necessary resources to achieve waste reduction targets by implementing the relevant sections of the Waste Management Act.
• Allocate substantial additional resources to develop and reward recycling.
• Provide additional resources to ensure that water pollution is reduced.
• Undertake to review the water pollution acts so as to increase the penalties associated with water pollution. (It remains a concern that over 30% of Ireland’s river channels are classified as polluted to some extent).
• Reverse the decision to abandon carbon taxation and introduce a coherent series of initiatives aimed at reducing dependence on oil, gas, coal and other fossil fuels.
• Resource the development of ‘satellite’ national accounts that include the costs of items such as environmental damage and resource consumption, and the value of a range of traditionally ‘uncounted’ items such as unpaid work.
• Introduce public purchasing policies that encourage contractors to adopt sustainable practices.
• Target funding strategies in the transport area to ensure far greater priority is given to public transport initiatives.
• Provide substantial additional resources for the development of library services throughout the country.

Maintaining lowest social welfare rates at 30% of GAIE

The National Anti-Poverty Strategy (NAPS) commits Government to increasing the lowest social welfare rates for a single person to 30 per cent of Gross Average Industrial Earnings (GAIE) by 2007.

An important element of this NAPS commitment to increasing social welfare rates is the acknowledgement that the years from 2002-2007 marks a period of ‘catch-up’ for those in receipt of welfare payments. Once the existing gap has been bridged the increases necessary to keep social welfare payments at a level equivalent to 30 per cent of GAIE become much smaller.

To make this point, CORI Justice Commission has calculated the increases necessary from Budget 2008 (delivered in December 2007) onwards to 2010 to maintain the link with 30 per cent of GAIE. The increases over these periods only need to correspond to the growth of GAIE in each year.

Using projections from the ESRI these suggest an average increase of approximately €10 a year from 2008 onwards. A detailed analysis of the projected developments in the lowest social welfare rates post-2007 is contained in our annual Socio-Economic Review, Pathways to Inclusion, published in May 2005 (pp. 47-49).

Development along these lines would address a number of inter-connected concerns:

• The need to ensure that people who depend on social welfare payments receive a level of income that is sufficient to live life with dignity.
• The need to ensure that people depending on social welfare payments are not the first targets when there are competing demands on public expenditure.
• The concern that increased welfare rates on their own are seen as the way to take people out of poverty.
• The concern that forcing people into extreme poverty is seen as an appropriate means to incentivise employment.

CORI Justice Commission acknowledges that an important implication of linking GAIE and social welfare is that increases in social welfare payments would be relatively low in years when GAIE increases were low.

Proceeding in this way would be totally consistent with the approach developed by the National Economic and Social Council (NESC) in its major study on The Developmental Welfare State published in May 2005. It would also go some way towards linking the economic and the social dimensions of Ireland’s development, recognising that these are complementary aspects of one reality. It would also go some way towards addressing Ireland’s social deficits which are a major impediment to building a fairer society.

Policy Briefing on Rural Development 2006

July 2006: CORI Justice publishes Policy Briefing on Rural Ireland

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Rural Ireland continues to change dramatically. The shape of its future, however, is hotly contested. Traditional agriculture and its related industries are in decline. Ireland’s air and water have become more polluted and agriculture is the single largest contributor to the overall emissions. More people are at risk of poverty in rural areas compared to urban areas. The risk of poverty is higher in the Border Midland and West region compared to the South and East region. The challenges facing rural Ireland are substantial. Radical policy change is required.

The 1996 census recorded that 46 per cent of Ireland’s population lived in small villages and in the open countryside. This figure declined to 40.4 per cent (1,582,921 people) according to census 2002. A factor in that reduction was the sustained decline in farm numbers. This trend is likely to be maintained when the results of the recent census become available.

According to the CSO’s Quarterly National Household Survey, agriculture, forestry and fishing now account for only 5.8 per cent (115,300 people) of the overall labour force. Those in farming comprise one-quarter of the rural labour force, and are a minority of the rural population. Fewer farm children seek a future in farming.

This Policy Briefing addresses a variety of issues relevant to rural Ireland and its long-term development. A central and persistent theme is that rural Ireland is currently in transition from an agricultural to a rural development agenda.

In practice this means that action should be focused on issues such as implementing the National Spatial Strategy to secure a more balanced distribution of population and economic activity throughout the country. It would require development of rapid communications and supporting infrastructure in all parts of the country. Land being taken out of traditional agriculture as well as forestry and the ocean economy could make a major contribution to the energy sector. These and a range of other actions have been identified in the Rural Ireland 2025 report (cf. p5).

Future development needs to build on the strengths of rural Ireland while developing the enterprises and infrastructure required to ensure a viable future for people living in rural Ireland. These developments need to be appropriate, both in terms of their scale and location.

Likewise, services need to be made available on a nationwide basis. Providing these services places additional costs on the service providers. However ‘public service obligations’ as they are known need to be secured by Government so that permanent residents of rural areas are not disadvantaged through their removal.

The national agreement Towards 2016 goes some way towards addressing these issues. But much remains to be done. Rural Ireland can have a viable and desirable future but action needs to be taken now.

Farm Incomes: more money less buying power

Among its many characteristics rural Ireland has high dependency levels, increasing out-migration and many small farmers living on very low incomes. Only a minority of farmers are at present generating an adequate income from farming and, even on these farms, incomes lag considerably behind the national average. An important annual insight into the income of Irish farmers is provided by Teagasc in their National Farm Survey.

The latest survey, reporting income for 2004 and published in 2005, collected data from a representative sample of 1,194 farm households nationwide. Its results indicate that the average family farm income (FFI) (excluding off-farm income) was €15,557 in 2004, an increase of 5.4 per cent from the figure of €14,765 recorded in 2003. Amongst full-time farmers the average income was €30,650 while among part-time farmers FFI equalled an average of €6,407.

The real value (buying power) of farm incomes fell by 17% between 1995 and 2004

The survey also noted great variations in income depending on the size of the farm and the type of farming pursued. Farmers involved in cattle rearing had an average income of €7,286 while those in dairying had an average from farm income of €34,421. Farmers in tillage and sheep farming had average incomes of €24,012 and €10,966 respectively. An examination of the distribution of farm income reveals that 10 per cent of farmers had an income exceeding €40,000 while 40 per cent of farmers had a ‘from farm’ income of less than €6,500. Teagasc found that 86 per cent of average family farm incomes in 2004 were comprised of direct payments or subsidies (2005:2).

Off-farm income is extremely important among farm families, especially in the western region. The National Farm Survey indicates that on 52 per cent of farms the farmer and/or spouse had an off-farm job and that overall on over 78 per cent of farms the farmer and/or spouse had some source of off farm income be it from employment, pension or social assistance. The results of the Household Budget Survey (CSO, 2002) further indicate that only 43.8 per cent of farm-household income came from farming. This situation is likely to intensify in the coming years, thus increasing the importance of additional off-farm income being available if rural poverty and social exclusion are to be addressed.

This situation is likely to intensify in the coming years, thus increasing the mportance of additional off-farm income being available

Table 1 presents an interesting analysis from the National Farm Survey which assesses the real value of FFI over the period 1995-2004. It reveals a marked decline in farm income in real terms. Measuring in real terms removes the effect of inflation (price increases) and essentially represents the buying power of agricultural earnings. The same method is used to assess national income figures such as GDP/GNP whose growth rates are also recorded in real terms. Therefore the table shows that the buying power of family farm incomes in 2004 is equivalent to €11,822 in 1995 terms. More simply, FFI is 17 per cent lower in real terms in 2004 than it was in 1995.

Source: Teagasc National Farm Income Survey Results, 2004 (2005:5)

Agriculture: outlook to 2015 and 2025

A key element in the evolution of any developed world society/economy has been a noticeable shift away from dependence on agriculture. That natural phase of economic development has been slowly occurring in Ireland over the past few decades. As Ireland develops, the size of its agricultural sector and the numbers employed in that sector continue to decline. The focus of that sector has also shifted from being producer driven to being consumer driven.

Two insights into the future shape of Irish agriculture have been provided over recent years. The first published in November 2004 is that of the Government appointed Agri-vision 2015 committee. In their report the committee concluded that:

“The number of Irish farms is expected to decline by 23%, from 136,000 in 2002 to 105,000 in 2015. By 2015, one third of the farm population will be classed as economically viable, another third of farms will be economically unviable with the operators working primarily off the farm and the remaining third will be transitional farms characterised by adverse demographic features, such as having an elderly farm operator and/or lacking an identified heir.

Of the third of farms that will remain economically viable by 2015, 75% will be farmed on a part-time basis, with the on-farm enterprise providing a return sufficient to remunerate the labour and capital used. Of those farms that are operated on a full time basis, and which are economically viable, the vast majority are expected to be dairy enterprises” (p37).

During the last year a second major report set out the expected future direction of rural Ireland up to 2025. Funded by the Department of Agriculture and Food and a number of other Government bodies it was compiled by some of the leading experts on rural Ireland at Teagasc, NUI Maynooth and University College Dublin. The report is entitled Rural Ireland 2025: Foresight Perspectives and it indicates a further sizeable change in the shape of rural Ireland over the next two decades.

Looking to the future of agriculture the expert group concluded that “it is unlikely that by 2025 that Ireland will have appreciably more than 10,000 full-time commercial farmers, comprising predominantly dairy farmers, a thousand or so commercial dry stock farmers, with roughly a similar number of sheep producers and a few hundred pig enterprises” (2005:10). This conclusion was reached on the basis of there being no unexpected major policy changes (nationally and at EU level) between now and 2025. The report also projected that the remainder of farmers (a further 30,000 full time equivalent jobs implying approximately 60,000 part-time workers) will be working part-time.

Overall the report projected that many of these part-time farmers as well as a number of the projected 10,000 full-time commercial farmers, will be involved in producing green energy fuels, such as wood biomass, as an important component of their farming enterprises.

“it is unlikely that by 2025 that Ireland will have appreciably more than 10,000 full-time commercial farmers”

Agriculture and Kyoto Emissions

Over time, Ireland’s air has become more and more polluted. Between 1990 and 2004 the Environment Protection Agency (EPA) reported that Ireland's greenhouse gas emissions grew by 23.1 per cent. In their most recent report. issued in early 2006, the EPA reported that total combined Irish emissions of the three main greenhouse gases regarded as having global warming potential amounted to 68.46m tonnes of CO2 equivalent in 2004, up from 55.6m tonnes in 1990. Despite two successive years of reductions – 2002 and 2003 – the 2004 figures marked a marginal increase of 0.15 per cent.

A breakdown of the 2004 pollution figures show that agriculture is the single largest contributor to the overall emissions, at 29 per cent of the total. The other main sources were energy (generation and oil refining) at just over 23 per cent and transport at 18.4 per cent.

The most recent figures also indicate that the current levels of emissions now exceed the limits agreed under the Kyoto protocol. The Irish government and the European Commission agreed a target of an 8 per cent reduction in European CO2 emissions on their 1990 level by 2012. Within this agreement, Ireland agreed to limit its increase of CO2 emissions to 13 per cent between 1990 and 2012.

CORI Justice welcomes Ireland’s ongoing commitment to this protocol, despite the refusal of some countries, including the USA, to ratify its implementation. However, these emissions are a major cause of climate change, and it is in all our interests to ensure that the limits agreed in the Kyoto protocol are met.

Major changes are required if we are to reduce our emissions towards this target. Central to this is the need for full implementation of the National Climate Change Strategy. As the largest polluting sector there are also obvious implications for agriculture and rural Ireland.

Poverty in Rural Ireland

The most up-to-date data available on poverty in Ireland comes from the 2004 EU-SILC survey, conducted by the Central Statistics Office (CSO). Using the EU poverty line set at 60 per cent of median income, their findings reveal that in 2004 almost one in every five of those living in Ireland were living in poverty.

The survey also indicated that there has been an overall growth in the proportion of the population living below these lines over the last decade. Data for 1994, 1998, 2001, 2003 and 2004 show that the proportion of the population in poverty has rising from 15.6 per cent in 1994 to 19.4 per cent in 2004.

A more comprehensive assessment of the nature and experience of poverty in Ireland will be provided in section 3.1 of our forthcoming socio-economic review entitled Developing a Fairer Ireland (see www.cori.ie/justice).

the 2004 EU-SILC results show that poverty is more likely to occur in rural areas than in urban areas.

When the breakdown of the poverty figures is examined the 2004 EU-SILC results show that poverty is more likely to occur in rural areas than in urban areas. As table 2 shoes the risk of poverty in rural Ireland (measured as the numbers living below the poverty line) was 7.5 per cent higher than in urban Ireland with at risk rates of 24.1 per cent and 16.6 per cent respectively. Poverty levels were also greater in the BMW (Border, Midland and Western) region than in the Southern and Eastern region with at risk rates of 26.0 per cent and 17.2 per cent respectively (p11).

Another recent study into the distribution of poverty across Ireland has been published by the Combat Poverty Agency and ESRI during 2005. Entitled Mapping Poverty the study used data from the year 2000 to assess what differences there were between counties.

Overall the study suggested that the structural issues driving poverty were unemployment, non-participation in the labour market due to illness/disability or old age, lone parenthood, low levels of education and social class background. However, while the differences were small the study did point out that the highest levels of poverty are found in Donegal, Leitrim, Longford and Mayo with the lowest in counties around Dublin.

Rural Ireland, Basic Income and Decoupling

The Irish Government’s decision to accept the European Commission’s proposals to ‘decouple’ agriculture payments means that all Irish farmers now receive a payment unconnected to what they produce. In effect this sees the introduction of a Basic Income payment for all Irish farmers.

Over most of the past two decades CORI Justice, has advocated the introduction of such an approach as the only sensible way of ensuring a viable future for people living in rural Ireland.

Most recently, we urged Government to decouple these payments in our response to a request from the Minister for Agriculture and Food to submit our views on ‘decoupling’.

direct payments to farmers -in effect this sees the introduction of a Basic Income payment for all Irish farmers.

In discussing this issue with the Irish Farmers Association (IFA), with Irish Rural Link (IRL) and with the Irish Creamery Milk Suppliers Association (ICMSA) CORI Justice emphasised our willingness to work with these and other organisations with an interest in this area to ensure that this basic income approach will be maintained into the future. As each of these three organisations are social partners in their own right we hope to be able to work with them in securing the future of this very positive development.

This decision by Government also means that the sectors in receipt of a ‘basic income type’ payment in Ireland now includes all farmers, children and older people (entitled to some form of old age pension). While we have always advocated the introduction of a basic income system through provision of payments to all, we are happy with its development by sector.

Growing need for Rural Development Strategies

As agriculture declines there is need for a more comprehensive set of rural development policies. Long-term strategies to address the failures of current policies on critical issues such as infrastructure development, the national spatial imbalance, local access to public services, public transport and local involvement in core decision-making are urgently required. Recognition that current development policies are largely city-led is also necessary and this approach needs to be re-balanced.

The 1999 White Paper on rural development was welcome in that it provided an outline of a vision to guide rural development policy as we have advocated for over a decade. In so doing, it accepted that the statement of a vision is a necessary first step in moving forward. CORI Justice also welcomed the identification by the White Paper of much that is already being done under a variety of headings in all areas of rural development. However, there was little in terms of new and imaginative policies proposed for the implementation of the vision, and no commitment of new resources to attain the objectives.

The context of current rural development policy, however, is one where

EU policies in particular ensure that production is concentrated among larger producers, and where regulations, policies and financing all militate against small local producers,

• direct payments favour large volume, higher income farmers,
• there is a dominance of the agri-model of rural development,
• there is very limited progress in achieving balanced regional development..

Areas such as the western region have lost ground to the rest of the country.

It is clear that the scale of the infrastructure and investment deficit in rural Ireland is unacceptably high. In recent years there have been major spatial changes and there are major spatial disparities as well. The failure of current policies in so many crucial areas requires that long-term strategies be developed to address these failures.

BOX 1: The Rural Ireland 2025 report suggests taking action on the following:

The National Spatial Strategy, implemented in conjunction with successive regionally focused national plans, would result in a more balanced distribution of population and economic activity throughout the country.

Rapid communications and supporting infrastructure would provide greater accessibility throughout all parts of the country.

The rural economy could sustain more competitive enterprises through the development of additional entrepreneurial and management skills, as well as further innovation in products, business organisation and marketing.

The agri-food industry could have more developed business, technological and innovative capacities, with a widely differentiated product portfolio selling in international markets.

Forestry and the ocean economy could be sizeable suppliers to the energy sector and provide valued public goods.

Maintenance of an attractive rural environment could be secured by compliance with EU Directives and payment for public goods, as well as better management systems nationally.

A knowledge-based bio-economy could emerge built on the comparative advantage of Ireland’s natural resources.

‘Old economy’ enterprises could be upgraded, and manufacturing small and medium sized enterprises (SMEs) could increase their contribution to the rural economy.

Tourism could be a vibrant sector of the rural economy, providing knowledge-based environmental goods and services, focused on Ireland’s unique landscapes and culture.

Clusters of internationally oriented companies could exploit the full potential of natural resources in food, the marine, forestry and tourism.

The Rural Ireland 2025 report succinctly summarises the objectives for rural development contained within government policies. It states that

“government policy for rural areas aims to build a rural economy where enterprises will be commercially competitive without damaging the environment. It seeks to have vibrant sustainable communities, with a quality of life that will make them attractive places in which to work and live. It aspires for equity of opportunity between rural and urban areas, and for balanced development between the regions. These initiatives are underpinned by EU policy for rural areas, which subscribes to the attainment of ‘living countrysides’ within the context of balanced regional development across the Union” (page v).

To successfully move rural Ireland closer to these policy goals the Rural Ireland 2025 report suggests a series of rural development strategies which should be immediately pursued. These are listed in Box 1.

Over recent years there have been many welcome initiatives aimed at rural development. For example, Budget 2004 made provision for a new Rural Social Scheme (RSS) “to help improve rural services in a more efficient way and at the same time to provide an income for small farmers with a working week compatible with farming”. In 2006 it is estimated that there would be 2,500 places on this scheme which is receiving government funding of €36.32m for the year and which is run by the Department of Community, Rural and Gaeltacht Affairs. The decision to further increase funding to this scheme in all recent Budgets is to be welcomed. Similarly, the CLAR programme is going a little way towards addressing these problems.

However, far more is required if rural Ireland is to be viable in the twenty-first century. As of now, Ireland has a long way to go before it could be said that it is meeting the requirement of balanced sustainable regional development. The forthcoming government Rural Development Strategy needs to establish a clear path towards that goal.

Rural Transport

The availability of transport as a means of access to both public and private services is a major issue for people living in rural areas. Progress towards this goal is not helped by the continued centralisation of public services. When rural schools closed there was no account taken of the transport costs of bringing children to the larger schools. Despite the recent transport initiatives, many communities in rural areas are not well served.

Some of the difficulties faced by these initiatives have stemmed from the lack of regulation and the constant debate on who should have the profit orientated routes. There are also considerable problems associated with providing a service in areas where the population is scattered over a large area. CORI Justice believes that we are now reaching a crucial juncture that requires key decisions in ensuring that rural communities receive the public transport infrastructure and services that they are entitled to.

In that context we welcome the commitment in the national agreement, Towards 2016, that “there will be a doubling of the cash funding available to the Rural Transport Initiative (RTI) by 2007. Thereafter, a steady increase in funding will be provided for rural transport services, ultimately to a cash level about four times the 2005 allocation”. These increases are necessary and welcome. So too are the commitments in the agreement to consult with the community and voluntary sector on the development of public transport services.

Rural Public Services

Increasingly Ireland is being identified as a country whose public services are underdeveloped. Given the wealth of the economy, this is a situation that is far from acceptable. Because poorer people rely on public services more than those who are better off, it is they who are most acutely affected by this shortage. Similarly, rural dwellers rely heavily on public services.

Successive editions of our annual socio economic review (including section 3.4 of the forthcoming review entitled Developing A Fairer Ireland) have extensively addressed issues associated with current and future regulation of public services. One key element of policy in this area which is relevant to rural Ireland is the current and sustained existence of so-called ‘public service obligations’.

These obligations require services to be made available on a nationwide basis and as a policy play an important role in ensuring the possibility and sustainability of rural communities.

For service providers, be they public or private, there are additional costs associated with adhering to these obligations and therefore there is a clear incentive for them to seek their removal. CORI Justice believes that Government policy should ensure that these obligations remain and that permanent residents of rural areas are not disadvantaged through their removal.

National Spatial Strategy

The National Spatial Strategy (NSS) has not been to the forefront in policy development in recent years despite its importance. The document provides an important blueprint for the regional development of Ireland in the decades to come.

Therefore, despite limited progress to date, CORI Justice welcomes the advances achieved in the new national agreement, Towards 2016, which reverse this process and should ensure the NSS is central to policy development in the years ahead.

Among the high level outcomes on the NSS sought within the longer-term 10-year framework of that agreement are:

Substantial and faster growth evident in all of the Gateways;

Gateways both individually and collectively providing alternative locations for investment and economic activity complementing Dublin

Hub Towns extending the impact of Gateways more widely within their regions.

· Enhanced quality of life through more balanced development of the Gateways and their wider regions, the co-ordinated delivery of infrastructure and amenities and improved connectivity between urban and rural areas.
Settlement Patterns

Housing has become a controversial topic because of the ‘once-off’ house debate. However this masks many issues in terms of settlement that need attention. Many rural villages are victims of poor planning and design in terms of long life tenure. Social housing provision according to the Local Authority Assessment of Social Housing Needs is particularly low in towns and villages around the country (Department of Environment, Heritage and Local Government, 2005).

While many experts continue to argue against the practice of one off housing in terms of the social and economic benefits to the community, the lack of any serious alternative is detrimental to the needs of many people who cannot afford basic housing within their own community.

There is a huge need to ensure that local authorities, organisations involved in housing provision, and local communities are resourced to ensure that rural villages can be the focus of long life housing design.

Main Policy Recommendations on Rural Ireland

• Transform the decoupled direct payment into a basic income for each person.
• Reappraise the concept of work. In doing this, the potential of the social economy should be incorporated, the range of activities of the Farm Relief Service broadened, and the facilitation of family-farm inheritance should be ensured.
• Ensure the provision of basic infrastructure and services, based more on principles of equity and social justice, than on cost effectiveness, and take particular account of rural disadvantage.
• Ensure the provision of a reliable and appropriate transport system, by providing resources for the development of local-transport strategies and initiatives tailored to meet the needs of the local community.
• Reverse the trend of centralising services away from local communities in areas such as healthcare, education, post offices, etc.
• Structure housing lists to reflect rural needs. In particular, in rural areas, develop a framework to guide planning policy, which is focused on supporting and sustaining viable rural communities and protecting and enhancing the rural environment.
• Ensure that public-service bodies take steps to inaugurate an effective and ongoing consultative process with all rural people.
• Overhaul the model for development in agriculture to take effective account of the difficulties of smaller farmers.
• Reappraise programmes to create employment for part-time farmers with a view to targeting effectively the needs of smaller farmers.
• Develop policies, which encourage alternative farm enterprises.
• Support additional relevant outreach education programmes in rural areas that encourage sustainable rural living.
• Adopt the suggestions of the Rural Ireland 2025 report.
• Refocus government funding to rural areas in a way that is consistent with the approach outlined in table 3.
• Ensure that policy protects the sustained existence of public service obligations.
• Finance a pilot project to establish service centres (one-stop shops) in rural areas.
• Begin to rural-proof all policies to ensure that their adoption does not further isolate rural communities or undermine rural development.
• Investigate the use of farm land as a means of meeting Ireland’s renewable energy requirements by maximising the retrieval of energy from agricultural sources.

Adopting Rural Policies that Prioritise People

CORI Justice believes that it is clear that the future development of rural Ireland now depends on moving to adopt policies that prioritise people. In that regard a recent proposal from Irish Rural Link deserves consideration.

The proposal, made as part of its submission to the Department of Community, Rural & Gaeltacht Affairs and the Department of Agriculture & Food on preparation for Ireland’s Rural Development Strategy Plan 2007-2013, suggested a template for the percentage division of future funds towards rural Ireland over that period.

Table 3 presents Irish Rural Link’s proposed distribution of future government funding divided across four ‘axis’ or areas of policy focus.

The thrust of Irish Rural Link’s proposal is that greater focus now be given to axis 3 which addresses “ the quality of life in rural areas and the diversification of the rural economy” and axis 4 involving Leader programmes.

As the analysis elsewhere in this briefing has shown, there are major changes occurring and about to occur in the nature of life in rural Ireland. Therefore, CORI Justice strongly welcomes this proposal and encourages government to adopt it.

Retrieving energy from agricultural sources

Two issues raised during this briefing are worth reflecting on. On page three we considered the decline in the number of people employed in farming and the increasing challenges posed by environmental targets that Ireland must meet. CORI Justice believes that both of these issues could be simultaneously addressed by focusing on the development of energy focused on bio-fuels, biomass and bio-gas. Earlier this year we outlined these views in a joint government submission with Irish Rural Link.

The EU recently published a Green Paper which clearly set out a European determination that renewable energy must be central to policy for the foreseeable future. The section on EU financial support for biomass energy states:

“Many regions assisted by structural and cohesion funds have high potential to pursue economic growth and employment creation through biomass. Supporting the development of RE and other alternative energy sources such as the production of biomass, is therefore an important objective of these funds. The funds can be used to support re-training farmers, the provision of equipment for biomass producers, investment in facilities to produce bio fuels and other materials, fuel switching to biomass by electricity and district heating providers. The Commission calls on member states when preparing national strategic reference frameworks and operational programmes to ensure potential benefits of biomass are thoroughly taken into account”.

To date, Ireland is far from fully utilising its ability to take advantage of the direction that EU policy is taking on the production of renewable energy. The EU policy has set an objective that consumption of energy from renewable sources will be over 20% by 2020 - at present Ireland consumes only 1.9%. The intention of the EU is to add a million jobs in the Union by adopting a range of renewable energy targets.

Our joint proposal envisaged the establishment of a forum to address these issues and to identify the measures required to ensure a smooth and swift development of alternative energy from agricultural sources.

The outcome of that body’s work would simultaneously halt the decline of farming in Ireland and significantly increase the supply of renewable energy available.

Overall, CORI Justice believes that the establishment of this body would be very timely. By establishing such a forum Ireland can align itself with EU policy while simultaneously establishing social and economic stability in rural areas.

Policy Briefing on Environment 2006

CORI Justice publishes Policy Briefing on Environment.

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Conventional economic models of development or progress have failed to incorporate the environment into their calculations. Until recently the environment has been seen as a limitless resource that could be used at will by all people without any fear of long-term damage or cost.

More recently there has been a growing, but far from universal, recognition that the environment is being seriously damaged and that the wellbeing of coming generations and of the planet itself is being put at risk.

While Ireland is making progress on meeting its recycling targets and on tackling the problem of ‘acid rain’, there are huge problems that remain to be addressed.

There are, for example, almost 710,00 hectares of forestry in Ireland. This has increased by 47 per cent since 1990. In 2004 these trees removed 671 kilotonnes of CO2 from the Irish atmosphere. In the same year road vehicles created 11,675 kilotonnes.

The cost of buying carbon credits to meet our Kyoto protocol commitments over the five years, 2008-2012 is likely to be a minimum of €540m but could rise to €900m. [These costs are calculated on the basis of projections provided by Minister for the Environment, Dick Roche, TD cf. p. 4.]

Central to any model of development which has sustainability at its core must be a realisation of the need to move away from money-measured growth, as the principal economic target and measure of success, towards sustainability in terms of real-life social, environmental and economic variables. Already there has been some progress within mainstream decision-making.

In the environmental context it is crucial that dominant economic models are challenged on (among other things) their assumptions that nature’s capital (clean air, water and environment) are essentially free and inexhaustible; that scarce resources can always be substituted; and that the planet can continue absorbing human and industrial wastes which most economists tend to downplay as externalities.

A central initiative in this context should be the development of “satellite” or “shadow” national accounts. Our present national accounts miss fundamentals such as environmental sustainability. Their emphasis is on GNP/GDP as scorecards of wealth and progress.

These measures more or less ignore the environment, and completely ignore unpaid work. Only money transactions are tracked. Ironically, while environmental depletion is ignored, the environmental costs of dealing with the effects of economic growth, such as cleaning up pollution or coping with the felling of rain forests, are added to, rather than subtracted from, GNP/GDP.

CORI Justice welcomes the commitment in Towards 2016 by the Irish Government to examine the feasibility of the application of satellite accounts in the area of environmental sustainability for Ireland. This is scheduled to occur during 2007. We look forward to this commitment being implemented immediately.

Waste: Major Progress towards Recycling Target

Recent reports by the Environmental Protection Agency (EPA) and the Central Statistics Office (CSO) have presented insightful overviews of the state of Ireland’s environment. On waste they show that household and commercial waste has increased by over 12 per cent in volume between 2001 and 2004. Currently Ireland produces almost 3 million tonnes of waste each year. The EPA report Environment in Focus 2006 notes that this level marks an increase of 64 per cent since 1995.

The management of this growing volume of waste remains a challenge. In 2003, 28.4 per cent of our waste was recycled, while the remaining 71.7 per cent went to landfill. For 2004 the EPA reported a major improvement with some 33.6 per cent of waste being recycled and 66.4 per cent going to landfill. As table 1 shows there are still some problematic areas where levels of landfill remain very high. Targeted policies in the areas of plastics, textiles and organic waste are clearly needed if we are to further increase this recycling figure.

However, these recycling results bring Ireland very near to the EU target of recycling 35 per cent of waste. This target was to be achieved by 2013 and the speedy progress toward this target proves that through good policies, real changes and improvements in environmental policies can be achieved.
CORI Justice welcome this development and we echo the recent call by the EPA that “a revised targ