CORI Justice publishes its submission to Commission on Taxation

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The issue of measuring progress 2006

October 16, 2006 - Article in Irish Times on the issue of measuring progress

 

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Mind the gap between rich and poor April 2005

MIND THE GAP between rich and poor - Text of paper presented by Brigid Reynolds, S.M., Director of CORI Justice Commission at a seminar in Belfast on Poverty: will the poor always be with us? April 8, 2005.

 

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Taxation Policy Book 2004

October 2004: CORI Justice Commission publishes book on Taxation Policy

 

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The role of money and finance - February 2004

2004 February 11: Paper by James Robertson on THE ROLE OF MONEY AND FINANCE: Changing a Central Part of the Problem into a Central Part of the Solution.

 

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Minister, jobs for all won't end the poverty trap 17 December 2003

2003 December 17: Article by Sean Healy, entitled Minister, jobs for all won't end the poverty trap, published in The Irish Independent

Ireland and the Future of Europe 3 October 2003

Ireland and the Future of Europe - Leading the way towards inclusion: Text of papers delivered at the CORI Justice Commission's annual social policy conference on October 3rd, 2003. Download Pdf

Introduction Download Pdf

1 Ireland and the future of Europe: A European perspective Pat Cox Download Pdf

2 The Just Society: Can we afford it? avid Begg Download Pdf

3 Business and the future of Europe Brendan Keenan Download Pdf

4 Ireland and the future of Europe: A regional perspective Patricia O’Hara and Patrick Commins Download Pdf

5 Ireland and the future of Europe: A social perspective ean Healy and Brigid Reynolds Download Pdf

Bibliography Download Pdf

Tax and Spend: A Look to the Future with an Eye on the Past: October 2003

Tax and Spend: A Look to the Future with an Eye on the Past

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Donal de Buitleir and Pat McArdle Kenmare Economics Conference, 11 October, 2003.
 

The reason to contest the rising tax burden is the Government’s inability to spend the money
wisely rather than the overall level of taxation, which is still low by international standards”

Martin Wolf, Financial Times, 10 April 2003

Introduction

This paper provides estimates of the public finances to 2007 as a backdrop to the development of recommendations for a sustainable and economically appropriate fiscal policy. This is followed by a discussion of some macro policy issues. We then examine whether or not the apparently low tax burden in Ireland suggests that Government spending is inadequate. Finally, we consider some fiscal policy questions for Budget 2004 and future years.

PUBLIC FINANCES

2003 Budget

The 2003 Budget was a difficult proposition in that the opening deficit was almost €5.0 billion. The Government responded by establishing an Independent Estimates Review Committee (The Three Wise Men). Together, the Wise men and the Cabinet trimmed inflated spending demands by €1.7 billion and Budget Day tax increases brought in €1.2 billion. This meant that Exchequer Borrowing was held at €1.9 billion or 1.7% of GNP and the associated General Government Deficit was €0.9 billion or 0.7% of GDP. While we have to have regard to the traditional Exchequer Balance as most of the Budget Day arithmetic is presented on that basis, the primary focus of this paper is on the economically more relevant General Government Deficit (GGD) .

An acrimonious political debate quickly developed over the so-called “spending cutbacks” in the 2003 Budget. The reality is that after all the painful pairing back, net voted current spending is still budgeted to rise by 8.3%, a rate of increase that is unsustainably high by reference to growth in GNP and the capacity of the economy to fund it. More damaging was the decision to curtail capital spending, the usual soft target when times are tough. The outcome was a small fall in budgeted spending as compared with the previous year and voted capital spending as a % of GNP fell from 5.3% to 5%.

Taxes were also increased sharply, with Budget Day announcements adding €1.2 billion to the tax burden and boosting projected tax revenue growth in 2003 to 8%, a rate of increase that broadly matched that of current spending but was also inappropriately high. Because it was Government policy to avoid increases in income tax rates, the focus was on measures designed to bring forward cash flow to the Exchequer (CGT payment acceleration €250 million), some more once off or temporary measures (Capital Services Redemption a/c €250 million, banks levy €100 million), an effective increase in income tax through non-indexation of bands (€150 million) and, residually, on higher indirect taxes (€770 million).

Table 1 – 2003 Budget Summary

EUR mn	Budget 2003	Forecast Outturn	Difference
Tax Revenue	31,646	31,396	-250
Non-Tax Revenue	1,003	1,024	21
Current Revenue	32,649	32,420	-229
Pay & Pensions	12,687	12,812	125
Non-Pay Expenditure	12,595	12,668	74
EU Budget Contribution	1,365	1,215	-150
Debt Interest	2,317	2,102	-215
Current Expenditure	28,964	28,797	-166
Current Budget Surplus	3,686	3,623	-63
Capital Budget Deficit	-5,555	-5,507	48
Exchequer Deficit	-1,869	-1,884	-15
General Gov. Deficit	-885	-842	43
GGD as % GDP	-0.7%	-0.6%

Indirect tax hikes resulted in a Budget Day direct impact on the CPI of 1%. This had an immediate knock-on impact on wages given that the Sustaining Progress agreement was negotiated shortly afterwards. The net effect was to further erode our international competitiveness and, over time, to add 1%, or €140 million, to the Exchequer pay bill. The 2003 Budget was also pro-cyclical in that the Department’s estimates, published at the time, showed that the cyclically adjusted deficit fell by 0.6%, i.e. a tightening of policy when the economy was weakening. The 2003 Budget was more concerned with balancing the books than the economy.

Though the Budget forecasts appeared conservative, economic activity has again disappointed in 2003. At end June, tax revenue was €336 million behind the published profile and the Department signalled an emerging full year shortfall, and associated deficit overshoot, of up to €500 million. Private sector commentators generally rounded up and put the shortfall in the €0.5 to €1.0 billion range. At end-September, revenue was €275 million behind profile but the Department reaffirmed their €500 million full year estimate. By then, however, most private commentators had scaled back their projected Budget overshoots to a few hundred million.

Our analysis – see Table 1 - suggests that the Budget will come in on target again this year . In saying this, we believe that the Government will continue to exercise strict control over spending and, in particular, that current spending will be on target save for known excesses of €90 million for parallel benchmarking, €35 million for equality claims and €25 million on non-pay spending. Offsetting this, is a €150 million saving on our contribution to the EU Budget. Capital spending is running well behind profile and there is now a possibility that it will undershoot target by up to €50 million. We take the view that the underlying economic situation is improving somewhat and that this will sustain tax receipts in the final quarter of the year. In particular, we expect VAT and Income Tax to come in on target, though this will not be evident until Schedule D payments are received in November. Stamp duties should continue to surprise on the upside, given ongoing buoyancy in the housing market. Having said that, it seems likely that the generally weaker economic situation will result in some tax undershoot, which we project at €250 million – see Table 2. Excises and Corporation Tax account for the principal shortfalls.

Table 2 – Revenue

EUR mn	Budget 2003	Forecast Outturn	Difference
Excise Duties	4,810	4,484	-326
Capital Taxes	1,070	1,045	-25
Stamp Duties	1,419	1,776	357
Income Tax	9,307	9 307	0
Corporation Tax	5,068	4,867	-201
VAT	9,826	9,824	-2
Total	31,646	31,396	-250

The swing factor for the Budget this year, as on previous occasions, is likely to be debt interest payments. The NTMA has a track record of announcing substantial debt service savings late in the day. This year, interest rates fell to unexpectedly low levels in the early part of the year when significant amounts of funding were done. We are projecting a saving of €215 million on this account.

The net result of these various assumptions is an Exchequer Borrowing Requirement (EBR) of €1.9 billion, unchanged from Budget Day, and an associated General Government deficit (GGD) of €0.8 billion or 0.6% of GDP. The latter is, in fact, slightly below the Budget Day target of 0.7% of GDP.

2004 Budget

A budgetary shortfall of €0.5 billion in 2003, if it were to materialise, would have severe knock-on consequences for next year’s Budget because it would raise the opening deficit by a similar amount. This possibility, allied to mildly alarmist comments from Government sources, has created the impression that the 2004 Budget will be the toughest in a decade. The Department of Finance is, of course, happy to acquiesce in this as it helps to curb unrealistic expectations in the spending departments. Our forecast that the 2003 Budget is on target leads to a much more favourable, albeit still difficult, 2004 Budget.

Decisions on the 2004 Budget should be taken in a medium term context. We have, therefore, drawn up Budget projections for the period 2003 – 2007. These show that the General Government Deficit will rise sharply to 1.5% in 2004 before tapering off gradually to 0.8% by 2007 . Given reasonably tight control on public sector current spending and numbers, the prospective Budgetary situation can facilitate continued capital investment of 5% of GNP per annum without having to resort to higher taxes or particularly severe spending cuts. Critical to this, however, is a willingness to allow the deficit to rise to 1.5% of GDP next year, i.e. 0.3% above the 2004 GGD projection in last December’s Budget.

Economic Forecasts

Our economic projections are set out in Table 3. We have adopted a conservative approach based on a slow eurozone recovery and muted investment inflows over the next few years. Real GNP growth is forecast at 2.5% in 2004 and 3.5% in 2005 before rising sharply thereafter. While the slow early trajectory largely reflects the external situation, the subsequent acceleration owes much to domestic developments. The scale of SSIA saving is such that when they mature in 2006 and 2007, there will be a potential massive injection of spending power into the economy. The total release over the two-year period is more than €9 billion . At the moment, the equivalent of 3 to 4% of Personal Consumption (PCE) is diverted annually into SSIAs. In 2006, this will reverse with a net pay out equivalent to 2.5% of PCE and in 2007 the outflow will jump to 14% of PCE. Like many Government attempts to interfere with the market, the SSIAs have had the opposite effect to that intended. Given their late introduction and slow initial uptake, they are now withdrawing substantial purchasing power from the economy and when they mature there is a distinct possibility that they will generate an inflationary spending boom.

Table 3

 

 

 

 

 

 

 

Media reports indicate that attempts may be made to divert maturing SSIAs into pensions and, no doubt, many of them will roll over into other forms of saving. One way or another, however, it seems likely that a substantial proportion of the proceeds will be spent, thereby boosting domestic consumption in 2006 and 2007 and causing GNP growth to accelerate.

Budgetary Projections

Our budgetary projections – see Table 4 – are based on the following technical assumptions:

• Pay – amounts due under Sustaining Progress and Benchmarking will be paid on schedule. They will be followed by moderate increases in 2006 and 2007.
• Numbers – the Government will go a long way towards achieving their target of reducing numbers by 5,000 but many will simply retire and total public sector employee and pensioner numbers will fall by less. Our projections assume that average numbers are unchanged in 2004, followed by a net fall of 3,000 in 2005 with increases of 2,000 and 5,000 in 2006 and 2007, respectively. Overall therefore, the total would rise by 4,000, or 1.3%, over the four-year period. This compares with a 28% increase in the six years to 2003.
• Strict control on non-pay. Because receipts from the EU will be trending down, the pressure on gross spending will be all the greater – our forecasts assume that non-pay voted current spending rises in line with nominal GNP growth in 2004 and 2005 and significantly below it in the two boom years which follow.
• Growth in debt service spending is likely to outstrip GNP reflecting a return to normality following the cleaning out of balances on hidden departmental funds in 2003, rising interest rates and higher borrowing requirements.

Table 4

Underlying tax revenues are forecast to increase in line with GNP using historical relationships but must then be subjected to numerous adjustments – see Table 5. Some of these reflect the impact of the indexation of personal credits and bands to wage rises, others reflect increases in excise duties in line with inflation. Many of them are the consequences of previous budgetary decisions, e.g. changes in the capital allowances regime, and in Corporation Tax rates and payment dates . In addition, allowance has been made for the cost of SSIA top ups as time elapses and potential annualised returns on these accounts rise sharply.

• The target to maintain voted capital spending at 5% of GNP is achieved. This implies a capital injection equivalent in scale to that budgeted for 2003 and rising in line with nominal GNP growth thereafter. Capital receipts will, however, be under pressure. We have assumed that ERDF and Cohesion Fund receipts will wind down sharply over the period to 2008 . The consequence is that the Exchequer Capital Deficit rises sharply from a budgeted 5% of GNP in 2003 to 5.8% in 2007.
• We further assume that the Pensions Reserve contribution, equivalent to 1% of annual GNP, will continue to be set aside.
• We differ from the official approach in that we do not include contingency provisions for future years. Our projections, therefore, reflect the cost of financing the existing level of services and an unchanged tax system.

Table 5

 

 

 

 

 

 

 

 

The upshot of these various assumptions is an Exchequer Borrowing Requirement which rises to €3.8 billion, 3.3% of GNP, in 2004 before falling back gradually over subsequent years. As stated earlier, the associated General Government Deficit peaks at 1.5% of GDP in 2004 before also falling back to 0.8% in 2007. The Debt/GDP ratio declines gradually from 33.4% of GDP in 2003 to 29% by the end of the period. This is a gross concept - net of Pension Fund assets, the debt ratio is below 20% by 2007.

We feel that these projections depict a sustainable budgetary scenario, albeit one where continued strict control of current spending and numbers will be necessary if capital spending is to be maintained and the overall deficit kept within bounds. While no particular budgetary packages have been assumed, we have made technical assumptions regarding the indexation of personal bands and credits, social welfare payments and excise duties. The implication is that the current tax structure is maintained but further tax reform is ruled out as attempts are made to deal with the infrastructure deficit.

The progressive nature of the tax system means that failure to index it results in an increase in the tax burden. For example, if, instead of indexing Income Tax and Excise Duties as we have assumed, the Minister were to leave them as they are, the net tax gain would be €175 million in 2004. If the freeze were continued until 2007, the cumulative gain to the Exchequer would be €930 million and the tax burden would have increased by that amount.

The EU Surveillance/Approval process

The EU fiscal framework is founded on the Treaty requirement for Member States to avoid excessive deficit positions defined as budget deficits below 3% of GDP with debt to GDP ratios below 60% (or falling at a satisfactory pace towards that level). The Treaty requirements are complemented by the Stability and Growth Pact (SGP) which requires Member States to achieve and maintain budgetary positions of ‘close to balance or in surplus’ over the medium term.

Earlier this year, a Commission proposal that ‘close to balance or in surplus’ be defined in underlying terms throughout the economic cycle, i.e. net of transitory effects and especially of the effects of cyclical economic fluctuations on budgets, was accepted. As a result, the 2003 Budget was assessed by reference to the cyclically-adjusted budget balance (CAB) rather than the nominal General Government Deficit. The CAB calculations are complex as they involve estimation of output gaps benchmarked against a fully employed economy . Details of the latest Department of Finance and EU Commission CAB estimates are in Table 6. Notwithstanding a projected widening of the GGD in 2004 and 2005, the CAB turns marginally positive reflecting the fact that the budgetary deterioration is the result of a temporary economic downturn rather than an expansionary fiscal policy. Ireland, thus, satisfied the “close to balance or in surplus in the medium-term” and the 2003 Budget was approved by Brussels on that basis.

A favourable assessment was always likely given the restrictive nature of the 2003 Budget which tightened policy by more than 1% of GDP . The Council noted with approval the build up of assets in the National Pensions Reserve Fund and that the low level of primary surpluses reflected the impact of multi-annual measures, particularly the investment programme. It also remarked that the estimate of the output gap “presents unusual margins of uncertainty due to the special features of the Irish economy”.

Table 6
% GDP	Adjusted Deficits
Budget 03	2002	2003	2004	2005
GGD	-0.3	-0.7	-1.2	-1.2
CAB	-1.0	-0.4	-0.2	0.1
Commission
GGD	-0.3	-0.6	-0.9
CAB	-0.9	-0.3	+0.1

If the 2003 Budget got the blessing of Brussels, what are the prospects for 2004? First, a 2004 GGD of 1.2% was effectively already approved in the context of the 2003 Budget exercise. Our projected 2004 GGD is somewhat higher at 1.5%. Taking the years 2003 and 2004 together, our projected cumulative GGD is slightly above 2003 Budget projections . This modest deterioration reflects the fact that there has been no change in the thrust of fiscal policy since the Budget, which is slightly ahead of target, and we have assumed unchanged policies in 2004. However, GDP growth in each of those years is well below the 2003 Budget projections. Normally, a weaker economy would cause the GGD to rise as taxes undershoot and unemployment benefits increase. The fact that this has not happened means that fiscal policy has effectively been tightened, resulting in lower CAB deficits

In fact, we forecast that the 2003 outturn CAB will be a small positive and the 2004 CAB a somewhat greater positive given that the calculations are cumulative. Because the EU now focuses on the CAB medium term position, which we believe is in surplus, there should be no reason for Brussels to object to a 2004 Budget GGD of 1.5%. Therefore, there is no need for a restrictive fiscal policy in the 2004 Budget.

MACRO POLICY ISSUES

Next Pay Agreement

A central focus of the 2004 Budget must be the next pay agreement. In approaching this, it does not matter whether or not we continue to have centralised pay bargaining. Budget 2003 added about 1 per cent to the consumer price index and Government generated price increases in the twelve month period before the finalisation of “Sustaining Progress” are estimated (conservatively) at 1.6%. On this basis, Government action directly added about €800 million per annum to the cost of the present pay agreement.

The next pay agreement will be concluded in mid-2004. Therefore any indirect tax increases imposed in the Budget will add directly to the rate of inflation in the critical period before its negotiation. In these circumstances, we believe that there should be no increase in indirect taxes in the next budget, i.e. any excise or VAT increases should be balanced by offsetting reductions to leave a neutral effect on the CPI. If this requires an increase in the real burden of income tax, this is a price worth paying as we attempt to make the transition to rates of pay increases which maintain our competitive position in the Eurozone. Our earlier projections indicate, however, that this can be achieved without having to raise income tax.

Control of Public Spending

Public Spending has increased rapidly in recent years. In the period 1997 to 2003, gross public spending went up from €18.9 billion to €38.2 billion. Detailed Figures are in Table 7. This increased expenditure has been accompanied by very substantial increases in employment.

Table 7 Gross Public Spending 1997-2003
	1997 €bn	2003 €bn	% Increase
Health	3.6	9.2	155.5
Education	3.2	5.9	84.4
Social Welfare	5.7	10.2	78.9
Capital Spending	2.0	5.5	175.0

It is likely that during a period of such rapid expansion the focus on cost efficiency was less than it might otherwise have been and that a period of consolidation is now necessary. One option is to ask each public sector agency to surrender 2% of payroll costs to a central pool each year. Of this a proportion (say half) might be reallocated to cater for areas which are expanding. Such a mechanism is necessary to divert resources from areas of work that should contract to those in which demand is increasing. We note the recommendation of the Three Wise Men that an “efficiency dividend” of 2% be imposed on administrative expenditure. This needs to be supplemented by an explicit limit on payroll costs.

Stability and Growth Pact

Some believe that the SGP excessively constrains infrastructure investment in countries like Ireland. While the Pact provides no special treatment for public investment, it is taken into account in the excessive deficit procedure (EDP). The Commission activates the EDP if the actual or planned deficit goes above 3% of GDP. However, Article 104(3) states that in preparing its report, the Commission “shall also take into account whether the government deficit exceeds government investment expenditure”.

In 2002, the Commission went one step further when it proposed that the ‘close to balance or in surplus’ requirement could be interpreted to cater for large structural reforms (such as productive investment or tax reforms) that raise employment or growth potential in line with the Lisbon strategy and/or which in the long-term improve the underlying public finance positions. In particular, they proposed that:

(a) small temporary deteriorations in the underlying budget position could be envisaged only if the Member State concerned has already made substantial progress towards the ‘close to balance or in surplus’ requirement and if general government debt is below the 60% of GDP reference value, and
(b) a small deviation from the ‘close to balance or in surplus’ requirement of a longer-term nature could be envisaged for Member States where debt levels are well below the 60% of GDP reference value, and when public finances are on a sustainable footing.

The latter suggestion is a ‘golden rule’-type fiscal policy, permitting long-term deficits to finance planned investment, albeit while staying well below the over-riding 3% limit. It looks tailor made for Ireland.

The Commission subsequently reported that these proposals were subject to intense debate with concerns being raised about their practical feasibility. In the end, the Council agreed, in March 2003, to a generalised version of the proposal when they undertook to pay greater attention to country-specific circumstances and to the longer-term sustainability and quality of public finances with a view to increasing the growth potential of the EU economies in conformity with the Lisbon agenda.

We recommend that the Irish authorities should now produce an investment plan for the period to 2010 and, in this context, secure EU agreement that “close to balance or in surplus” be interpreted as a CAB of 1% with a 0.5% error margin either side of that . Other things being equal, that means that the GGD would be 1% higher than otherwise, voted capital spending would increase from 5% to 6% of GNP and the debt ratio, instead of falling, would be 33% of GDP in 2007, unchanged from 2003.

We believe that Ireland should only do this if the additional resources are clearly devoted to specified infrastructural or research projects which yield tangible benefits. Given our relatively strong public finances, low debt ratio, favourable demography and relatively good funding of pensions liabilities, such an approach would be prudent and sustainable, provided there is sufficient capacity among providers of infrastructure to avoid much of the gains being lost through higher inflation. We further recommend that capacity in the building sector be specifically taken into account in future investment plans.

National Pensions Reserve Fund

The huge infrastructural deficit, allied to the rapidly growing size of the National Pensions Reserve Fund has led to calls for the Fund to finance major infrastructural projects with a view to increasing capital spending without raising the GGD. The Fund, for its part, has made it known that it is prepared to invest in suitable projects provided the remuneration is adequate. We believe these calls are misguided.

First, the Pensions Fund could invest directly in physical infrastructure but this would be treated as additional spending thereby pushing up the GGD and defeating one of the original objectives .

Second, the Pensions Fund could participate in PPP projects without raising the GGD as the Fund would merely be swapping one type of equity for another. However, when Government assets are financed by the private sector under PPP contracts, in return for a pre-determined stream of future payments, the identity of the effective economic owner of the assets must be established by Eurostat, the EU statistical agency. If the balance of the risks and rewards of ownership remains with the Government, the asset is recorded on the balance sheet of the Government, thereby neutralising the original intent of the PPP. It follows that only PPPs which overcome this hurdle can achieve the twin objectives of increasing net investment without raising the GGD.

Where such projects do exist, there is no evidence of lack of funding from the private sector. In practice, the Pensions Fund is likely to compete with banks and others to supply funds for a limited range of viable PPP projects but its participation, as such, is unlikely to increase total capital spending. When it comes to boosting infrastructure investment, therefore, the Pensions Fund is a red herring.

TAX REFORM & THE REAL TAX BURDEN

Evolution of Income Tax Burden

Much progress has been made in reforming the Irish income tax system and in reducing the tax burden on workers. The OECD has published an analysis of trends in the direct tax burden on average workers since 1979. The burden of income tax plus social insurance contributions for single workers without children has tended to increase in most OECD countries. In many countries this rise was limited to 2-6 percentage points. However, the personal average tax rate in Ireland fell between the late 70’s and the early 2000’s by 11 percentage points (second only to Turkey where the fall was 19 percentage points). The figures include cash benefits. Significantly, Ireland opened up a substantial gap with the UK where our tax burden is now 6.4 percentage points lower for single workers (16.9 v 23.3) – see Table 8.

The trends for a married couple with two children are broadly similar. Here, the Irish burden fell by 12 percentage points since 1981 and we have opened up a gap with the UK of 8 percentage points of income.

The direct tax burden for Irish workers has been transformed and is now amongst the lowest in the OECD.

The Tax Burden

Some argue that the process of tax reduction may have gone too far and that an increase in taxes is now necessary if we are to enjoy first class public services. We now examine the evidence. Table 9 gives the latest information in relation to the tax burden in OECD member countries.

The latest OECD figures relate to 2001. These show that taxation in Ireland as a percentage of GDP is 29.2 per cent compared to an OECD average of 37.6 per cent. The EU average is 41.9 per cent.

These figures give a poor indication of the relative tax burden in Ireland as it is necessary to adjust them for the lower level of GNP in Ireland. It is well known that GDP is a very poor measure of taxable capacity for Ireland. In most countries GDP and GNP are almost identical. However, in Ireland due to the importance of the multi-national sector, GNP is about 80 per cent of GDP. Even with this adjustment Ireland still raises a relatively low amount in taxation of 34.5 per cent of GNP. We lie at the bottom of the 15 EU countries along with Portugal and just below Spain, Germany and the UK. Our tax burden is substantially above advanced countries such as US (29.6), Japan (27.1) and Australia (31.5).

Services

Does this imply that our public services must be worse than other EU countries? Before we can answer this question, there are a number of special factors that must be taken into account. These include:

• Differences in debt service costs
• Differences in unemployment rates
• Differences in defence spending
• Capital spending requirements
• Differences in the way pensions are funded
• Demographic differences
• Payments to the National Pensions Reserve Fund

We discuss each of these in turn. The results are summarised in Table 14.

Debt Service Costs

Table 10 shows Ireland’s relative indebtedness compared to other EU countries. We are now in second place behind Luxembourg or third if we use GNP for Ireland.

Interest on Government Debt in Ireland now takes about 1.8 per cent of GNP compared to an EU average of 3.1 per cent – while such a saving appears small it is significant in that it amounts to the total yield from stamp duties or in excess of the amount spent on third-level education.

The reduction in our national debt to well below half the EU average has cut the amount of tax revenue needed to service debt by 7.5 per cent of GNP over the last 15 years. That makes a lot more available to fund public services.

Unemployment Rates

Table 11 shows unemployment rates. Different rates of unemployment have dramatic effects on budget deficits. A reduction in unemployment translates a negative social welfare payment into a positive tax payment. For example, for every married person on average industrial earnings who becomes unemployed, the cost to the taxpayer is about €18,000. The additional social welfare cost of a 1 per cent rise in unemployment is about €200 million.

Our rate of unemployment is about 3 percentage points below the EU average, which saves us about €600 million or 0.5 per cent of GNP.

Defence Spending

Defence spending in Ireland is lower than in any EU country except Luxembourg. In 2002 we spent about 0.7 per cent of GNP compared to an average of 2.0 per cent of GDP for EU countries in NATO. This means that, other things being equal, our spending should be 1.3 per cent of GNP less.

Pensions Funding

In most EU countries, the bulk of the expenditure for old age and survivor benefits comes out of statutory pension schemes and is financed out of social insurance contributions and general taxation. Ireland is significantly different in that most pensions are financed on a pay-as-you-go basis in the public sector or through funded private schemes. An EU study has estimated that old age and survivors benefits on average took 12.4 per cent of GDP in 1997 compared to 4.2 per cent in Ireland (GNP 5.25 per cent).

Eurostat figures (Abramovici) for 2000 show expenditure on pensions in the EU 15 to be 12.5 per cent on average, compared with 3.6 per cent in Ireland (GNP 4.2 per cent) – a difference of 8.3 per cent. This factor accounts for a significant difference in observed tax ratios.

Demography

Much of the concern about a demographic crisis is due to worsening dependency trends. At the peak of economic dependency in the mid-1980’s, there were nearly 230 dependants for every 100 workers. This ratio is expected to fall to 125 dependants per 100 workers by 2010, well below the current EU average.

Old age dependency in Ireland (Ratio of population over 60 to the population aged 20-59) is estimated at 27.8 per cent – the lowest in the EU. The EU average is 40.9 with Germany having a ratio of 45.4 .

It is difficult to quantify the effect of this but it clearly is helpful. A Fraser Institute study of health spending in Canada notes that those aged 65 years and over consume more than three times the average spending for all age groups while those over 85 consume more than nine times the average. Their estimate is that in 1999 Ireland’s favourable demographic structure was worth about 2.5 per cent of GDP (2.9 per cent of GNP) in a requirement for lower health spending.

While one would expect the need for education spending (5.9 per cent of GNP) and child related welfare spending to be somewhat higher than in other EU countries, this is unlikely to match the large saving on health spending. It is clear that our favourable demographic structure implies a lower need for public spending to provide an equivalent level of public services.

Capital Expenditure

Ireland’s infrastructure is clearly deficient, which means that we have to spend a greater proportion of our resources on investment than countries with more developed infrastructure. Under the terms of the Stability and Growth Pact, no distinction is made between current and capital spending. Ireland is spending about 5 per cent of GNP on public investment compared to an EU average of 2.9 per cent.

National Pensions Reserve Fund

Ireland is allocating 1 per cent of GNP to provide for social welfare and public sector pensions in future years. This is not contributing to the volume of public services now. Hence, we have deducted this in computing the adjusted tax ratio for Ireland.

 

 

 

 

 

 

 

 

 

 

 

Conclusion

All this supports the view that structural factors result in Ireland having a relatively low tax burden without having to sacrifice the quality of important public services (assuming equal efficiency of Irish public administration).

When one adjusts for these factors, the tax burden in Ireland is 41.7 per cent compared to an EU average of 41.9 per cent. This suggests that whatever may be wrong with the Irish economy and the standard of public services we have, it is not due to a lack of taxation.

TAX POLICY ISSUES

Social Insurance: Contributory Principle

There has been debate about whether or not social insurance should be financed from general taxation or funded on a contributory basis. Further details on the financing of social insurance are in Appendix 1.

What is clear is that we have a hybrid system and that the link between benefits and contributions has weakened over the years. Flat rate benefits are financed by pay-related contributions. In addition, some people get credited or free contributions during periods of unemployment, incapacity for work and maternity leave. The Report on Integration of Tax and Welfare (TWIG, 1996) found that credited contributions were very important in that in 1991/92 the majority of the insured population had some credits; 37 per cent had a mixture of contributions and credits and 29 per cent had credits only.

It would be possible to maintain the contributory principle on the basis of employer contributions only as is the case with many occupational pension schemes. Such a change was favoured by some members of the Tax and Integration Working Group (Para 7.28) on the grounds that it would:

• Increase social solidarity by getting everyone to contribute to the social welfare system which is the most powerful individual mechanism we have for protecting the weaker sections of the community.
• Partly shift the tax burden from income from work to other income (e.g. rental income, investment income and income accruing to retired persons) thereby contributing to the reduction in unemployment and poverty traps.
• Remove a regressive form of taxation.
• Greatly simplify the system.

Employee PRSI

There are 30 different classes of PRSI contribution and the system is very complicated. The employee's portion of the social insurance contribution is paid on earnings up to a ceiling of €40,420. Employees who earn not more than €287 in any week are exempt from paying PRSI for that week. There is no annual refund payable to employees whose weekly earnings fluctuate above and below the €287 exemption limit.

The weekly (non-cumulative) PRSI-Free Allowance for employees with weekly earnings in excess of €287 is €127 per week. (This allowance does not apply to the Health Contribution and it does not affect the employer's contribution).

A Department of Social and Family Affairs paper to the Tax Strategy Group notes that “While the introduction of the €287 weekly PRSI Exemption delivered an increase in net pay for all those earning between €127 and €287 per week, it had a number of negative effects, including introducing a significant “step effect” - once earnings move from €287 to €287.01 per week, Employee PRSI contributions increase from NIL to €11.48 per week.

Despite the fact that every effort was made to minimise complexity, the exemption increased the complexity of the system and necessitated the introduction of 4 new sub-classes to cater for the changes.

The Department went on to propose that the exemption should be phased out by progressively raising the PRSI Free Allowance to €287 per week over a series of Budgets. The Department also discussed the abolition of the ceiling on employee contributions, which was estimated to yield €190 million. It said this would strengthen the social solidarity element of the system in that a proportion of all income would be pooled for the benefit of all contributors.

If the objective is to strengthen social solidarity, then all taxpayers should make a contribution based on their ability to pay. This could be achieved by restoring the Exchequer contribution to the Social Insurance Fund from general taxation to historic levels in line with the vision propounded in the Beveridge Report. The strategic objective should be to phase out employee contributions entirely and replace them with an Exchequer contribution funded from general taxation to reflect the principle of social solidarity. Given that employees now contribute directly only 20 per cent of Fund income, a restoration of the Exchequer contribution to historical levels would be more than sufficient to eliminate employee PRSI.

This would have the advantage of reducing administrative and compliance costs by simplifying the PAYE system. It would also reduce the tax wedge on those active in the labour market by shifting the tax burden to pensions and unearned income. By equalising the tax burden on employees and pensioners, it would increase the relative contribution of pensioners before demographic change substantially increases their numbers thereby putting the public finances on a more sustainable footing in the long term.

An increase of 2 percentage points on each rate of income tax would be more than sufficient to abolish employee PRSI and allow some reduction in the contribution rate for the self-employed who would not get any benefit from the abolition of employee PRSI.

Employer PRSI

The 2003 rate structure for employer PRSI is as follows:

• Up to €356 weekly earnings - 8.5 %; over €356 weekly earnings - 10.75 % on all earnings.
• The effect of this is to introduce a step change of over €8 per week when an employee goes over the €356 per week limit.
• The strategic objective should be to move to a single rate employer PRSI contribution. The yield from extending employer PRSI to benefit-in-kind payments from January 2004, €83 million, should be used to reduce the higher rate of employer PRSI.

CGT Indexation

An important policy change was made in the 2003 budget when it was announced that “indexation of the base for computation of capital gains will only be allowed to be calculated up to 31 December, 2002”.

This major change was justified on the basis that “All of these reliefs and allowances made sense when CGT rates were 40 per cent and 60 per cent”. The other reliefs referred to were roll-over relief and tax deferral through the use of loan notes.

The abolition of indexation was a major error akin to justifying the abolition of depreciation allowances on the grounds that tax rates were low. It should be an important principle of tax policy to get the base right before applying the appropriate rate of tax – abolition of indexation distorts the base in a most arbitrary way. It is very damaging in the long-term. It involves a major increase in effective tax rates.

To take a simple example, assume an asset is bought now and that it doubles in value over the next ten years. Assuming inflation is 5 per cent a year, the effective rate of capital gains tax is not 20 percent, not even 40 per cent but 57 per cent. If it doubles in one year the effective rate of tax is 21 per cent.

The abolition of indexation favours speculation. As Kay & King conclude:

• “The real losers from inflation are those who make modest nominal gains. To compensate investors for inflation requires providing relief which is proportional to the initial investment not to the resulting gain.”
• The abolition of indexation for capital gains tax should be reversed.

Carbon Tax

The 1997 Kyoto Protocol, for the first time, sets greenhouse gas emissions limits for the developed world. Ireland, under the EU “bubble”, has committed to limit the increase in greenhouse gas emissions to no more than 13 per cent above the 1990 level by 2008-2012. The latest “business as usual” projections suggest that, without offsetting action, emissions will rise by around 23-28 per cent over this period.

The national climate change strategy, published in November 2000, sets out a ten-year framework for achieving the necessary greenhouse gas emissions reductions to ensure that Ireland complies with the Kyoto Protocol. Sectoral measures included in the strategy are intended to reduce emissions by over 15 million tonnes CO2 equivalent during the commitment period 2008 to 2012 per annum. No specific target for taxation measures is included in the Strategy.

The 2003 Budget stated that “Government has asked relevant Departments to advance plans for a general carbon energy tax, with a view to introducing this from the end of 2004. Given the many implications of such a tax, both environmental and economic, there will be full consultations with interested parties on the design of a tax and a reasonable period is being allowed for its effective introduction”.

The Department of Environment and Local Government has proposed a tax rate of €7.50 per tonne initially rising to € 20 per tonne over a period of 3 to 4 years. The revenue raised is estimated to be €200 million initially rising to €510 million at € 20 per tonne in 2010 with exemptions for emissions trading as proposed in the Department of Finance consultation paper issued in July, 2003. A number of points should be made:

• First, the proposed exemption from carbon tax for emissions trading is welcome and justified on sound principles.
• Second, the trading regime and the alternative of proposed fines will have a significant adverse effect on the competitiveness of certain sectors.
• Third, a substantial proportion of emissions, most notably in the agricultural sector, will not be subject to the carbon tax or trading regime. (Agriculture generates about 33 per cent of emissions in Ireland).

Finally, the carbon tax is estimated to cut carbon dioxide emissions by more than 2 million tonnes. Under the Kyoto Agreement, Ireland is supposed to keep emissions to 61 million tonnes from 2008 but already produces almost 70 million tonnes – and this is set to rise to 73 million tonnes, so the tax will make a small contribution to meeting the emissions target.

There are a number of options for recycling the yield from a carbon tax:

1. Use the money to compensate less well off households. Proponents of this option argue that expenditure on fuels as a proportion of income is higher for lower income groups (than for higher income ones) and that the fuels used by the lower income groups tend to have the highest carbon content (coal, peat) and would therefore attract the higher taxes.
2. Some European countries (Denmark, the Netherlands and the UK) pursue a revenue-neutral policy and channel their carbon tax ‘take’ back to households and/or business affected by the tax.
3. Norway, Sweden and Finland follow the line that carbon tax revenue is simply another contribution to general government revenue and should be used to fund overall government expenditure.
4. Use the money for general tax reductions.

We believe that the yield should be entirely devoted to tax reductions. Given the adverse effects on Ireland’s competitiveness of the Kyoto regime, these tax reductions should be focussed on improving competitiveness to the maximum possible extent.

Demographic Change

The implications for public expenditure on higher pensions and health are the subject of frequent discussion – less frequently discussed are the implications for tax revenue arising from the prospective ageing of the population. Age significantly affects the amount of tax and PRSI paid – Table 15.

On an income of €30,000 a married person aged over 65 pays €3,500 less in taxes than a PAYE worker. As a result their net income is almost 14 per cent higher despite the fact that the young are likely to have mortgages and higher car insurance and child care expenses (after child benefit). The old have community rating for medical insurance premia, free public transport and medical cards (over 70).

For a single person on an income of €30,000, the income differential is almost 5 per cent. Revenue Commissioners data for 2000/01 show that those aged 65 and over paid tax at an average rate of 13.6 per cent of their total income, € 20,307, compared to 19.1 per cent for others (total income €24,889). These figures do not take account of social insurance contributions.

The balance between these groups is open to question. While a change is primarily justified on equity grounds, a relative shift in the balance of taxation from the young to the old could make an important contribution to fiscal sustainability.

The differential arises from two factors mainly; the relatively high income tax exemption threshold particularly for married couples and the fact that older people do not pay PRSI. Three measures would help to address this:

• An increase in personal tax credits
• A freezing of the exemption thresholds and
• A shift from employee PRSI to income tax as recommended above.

Recycle SSIAs

Based on our earlier forecasts, the maturity value of SSIA balances will be about €17.5 billion. These are due to mature in the year from mid-2006 onwards. Personal consumption in 2007 is estimated at about €80 billion (ESRI MTR 2003-2010). The implications of having a large boost to personal consumption from maturing SSIA balances needs to be considered.

A number of options merit consideration. The first is to provide some incentive for people to extend their SSIA’s beyond the original maturity date if only to spread the boost to consumption over a longer period.

The second is to provide an additional incentive for those with inadequate pension coverage to put the funds in PRSA’s or some other pension vehicle. While significant incentives already exist to do this, some additional targeted incentive aimed at those with inadequate pension provision may be justified.

CONCLUSIONS

We conclude that:

• The 2003 Budget is on or slightly ahead of target.
• A restrictive fiscal policy in 2004 is neither necessary nor desirable.
• The 2004 Budget will be difficult but by no means insurmountable. A combination of tight control on spending and numbers together with a more buoyant economy and a willingness to let the deficit rise to 1.5% of GDP should allow capital spending of 5% of GNP without having to resort to tax rises or spending cutbacks.
• This should be acceptable to the EU as the underlying budget position will probably be in surplus, thereby conforming with the Stability and Growth Pact requirement that the Budget be close to balance or in surplus in the medium term.
• It is critical that the Budget should not increase the CPI in advance of the next wage agreement. The objective should be to lower inflation to 2% to enhance competitiveness. This means that any excise tax hikes should be balanced by equivalent reductions in other duties.
• A mechanism needs to be devised to divert resources from contracting to expanding areas in the public sector. Departments could surrender 2% of payroll costs to a central pool each year with provision for some reallocation to priority areas.
• An updated Investment Plan for the period to 2010 should be produced. In this context, EU agreement to run a medium-term underlying budget deficit of 1% of GDP should be sought.
• The objective should be to boost capital spending from 5% to 6% of GNP, provided worthwhile projects can be found.
• Future Investment Plans should make specific allowance for capacity in the construction sector. Additional spending should be contingent on spare capacity existing or external resources being used.
• The Pensions Reserve Fund is merely an alternative source of funding and it is unlikely that participation by it in PPPs will boost total spending on infrastructure over coming years.
• The problem is not one of inadequate funding, rather a limited supply of viable PPP projects.
• We have made major progress in reforming our tax system since the mid–eighties; the challenge now is not to reverse the progress that has been made.
• There is no evidence that the burden of taxation in Ireland is insufficient to deliver good public services by international standards given the relatively favourable structural factors we face over the next decade.
• The outlook for the public finances in the medium term does not give cause for concern provided there is reasonable control of public spending; while the rates of spending increases in recent years are unsustainable, there is no need for a return to the restrictive spending policies or the tax increasing policies of the eighties.
• While tax reductions of the scale experienced in recent years are neither necessary nor desirable, there is scope for substantial tax reform in the following areas:
• Financing of social insurance, most notably by abolishing employee PRSI contributions
• Simplification and reduction of the employer PRSI contribution
• Restoration of indexation for capital gains tax purposes
• Recycling of proposed carbon tax to help competitiveness
• A change in the relative balance of taxation between the young and the old
• Recycling the proceeds of SSIAs.
• The overriding medium-term fiscal focus should be on a sustained and coherent programme to remedy infrastructural deficits. It should be possible to do this while, at the same time, maintaining the tax reform gains of recent years while avoiding further increases in an indirect tax burden that is already undesirably high.

October 2003

Appendix 1

Social Insurance Fund

The Commission on Social Welfare found that tripartite funding – by employers, employees and the State- is a feature of social insurance schemes in most countries and has applied in the Irish system since its inception. Tripartite funding is in line with the original Beveridge Vision of Social Insurance. The TWIG Report concluded that “the principle of an Exchequer contribution to the Fund should be maintained and reflect a commitment to social solidarity”.

The Financing of the Social Insurance Fund has developed as follows

Employers	Employees	State	Other	Self Employed
	%	%	%	%	%
1965	29.5	28.0	39.9	2.6
1980	54.5	21.4	23.7	0.3
1990	63.8	26.2	5.9	0.4	3.7
2000	74.2	20.0	nil	0.7	5.1
2001	75.1	19.5	nil	1.1	4.4

The Fund is now in surplus (€687 million in 2000 excluding a payment of €152 million to the National Training Fund). The 2000 surplus is equivalent to 18.8 per cent of expenditure on Social Insurance schemes. The estimated surplus in 2003 is £1.5 billion (1.4 per cent of GNP).

In fact, employer and employee contributions exceeded total expenditure on social insurance by £293 million in the year 2000.

The surplus in the Fund that has emerged in recent years is invested by the NTMA. In addition, one-third of the annual Exchequer contribution to the National Pension Reserve Fund of 1 per cent of GNP is earmarked to pay Social Insurance benefits in the future.

In his 2000 Budget Statement, the Minister for Finance indicated that the Social Insurance Fund is in a healthy financial situation and that this position was projected to strengthen further in the immediate years ahead. In his 2001 Budget Statement the Minister said:

“Since its inception in 1953, the Exchequer has assisted the Social Insurance Fund. For instance, in the ten years to 1996, the Exchequer contribution exceeded €2 billion. Thanks to this Government’s record on employment, the Fund is now in such a healthy financial position that the Exchequer can recover some of this funding. The Fund will have about a €1.4 billion surplus at the end of 2001. I indicated last year that it is important to keep the surplus under review. Having regard to its strong financial position, I am satisfied that it is appropriate for the Fund to make a contribution of €635 million in 2002 towards the Exchequer. Taking account of the other changes I am announcing today, the Fund will still have €1.2 billion in hand at the end of 2002”.

Administrative Costs

The administration costs of the social insurance system in the year 2001 charged to the Social Insurance Fund were €159 million or 4.3 per cent of expenditure from the Fund (down from 4.6 % in 2000). The administrative cost of the social assistance schemes was €216 million or 5.2 per cent of the expenditure on these schemes (up from 5 per cent in 2000).

One would expect a greater administrative cost for social assistance due to the need for means tests etc. The relative administrative costs of social insurance compared to social assistance declined from 93 per cent in 2000 to 83 per cent in 2001.

Actuarial Review of Social Welfare Pensions

The Actuarial Review of Social Welfare Pensions (2002) concluded that if social welfare pensions increased in line with average earnings, the additional cost as a percentage of GNP over that in 1996 would be as follows:

2016	nil
2036	2.1 per cent
2056	3.2 per cent

To illustrate the sensitivity of the SIF to future possible changes in benefit rates, four possible scenarios were considered in the review, and conclusions were drawn as follows:

If payments were increased in line with price inflation only, spending on retirement and old age pensions would represent 2.1% of GNP by the end of the period (2056) and the SIF would remain in surplus if contribution rates remained constant;

If payments were increased in line with earnings, spending on retirement and old age pensions would represent 6.5% of GNP by the period, with the result that the SIF surplus would be exhausted by 2015 on the assumption of unchanged contribution rates;

The analysis was also carried out on the basis of a number of the illustrative scenarios identified by the Social Welfare Benchmarking and Indexation Group in its 2001 report.

If the minimum payment were to be set at 27% of Gross Average Industrial Earnings by 2007, spending would amount to 7.6% of GNP in 2056 and the SIF surplus would be exhausted by 2007;

If the minimum payment were to be set at 30% of Gross Average Industrial Earnings by 2007, spending would amount to 8.5% of GNP in 2056 and the SIF surplus would be exhausted by 2005.

These figures look large until one notes that the amount charged to taxation for debt service has declined from 11.1 per cent of GNP in 1985 to 3.6 per cent in 1999 – a decline of 7.5 per cent.

References

An International Comparison of Health Care Systems” Nadeem Esmail and Michael Walker, Fraser Forum August, 2002.

Budget 2003, the Stationary Office, December 2002

Integrating Tax and Social Welfare, Report of Expert Working Group, June 1996

Medium Term Review 2003-2010 no 9, ESRI, July 2003

Production Function approach to calculating potential growth and output gaps, European Economy, Economic Papers, September 2002

Public Finances in EMU 2003, European Economy no 3 2003

Revised Estimates for Public Services, Government Publications Sales Office, February 2003

Social Protection: Expenditure on Pensions, Gerard Abramovici, Eurostat Statistics in Focus Series, Theme 3 –11/2003

Sustaining Progress: Social Partnership Agreement 2003-2005, February 2003

Taxing Wages 2000-2001 OECD, Paris 2001

Tax Strategy Group Papers, Department of Finance website

The British Tax System, J A Kay and M A King, Oxford University Press, 1980

The Future Evolution of Social Protection from a Long-Term Point of View: Safe and Sustainable Pensions, October, 2000, EU Commissio

Acknowledgements

In preparing this paper we are very grateful for the great deal of help we received from a number of people in the public service. All opinions and errors are our responsibility. The views expressed may not reflect those of our respective employers.

Quotation permitted provided source is acknowledged.

Committee for the National Plan for Women February 2002

February 15, 2002: CORI Justice Commission's Submission to the Committee for the National Plan for Women. Download Pdf

Church and theology in the contemporary world

Paper presented to Boston University CORI Justice Commission conference on CHURCH AND THEOLOGY IN THE CONTEMPORARY WORLD February 12, 2002. Download Pdf

THE CASE OF SOCIAL PARTNERSHIP IN IRELAND, Sean Healy sma and Brigid Reynolds sm

1. Justice Commission's perspective

The Republic of Ireland has been changing dramatically in recent years.Its economic boom, euphemistically called the Celtic Tiger economy, has been making headlines world-wide. The changes are evident in the increasing levels of economic growth, employment growth, unemployment decline and significant current budget surpluses over a number of years. The population has been growing. Traditional emigration patterns have been replaced by net immigration. Dependency ratios are falling. Standards of living have been rising for most of those in employment. Income per capita is rising dramatically. The national debt as a proportion of GNP has been falling dramatically. Ireland is seen at both EU level and by the OECD as a success story in terms of the conventional macroeconomic indicators. On a more visible level we witness dramatic changes every day in terms of a massive growth in consumption indicators.

The sale of new cars, foreign holidays and other consumer items has grown at an unprecedented rate since the mid-nineties. The private housing sector is booming. New shops, restaurants, night clubs and pubs are opening every week and attracting a foreign as well as a local clientele. Dublin has become the favourite European capital city for many in search of weekend entertainment.

This picture, however, does not tell the entire story of what has been happening to Irish society over the past fifteen years. There is another aspect of this story that must also be recognised and acknowledged. Side by side with the `new Ireland’ of the Celtic Tiger is another Ireland characterised in terms of a widening rich/poor gap, long-term unemployment, run-down inner-city housing estates, hidden rural poverty, early school leaving, single parent-hood, homelessness, growing aggression and violence. There are long, in some cases growing, waiting lists for medical care and public housing. Ireland has a two-tier education system as well as the highest level of adult illiteracy among all European Union countries. There is little evidence of the Irish economic 'miracle' in many of the deprived sectors of the Irish economy. The fruits of economic transformation have not benefited all members of Irish society. The `rising tide’ of the Irish economy has failed to lift all boats.

There is still considerable poverty and social inequality in Irish society. While employment has grown dramatically, the divisions in Irish society have widened and the proportion of people living on income equivalent to less that 50 per cent of average household disposable income (i.e. less than €140 a week for a single person in 2001) is not falling. It is clear that economic growth can widen divisions in society and create greater levels of income inequality. In the absence of government intervention the benefits of economic growth will not `trickle down’ to the vulnerable and disadvantaged groups in society. While failing to tackle poverty on an adequate scale, government policies are also failing to address issues of income distribution and social equity.

These issues have not been seriously debated in Irish society to date. The government has introduced a substantial range of anti-poverty strategies that target disadvantaged groups. However it has failed to seriously address the structural causes of poverty in Irish society, which have been exacerbated by the recent economic miracle. A minimalist approach to the eradication of ` absolute’ or 'consistent' poverty’ which ignores issues of equality and distributive justice will not produce a fair society.

Today many people ask questions such as: If Ireland of the Celtic Tiger is so good why do we meet so many anxious faces on our streets? Why are so many people experiencing stress in meeting their commitments, be they financial, social, family, etc. Why do so many parents have a struggle to find the resources necessary to keep their children in school? Why are so many people homeless or living in overcrowded accommodation? Why is there so much fear and anxiety in our communities? As the pace of change escalates those who have the economic and social resources acquire the equipment necessary to ride the crest of the present boom while a large minority live in fear of being submerged. Those on the crest of the boom have anxieties about staying there. This anxiety fuels the tendency to accumulate more and more to the point where, in practice, they adopt the slogan that ‘greed is good’. Meanwhile those who struggle to ‘hang on’ are feeling their grip loosening and the prospect of being part of this society becoming more remote.

This reflection brings to the fore the issue of values. People find their fears are easier to admit than their values. Ireland seems to accept a two-tier society in fact, while deriding it in principle? This dualism in our values allows us to continue with the status quo. In practice this means that it is okay to exclude between a quarter and a third of the population from the mainstream of life of Irish society while large resources and opportunities are channelled towards other groups in society. This dualism operates at the levels of individual people, communities and sectors.
Christian values

CORI's concerns in this socio-economic reality are deeply rooted in Christian values. Christianity subscribes to the values of both human dignity and the centrality of the community. The person is seen as growing and developing in a context that includes other people and the environment. Justice is understood in terms of relationships. The Christian scriptures understand justice as a harmony that comes from fidelity to right relationships with God, people and the environment.A just society is one that is structured in such a way as to promote these right relationships so that human rights are respected, human dignity is protected, human development is facilitated and the environment is respected and protected.

As our societies have grown in sophistication the need for appropriate structures has become more urgent. While the aspiration that everyone should enjoy the good life, and the good will to make it available to all, is an essential ingredient in a just society, the good life will not happen without the deliberate establishment of structures to facilitate its development. In the past charity in the sense of alms-giving by some individuals on an arbitrary and ad hoc basis was seen as sufficient to ensure that everyone could cross the threshold of human dignity. Calling on the work of social historians it could be argued that charity in this sense was never an appropriate method for dealing with poverty. Certainly it is not a suitable methodology for dealing with the problems of today. As world disasters consistently show, charity and the heroic efforts of voluntary agencies cannot solve these problems on a long-term basis. Appropriate structures are required to ensure that every person has access to the resources needed to live life with dignity.

Few people would disagree that the resources of the planet are for the use of the people, not just the present generation but also the generations still to come. In Old Testament times, these resources were closely tied to land and water. A complex system of laws about the Sabbatical and Jubilee years (Lev 25: 1-22, Deut 15: 1-18) was devised to ensure, on the one hand, that no person could be disinherited, and on the other, that land and debts could not be accumulated or the land exploited.

Interdependence, mutuality, solidarity, connectedness are words which are used loosely today to express a consciousness which is very Christian. All of creation is seen as a unit which is dynamic, each part is related to every other part, depends on it in some way and can also affect it. When we focus on the human family this means that each person depends on others initially for life itself and subsequently for the resources and relationships needed to grow and develop. To ensure that the connectedness of the web of life is maintained, each person is meant to reach out to support others in ways that are appropriate for their growth and in harmony with the rest of creation. This thinking respects the integrity of the person while recognising that the person can only achieve his or her potential in right relationships with others and the environment. All of this implies the need for appropriate structures and infrastructures. When the Justice Commission sees the reality that is Ireland and the wider world today and reflects on these from the perspective of Christian values and Catholic Social Thought it comes to the conclusion that the world is not as God wishes it to be. The Commission understands that building the reign of God involves doing what we can to move the present reality from where it is towards where God wishes it to be. This provides the Commission with a number of issues to be addressed on an ongoing basis. These include:

• Identifying what the present reality really is
• Developing some awareness of what alternatives to the present situation are viable or possible.
• Discovering which of these are closest to God's Will.
• Taking action to move towards these alternatives.
• Recycling the process on an ongoing basis. In all of this the Commission recognises and acknowledges that it does not have all the answers. Rather, it is always struggling to get more accurate answers to the questions it asks and trying to seek out and develop better alternatives to what is already available. It constantly offers its analysis and vision and proposals for action to the wider society for comment and critique. It seeks an ongoing dialogue on these issues with the wider society as well as with those who share its Faith. The following sections provide a short outline of key aspects of the Commission's approach in these areas.

2.CORI Justice Commission's approach

We identify five central aspects of the Commission's approach to its work. These are:

• Social analysis
• Dialogue
• Vision building
• Action
• Reflection/recycling the process

2.1. Social Analysis

Much of the Justice Commission's work is underpinned by detailed social analysis. In doing this work of social analysis we follow a relatively standard approach. Whether we are addressing an issue such as social exclusion, an area such as Ireland or a problem such as drug addiction we seek to develop a comprehensive, integrated understanding by addressing the reality's following components:

• Economic structures: what resources exist in this reality and how they are organised?
• Political structures: what power resides in this reality and how decision-making is organised?
• Cultural structures: what the core meaning in this reality is and how it is organised and transmitted?
• Social structures: arising from the economic, political and cultural structures, how are relationships organised?
• If appropriate the different levels of these structures are analysed (e.g. local, regional, national, international).
• The history of whatever we are analysing is also looked at and built into the analysis.

2.2. Dialogue

Dialogue is a crucial component of the Justice Commission's work. In fact there are two different dialogues or 'conversations' going on all the time. These dialogues or conversations are with:

• Those who share our Faith, and
• The wider society. Both of these have two sub-groups with whom the Commission seeks to conduct an ongoing 'conversation'. In both conversations the subgroups with whom dialogue is sought are:
• People who are committed/involved and interested
• People who are not so committed/involved or interested The methods and approaches used vary in the two main dialogues. They also vary in the two sub-dialogues being conducted on an ongoing basis. The Justice Commission believes very strongly that both main dialogues must go on at the same time. The conversation the Commission conducts with the wider society is deeply informed by the conversation it conducts with those who share our Faith. The stance taken in the wider society stems from the conclusions being reached in the Faith conversation. Choices have to be made constantly concerning what issues to pursue in the wider reality, what position to take on these issues, what actions are to be sought, etc. Always, the Commission's decisions in these areas are informed by its conversation with those who share our Faith. The dialogue is a two-way affair, however. This means that the realities of the wider society are constantly challenging and influencing the Faith-conversation. Often, there are aspects of the wider reality that the Faith-conversation has not recognised or has sought to avoid. If the dialogue is to be real and transformative, it must be two-way and must involve a real engagement. It must also include a willingness to change one's mind if the evidence suggests this is what is required. The language spoken in the first of these conversations is different to that spoken in the second. This, in effect, means that the Commission has to be bi-lingual in its work. We shall return to this issue later in this paper.

2.3. Vision-building

From the perspective of Faith, if we want to move the world from where it is towards where God wishes it to be, then it is essential that we seek alternatives to what is being offered in the present reality. From the perspective of the wider world which is experiencing so much change it is also important that we seek alternatives to the vision of the future being offered by the dominant forces of our world at present. This is necessary because the vision that is being offered is not capable of delivering on its promise. The conventional economic vision of the future is simply unattainable. Consequently, the Justice Commission puts a lot of work into seeking out alternatives, re-imagining the way things might be and assessing what could be both desirable and viable.

2.4. Action

Following on this work of seeking out alternative futures the Commission seeks to design action that could lead towards reaching that alternative future. This results in the Commission being involved in a range of activities that must be addressed if the 'vision' issue is to be treated seriously by others who are sceptical or threatened or whatever. In practice this has involved the Commission in a wide range of activities ranging from piloting programmes to researching issues to advocating positions. We shall return to this issue later in this paper.

2.5. Reflection/recycling the process

Reflection on what is happening, and constantly recycling the process of analysis, dialogue, vision-building and action, is crucially important. Hopefully some of the wider world reality is being changed, as a result of our involvement. However, we ourselves are also being changed. Our experience of the wider reality is brought to bear on our Faith reflection just as our Faith reflection is brought to bear on the wider reality. We try to ensure that this produces constant development in and between both conversations with which the Commission engages. This is critically important if there is to be any real learning from experience over time.

3. CORI Justice Commission's stance, analysis and vision

In its ongoing work the Justice Commission has developed a statement on its role and policy. This identifies where the Commission's starting points are, how they see Ireland today and how they envision the future. The following is the Commission's most recent statement of its position on these realities:

We start from the belief that Ireland is not the kind of society envisaged in the Gospels. We do not accept the divisions we see. Like many we wish to work for a society where “the hungry are filled with good things” (Lk. 1:53). Taking inspiration from the Beatitudes we work with Jesus for the coming of the Kingdom where the poor will be happy because they have sufficiency, where those who hunger and thirst for what is right will see their vision concretised in the structures of society, where the gentle (or ‘or the lowly’) will be guaranteed their right to a part of the earth’s resources (“They shall have the earth for their heritage” Mt. 5:4). With St Paul we are conscious that the “entire creation is groaning in one great act of giving birth”. (Rom. 8:22). We want to play a positive role in this great act of giving birth to a future society.

How can this Gospel message be made relevant in our mission today? In recent years the Church has developed a large body of social teaching. We find in this teaching the guidelines needed to point the way for us pilgrim people. From Pope Leo XIII who began the call for major changes in the socio-economic order to the present day, the Church is calling us to transform society. We recall that Paul VI in 'Populorum Progressio' called for “bold transformations, innovations that go deep” (32). The synod of Bishops (1971) in its document 'Justice in the World' said that “Action on behalf of justice and participation in the transformation of the world fully appear to us as a constitutive dimension of the preaching of the Gospel” (6).

Pope John Paul 11 in 'Laborem Exercens' calls for a complete analysis to reveal unjust structures so that they may be examined and transformed to build a just earth (2). More recently in 'Centesimus Annus' he talked about the virtues needed to be involved in this transformation. “To destroy such structures (of sin which impede the full realisation of those who are in any way oppressed by them) and replace them with more authentic forms of living in community is a task which demands courage and patience” (38).

Recent social teaching alerts us not only to the structures that oppress people but also to the structures that cause destruction to the environment. “Today the ecological crisis has assumed such proportions as to be the responsibility of everyone ….there is an order in the universe which must be respected …the ecological crisis is a moral issue” (Pope John Paul 11 January 1, 1990).

The Commission sees its policy as answering this call to transform society. In the following paragraphs we analyse Ireland from the perspective of people who are poor and socially excluded. This perspective provides a different analysis and vision from that provided to our society by its dominant thinkers and decision-makers. We believe the present reality and the vision being offered should both be seriously challenged. We go on to outline the key elements of an alternative vision which would see the emergence of a society where Gospel values were dominant. In conclusion we state why we believe the present moment of human history is so important. We also outline the Commission’s proposed agenda so as to take advantage of this moment and move Irish society towards a more Gospel-based future.

Ireland Today

When we look at Ireland today – north and south – we see a society, which ranks among the top twenty per cent of the world’s richest societies. We see people who have gained a great deal, materially, in recent years. The Republic's average per capita income is now substantially above the European average. The Good Friday Agreement has brought dramatic changes in Northern Ireland as well as in the Republic. We see a world of possibilities and opportunities open before many members of this society. At the same time we see great divisions in this society. One in every five people is below the poverty line. There is a major scandal of rural poverty. Many urban dwellers live in degrading conditions. Growing inequality is a major feature of society. Social exclusion is the lived experience of a large number of people. The rest of society marginalises these people.

When we look at power structures in Ireland we find that the process of decision-making involves the direct participation of a small elite who lead the major interest groups representing the powerful in Irish society. Those who can lobby, persuade, manipulate, even threaten the society, ensure their voices are heard. There is a growing demand for the involvement of people who are excluded. This demand comes principally from the community and voluntary sector. In the Republic the arenas of social partnership have been adjusted in recent years to include representatives of this sector. In Northern Ireland the new Legislative Assembly and its related bodies provides new possibilities for participation. How open decision-making structures are to hearing the voices of those who are marginalised and socially excluded remains open to question. Real power in Ireland – north and south – is in the hands of a small elite. This elite benefits from having such power while others pay the cost.

Looking at values and attitudes in Ireland we see a society which has maintained many traditional values. At the same time it is undergoing profound change. In the past few decades the values of the consumer society have become dominant. People assume that everything is replaceable. Priority is given to using human ingenuity and cheaper production methods regardless of quality or consequences for the environment. “Success” and profit are the objectives and they are sought in the shortest possible timeframe. Within this materialist and consumer society the religious practice rate is high by any standard. Many people, however, question the division between the religious ideals pronounced by various Churches and the values that guide the day-to-day lives of a great many Church members.

There are sharp class divisions in Ireland. The potential for mobility out of the more marginal and disadvantaged categories will be slight in the future if we continue to follow the present development model. There are other major divisions in Ireland between rich and poor, between young and old, between men and women, between north and south, between the various groups involved in the conflict in Northern Ireland, between urban and rural dwellers, between the employed and all others in society, and so on. Changes in the European context continue to have a major impact on the Irish situation. The more we look at our society the more we realise that there are groups who benefit from its economic, political, cultural and social structures and others who do not. The numbers who do not benefit from the present situation are large and the gap between them and the rest of society is widening. This is not inevitable. Rather it is the result of decisions taken by people to organise society in this particular way.

An Alternative Future

Is this the way our society should be organised? Is this the way God wishes our society to be organised? It seems to us that the obvious answer to both questions is in the negative. So two further questions present themselves: what kind of alternative future do we have to offer? And what are we doing to articulate and make concrete this alternative? These questions become especially important given the changing European context in which Ireland is situated.

When the politically and economically powerful in our world address the future, they offer us today only one vision - that of a society with expanding production, greater competitiveness, deepening divisions and wider gaps between rich and poor. They see power as being in the hands of a small elite. The most important people in such a society are seen as those who facilitate the more efficient running of the production process from which all of life’s “goodies” are presumed to flow. In reality the majority would have no say in the shaping of such a society and would not participate in its decision-making processes to any great extent. The very meaning of life would be radically altered, human rights would be eroded, human dignity would not be respected, human development would not be facilitated and the environment would be exploited.

We believe this vision needs to be seriously challenged. Our Christian values state clearly that we should not accept the present growing divisions in our world but should, instead seek to eliminate them. We need to search for and strive to achieve balance in our values, goals and priorities. This will require a shift of emphases.

We need to move from quantitative to qualitative values and goals, from organisational to personal and interpersonal values and goals. We need to move from values that are economically based towards values that put far more emphasis on the real needs and aspirations of people. We need to move from mechanistic to organic values, from masculine towards feminine priorities. We need as a society to change direction, to find and maintain balance in all our relationships – with ourselves and God, with people we are close to and people in the wider world and in our relationship with the environment.

A society moving along these balanced lines would be a just society based on the Biblical understanding of justice as a harmony which comes from fidelity to right relationships with God, with our neighbour and with the environment.

We stand at a moment of great change in human history. The human race is faced with major choices concerning the future. Ireland in strengthening its commitment as a European partner is embarking on an uncharted journey where many choices about our future will be made. We believe that Irish religious should be involved with ALL Irish people in making these choices. We should not be afraid of this. We should not consider such a role as arrogant or unrealistic. The Gospel calls us to be involved in shaping a future, which is closer to the values of Jesus Christ.

The Goal Statement of CORI states that “CORI is a voice for Irish Religious on Justice issues. It promotes justice and challenges unjust structures by:

• Doing ongoing social analysis of the present reality;
• Identifying root causes of injustice;
• Developing an alternative vision of society, and
• Working for the realisation of this alternative vision”.

The Goal Statement goes on to identify specific goals concerning spirituality, collaboration, women, care of the earth. Northern Ireland, violence and our methods of working. In service of the Conference’s Vision and Goal Statement the Justice Commission will continue its work of analysis, reflection, development of alternatives, advocacy, enabling and communication.

4. Main areas of CORI Justice Commission's work

In actualising this statement of its stance, analysis and vision the CORI Justice Commission divides its work under four major headings:

• Public Policy
• Enabling and Empowering
• Spirituality
• Partnership Projects

4.1. Public Policy

Public policy is a major determinant in shaping society. Consequently, the Justice Commission puts a great deal of effort into addressing this area. Later we will list some of the issues addressed by the Commission in this context. Here we simply list some of the initiatives and activities of the Commission in this arena during the past eighteen months:

• Held its annual Social Policy Conference on the topic Participation and Democracy: Opportunities and Challenges.
• Published a book containing the conference papers, with the same title.
• Published its annual Socio-Economic Review entitled: Prosperity and Exclusion: Towards a New Social Contract.
• Made a submission to Government and it's various Departments before both National Budgets in that period.
• Published a detailed analysis and critique of both national Budgets in that time-frame.
• Presented a paper on the future of work at the Vatican's 20th anniversary conference on the Papal Encyclical Laborem Exercens.
• Made a series of interventions on issues relating to Refugees and Asylum Seekers
• Were members of and made an input to the following Government Working Parties:
• Basic Income Working Group
• Benchmarking and Indexation of Social Welfare payments Working Group.
• Refundable Tax Credits Working Group
• Racism Awareness Working Group.
• National Committee of the UN Year of the Volunteer
• As well as these the Justice Commission has an ongoing participation in the following State Bodies
• National Economic and Social Council (NESC)
• National Economic and Social Forum (NESF)
• National Agreement Monitoring Group (Programme for Prosperity and Fairness)
• Social Economy Monitoring Group.
• Labour Market Standing Committee
• Environmental Monitoring Committee of the National Development Plan. .0pt'>
• National Anti-Poverty Strategy- Income Adequacy Working Group.
• National Anti-Poverty Strategy- Employment/Unemployment Working Group.
• Public Transport Partnership Forum
• The Commission also has ongoing participation in several ‘linkage’ groups, linked to State bodies. These cover issues ranging from housing to the national spatial strategy, from environment to refugees and asylum seekers.
• The Justice Commission is represented on County Development and/or Strategic Policy Committees in twelve Local Authorities.
• The Commission also has an active involvement in most of the 34 Community Forums established in the Local Authorities.
• The Commission believes that these initiatives have made a significant contribution to :
• Updating the social analysis not just of the Commission but of the many groups who use its material.
• Communicating the analysis to a wide audience.
• Providing a forum for policy makers to discuss and debate specific issues of public policy.
• Providing opportunities to highlight the divisions in society..0pt'>
• Providing opportunities to be a voice for the voiceless.
• Providing an alternative vision
• Providing concrete proposals for action.
• Outlining and suggesting models of good practice.
• Arguing for a fairer distribution of national resources.

These initiatives are focused on a variety of groups in Irish Society. Among these are:

• Opinion formers
• General public
• Religious
• Churches (leadership and members) and other religions
• Politicians and members of Government
• Government Departments and local government structures
• Academic world
• Social Partners (Business, Trade Unions, Farmers, Community and Voluntary Groups)
• Activists
• Those who share our values especially in the voluntary and community sector

The Commission receives much feedback that confirms these activities and initiatives are particularly appreciated by those involved in advocacy work with poor people and excluded groups.

4.2. Enabling and Empowering

A major focus of the Justice Commission’s work is enabling and empowering people and groups to participate in all arenas where decisions effecting their lives are taken. To this end the following initiatives were undertaken.

GCIPP Programme

Since 1995 the Justice Commission has had an internship programme. This has now been developed into a programme entitled Generating Change and Influencing Public Policy. This programme is part-time, lasts for one year and is done by people who are active in a range of different policy areas. At present there are 10 people on the programme.

Public Policy Network

Those who have completed the programme Generating Change and Influencing Public Policy (Internship Programme) meet regularly to discuss policy issues and develop strategies to effect change. This is also a great source of support and information sharing for members.

Workshops and Seminars

The Justice Office facilitated 41 workshops/seminars, involving over 2,250 participants. These were structured to share the research and information of the Office, to learn from the experiences and insights of participants, to address issues concerning the future and to share models of good practice.

CARA Network

Over ten years ago the CARA Network was started to connect groups and individuals, both religious and lay, who were involved in initiatives to transform society. During the past five years this network has been contributing to and monitoring the Task Force on the Reform of Local Government. Members have been playing a very active part in local communities alerting community and voluntary groups to the developments taking place and facilitating their involvement A number of its members have been elected to Strategic Policy Committees and County Development Boards. They are also very active in the County Community Forums. (CARA is an Irish word meaning 'friend'. In this context it stands for Communication, Analysis, Reflection and Action.)

Justice Responsibles Network

Many Congregations have named personnel who co-ordinate justice ministry. This network which meets twice annually facilitates members in reflecting on their role, providing mutual support, sharing models of good practice and in developing strategy for and with religious.

CORI Social Economy Network (C-SEN)

In the period 1994-98 the Justice Commission piloted a programme which created jobs for 1,000 unemployed people in 162 projects in six pilot areas around the country. Since then the Commission has been working to get the concept of the social economy accepted and relevant action taken by Government. Substantial progress has been made on this and a social economy programme is now being developed throughout the country. This network links the 162 projects in the original pilot programme and the network meets twice a year.

4.3. Spirituality

The work of the Justice Commission is deeply rooted in the Christian Scriptures and in Catholic Social Thought. The issue of spirituality has been central to its deliberations from the very beginning. This issue is addressed by the authors in a separate paper entitled The Practice of Spirituality and Social Engagement.

4.4. Partnership Projects

The fourth major area of work for the Justice Commission is its involvement in partnership projects. The principal ones are as follows:

Basic Income

The Justice Office works with 17 countries (12 in Europe), USA, Canada, Brazil, South Africa and New Zealand to draw together work in progress on Basic Income around the world. This network is called BIEN. Sean Healy and Brigid Reynolds presented a paper at the biannual Conference held in Berlin in October 2000. They also contributed a chapter to a book on this issue produced by this network and published from the University of Amsterdam. In 2002 they presented a paper on basic income to a conference at the University of Liege.

The Commission also developed a partnership project with Citizen’s Income Trust in Britain on this issue. This produced a study of Basic Income for the United Kingdom.

Benchmarking the Social Economy

As noted earlier the development of the social economy has been a particular concern for the Commission. This particular initiative is a joint project with organisations in Belgium, France, Portugal and Germany on developing benchmarks for models of good practice in relation to the social economy. This project was highlighted in a report from Ireland's Comptroller and Auditor General entitled Local Development Initiatives. In the context of looking at ‘value for money’ this initiative was seen as having a valuable contribution to make to the employment and future prospects of unemployed people.

Networks and the Social Economy

This is a network of projects in Ireland, Italy, France and Portugal who develop job-creation projects in the social economy and link these projects to promote best practice. The Irish Government has a special interest in this project through the Department of Enterprise, Trade and Employment.

Study of Strategic Responses to Unemployment

Two networks have been developed with partners in France, Denmark, the Netherlands and Belgium to provide strategic solutions for the problem of social exclusion caused by unemployment. One is a network of projects, the other is a network of legal experts.

Ecumenical Initiatives.

The Justice Commission also seeks to develop ecumenical initiatives. Over the past eighteen months being covered in this listing there have been a number of initiatives. In Ireland work has been done with the Church of Ireland, the Jewish community and the Islamic community. The Office also addressed a conference in London organised by Church Action on Poverty. This was chaired by Lord Sheppard and addressed the issue of 'Work and Worth: A New Agenda'.

Ethical Investment

The Commission also has a project on ethical investment. This involves some research and providing advice to a financial institution on ethical investment policy.

5. Key issues

CORI Justice Commission works on.0pt'> Below we list some of the key issues addressed by the Justice Commission in its work. These are critical issues for society at this time and how they are addressed will have a major bearing on the future shape of society. We do not address them in any detail here. In other arenas we have produced and published a substantial amount of material on each of these issues analysing the present situation, outlining an alternative vision for the future and developing implementation pathways to move towards a more desirable future. We list them here so that readers, unfamiliar with our work, will gain some idea of the range of issues we address.

Poverty
Income distribution
Taxation
Work/unemployment/job creation
Social Exclusion
Participation
Social Provision
Accommodation
Healthcare
Education
Cultural Respect
Sustainability - local, national and global. In this context we include social, economic and environmental sustainability.
Rural Development
Specific Northern Ireland issues
North/South (of the world) relationships

Most of these issues are addressed in terms of the local, the national, the European Union level and the wider international context. This is not an exhaustive list but it serves to illustrate the range of issues addressed by the CORI Justice Commission. We now address the issue of social partnership specifically. Many of the issues listed above are addressed within the social partnership process, although not exclusively so. They are addressed in a wide range of other policy forums as well.
6. Social Partnership

Here we tell a very short version of the story of the development of social partnership in Ireland in the last decade and a half. For a more detailed treatment of some of this material see the book Social Partnership in a New Century edited by the present authors and published by CORI Justice Commission.

6.1. Social Partnership in Ireland since 1987

Social partnership as we know it today emerged in the late 1980s when Ireland's economic and social development was in dire straits. There was deep recession, falling living standards, declining employment, very high unemployment levels, huge exchequer borrowing requirements and a debt/GNP level that was unsustainable. O'Donnell (1998) concluded that "by the mid-1980s, Ireland's economic, social and political strategy was in ruins, and its hope of prospering in the international economy was in considerable doubt".

Social partnership emerged from a concerted effort by Government, trade unions, employers and farming organisations to address this reality. The National Economic and Social Council (NESC), of which all of these sectors were members, produced a strategy document which, in turn, provided the basis for a three-year national agreement entitled The Programme for National Recovery.

Following this programme there have been four further national agreements each covering, about a three-year period. Each of these was based on a strategy document produced by the NESC. These strategy documents reviewed the preceding period, set out the challenges to be faced in the period ahead and recommended a strategic approach to economic and social policy in that period. By definition these documents were compromises between the different sectors involved. They did, however, involve a great deal of learning from each other as different perspectives and priorities were discussed and taken into account. In this process different social partners did not give up their own goals, objectives or tactics. However, they did agree "an inclusive overview of options, challenges and trade-offs, in the period covered by each of these strategy reports" according to McCarthy (1999:7).

6.2. The Community and Voluntary Pillar of Social Partners.

From the inception of this process in 1987 the CORI Justice Commission argued that there should be a fourth pillar of social partners in addition to the three already in place i.e. trade unions, employers and farmers. According to the Commission this fourth pillar should represent excluded groups not represented in their own right in the social partnership process. The Commission highlighted the absence of unemployed people, poor people and women from the process.

In 1993 the National Economic and Social Forum (NESF) was established with a broader range of participants than the NESC. Among its members were people representing a range of excluded groups. Its remit was to address issues of social policy, exclusion and unemployment.

When the negotiations for the fourth of these agreements began in Autumn of 1996 Government invited eight groups from the community and voluntary sector to be part of the discussions. These became the Community and Voluntary Pillar of Social Partners that negotiated, signed and monitored the implementation of the last two agreements. Representatives of the pillar were included in NESC as well. CORI Justice Commission was one of the organisations invited to be a member of the Pillar. It also provides one of the Pillar's five representatives on the NESC.

The Commission was very conscious of the challenges this new role provided. In particular it was aware of the importance of recognising that the negotiating role should not lead to a compromising of the prophetic role it had come to exercise at this time. The Commission discussed these challenges and how they were to be addressed in detail and agreed to proceed with this new involvement. Over the years since then the Commission has constantly monitored its own performance on this issue and made adjustments as it saw fit. It has maintained its approach as outlined above. It has also maintained its stance. The dialogue and 'conversation' capacity demanded of the Commission has increased substantially within the social partnership process and we have tried to develop this in the light of experience in this process as well as in other arenas.

6.3. The Social Partnership Process

We have already outlined the pattern of the social partnership process. It involves reflection, analysis and policy prescription developed on a shared basis. This is followed by negotiation, implementation and monitoring of a national agreement. The NESC strategy document that underpinned the Partnership 2000 agreement , (NESC,1996:66) provided a characterisation of social partnership along these lines:

• It includes a combination of consultation, negotiation and bargaining;
• It is heavily dependent on a shared understanding of the key mechanisms and relationships in any given policy area;
• Government plays a unique role. It provides an arena within which the process operates. It shares some of its authority with social partners
• The process reflects inter-dependence between the social partners. This is necessary because no party can achieve its goals without a significant degree of support from others;
• It is characterised by a problem-solving approach which seeks to produce a consensus in which various groups can address problems together;
• It involves trade-offs between and within interest groups;
• It involves different participants on various agenda items ranging from national macro-economic policy to local development. This is a good description of the social partnership process. It is also a statement of the conditions required of a social partner for effective participation in the process. O'Donnell points out (2001:6ff) that as the process has developed it has become clear that there are two further conceptions, or dimensions to social partnership:
• Functional interdependence, bargaining and deal making.
• Solidarity, inclusiveness and participation. O'Donnell develops these two points and adds a third as follows:

Effective partnership involves both of these, but cannot be based entirely on either. To fall entirely into the first could be to validate the claim that the process simply reflects the power of the traditional social partners, especially if claims for the unemployed and marginalised are not included in the functional inter-dependence, and are seen as purely moral. To adopt a naïve inclusivist view would risk reducing the process to a purely consultative one, in which all interests and groups merely voiced their views and demands. While these two dimensions are both present, even together they are not adequate.

There is a third dimension of partnership, which transcends the two discussed above. Although the concepts of 'negotiation' and 'bargaining' distinguish social partnership from more liberal and pluralist approaches, in which consultation is more prominent, they are not entirely adequate to capture the partnership process. Bargaining describes a process in which each party comes with definite preferences and seeks to maximise their gains. While this is a definite part of Irish social partnership, the overall process (including various policy forums) would seem to involve something more. Partnership involves the players in a process of deliberation that has the potential to shape and reshape their understanding, identity and preferences. This idea, that identity can be shaped in interaction, is important. It is implicit in the description of the process as 'dependent on a shared understanding', and 'characterised by a problem-solving approach designed to produce consensus' (NESC, 1996b: 66). This third dimension has to be added to the hard-headed notion of bargaining, (and to the idea of solidarity), to adequately capture the process. (O'Donnell, 2001:6-7)

It is interesting to note in this context that the social partners do not have to agree on an ultimate social or economic vision of the future. Rather, the focus is primarily on a problem-solving approach. In practice, this means that consensus and a shared understanding are outcomes from the process rather than pre-conditions.

Some people find it difficult to understand that consensus can be reached even though there are underlying conflicts of interest or very different visions of what the future ought to be. Yet this is the reality. The key to understanding why this is so may lie in the fact that those participating see the consensus as provisional. They are prepared to support movement towards specific action while holding open the option of reviewing the underpinning analysis as well as the vision and goals that underpin the consensus. In practice this review process is an ongoing part of social partnership.

6.4. Characteristics of a Social Partner

In studying social partnership very often the nature of a social partner is understood in traditional terms that have evolved in countries with a longer tradition of partnership-type systems. A year after the Community and Voluntary Pillar had become part of the social partnership process the NESF published a report that addressed, among other things, the new view of what a social partner is now. It contrasted the traditional of a social partner with the newer version now in place in Ireland. Table 1 is taken from that NESF report (NESF, 1997:37).

Table 1: Traditional and New Ideas of a Social Partner

Table 1: Traditional and New Ideas of a Social Partner

Traditional idea of a Social Partner	New characteristics of a Social Partner
Monopoly	Continuous mobilisation
Function (economic or regulatory)	Co-ordination of functions
Producer groups	Actors in civil society
Bargaining	Information as key resource
State intervention in the economy Hierarchy	New forms of public advocacy - analysis - dialogue - shared understanding
	Actor, not just voice

The traditional idea of a social partner is summarised in the left-hand box. One key idea is that a group had to have a monopoly of representation of a given social group. For example trade unions represented all workers. Employer's organisations represented all enterprises. A second characteristic was their functional roles. They were seen as having a definite functional role in the economy a clear regulatory role. Some argued that only producer groups should be recognised as social partners. Organisations in these situations spent much of their time bargaining with each other and with government. Because the government intervened extensively in the economy it found itself in negotiation with these bodies. Finally, each of the social partners in this traditional sense were organised hierarchically and were very concentrated.

According to the NESF report this traditional understanding of what constituted a social partner has become less relevant. The characteristics of social partners in the newer understanding are summarised on the right hand side of Table 1. Social partners are now seen to be continuously mobilising citizens who have problems that need to be addressed. Social partners must now offer practical achievements and a vision of a better economy and society. Their strength is now seen far more in co-ordination; they assist in defining and co-ordinating functions rather than relying on fixed functional roles. They are actors in civil society who respond to unintended consequences of policy, economic change or action by other groups. According to the NESF information is now the key resource which a modern social partner brings to the table."They are needed precisely because the information is generated within their organisational ambit. They ave the links, the capacity, and the contacts with what is really going on in society.

They also use new forms of public advocacy. In place of the old form of bargaining we now have analysis, dialogue and shared understanding. The NESF report makes the telling point that "It is possible to bargain without discussing, and a lot of traditional bargaining was like that. At the other extreme, it is possible to analyse without putting yourself in the shoes of the actors, and a lot of traditional social and economic science was like that. In between, there is a combination of discussion, analysis and deliberation, which might be called negotiated governance. Irish social partnership, at its most effective, seems to be moving towards this model. This challenges social partner organisations to facilitate analysis and action at local level and feed this in to policy at national level…." (NESF, 2001:38-39).

A social partner must be an actor in society, not just a voice. Action is critically important. Mobilising, organising, delivering and solving problems with others, are now central characteristics of effective social partners. This means that the organisation must be prepared to be constantly shaped and reshaped in light of the action it takes.

6.5. Demands of social partnership on social partners

The social partnership process is extremely demanding for those involved. It makes huge demands on an organisation's resources and on the individuals who play an active role.

An example of these demands can be seen in the fact that commitment to this social partnership process requires involvement in the extensive network of policy design and evaluation involving social partners and government that has emerged. There are a great many working groups, task forces and committees established as part of the implementation of the national agreements. These are "testimony to the attempt to apply the policy learning process developed at a strategic, national level to a variety of policy problems which have been identify in the partnership process" (McCarthy 1999:9). This involvement takes time, personnel and resources. It demands much analysis and critique so that one can play a competent part in the on-going process.

Another example of the demands of social partnership is in the need for major additional work to link the action with which the organisation is involved with the partnership process.

For the Justice Commission it also demands that alternatives have to be investigated and evaluated to see if they would provide better opportunities or more likely avenues to progress the core issues already identified above. In this evaluation the Commission always seeks to compare what the social partnership process is producing with what any real or likely alternative might produce. The evaluation is not against some Utopia that is unlikely to emerge any time soon. The Commission also recognises that the social partnership process is not the only means of engaging in the economic, political, cultural and social reality. However, it does provide a major opportunity and an enormous arena in which to advance many of the issues considered to be entral to shaping a better future.

7. Engagement as Economic, Political, Cultural, Social Actor

Reflecting on the nature of social partnership and on the Justice Commission's involvement in that process as well as in its other activities we suggest the following seven requirements for Church to be a credible actor in the economic, political, cultural and social spheres. This is not meant to be an exhaustive list but these seem to us to be especially relevant given our experience in the social partnership and related contexts of Ireland at the start of the 21st century. The seven we suggest are:

• Social analysis
• Dialogue - the issue of conversation
• Being bilingual
• Vision-building
• On-going action
• Being prophetic and resisting the temptation to be absorbed by the status quo
• Realising credibility comes through involvement

7.1. Social Analysis

For the most part there is no one, clear, obvious, unambiguous reading of reality. In both conversations with which the Commission engages reality is being constructed. There is a perspective brought to bear in reading reality by those who approach it with the eyes of Faith which is different to the perspective of one who does not approach it in that way. It is the same reality, however, that is being approached, no matter what ones perspective on, or reading of, that reality.

For the Justice Commission it is important to engage with both 'conversations'. However, the analysis of the wider reality is influenced by the Faith-based conversation being conducted on an ongoing basis. The stance the Commission brings to bear in its analysis work is very influenced by the Faith-based conversation.

To engage meaningfully in either conversation, social analysis is crucial. The Commission approaches it with a Faith-based perspective. That, however, does not mean that the work of social analysis needs to be any less thorough. As we have seen already the Commission follows a particular model of social analysis which it finds useful in its work. This work is always 'work in progress'.

7.2. Dialogue - the issue of conversation

We have seen in this paper already that the issue of dialogue is of crucial importance to the Justice Commission. The Commission conducts two on-going dialogues - one with those who share our Faith and one with the wider society. Both of these dialogues are conducted with two sub-groups - those who are committed/involved and interested and those who are not. These dialogues are conducted at the same time. Each dialogue informs and influences the other so they are genuine two-way affairs. Consequently, each dialogue constantly challenges the other at a variety of levels. To be involved in such a dialogue demands a willingness to change ones mind. The language spoken in these dialogues are different (cf. Next section).

The new understanding of a social partner also demands that we dialogue. It demands that we dialogue with our own membership and constituency, with the wider society and with the policy-making process.

In this context the issue of 'conversation' becomes an important issue. According to David Tracy (1987:19)

"Conversation is a game with some hard rules: say only what you mean; say it as accurately as you can; listen to and respect what the other says, however different or other; be willing to correct or defend your opinions if challenged by the conversation partner; be willing to argue if necessary, to confront if demanded, to endure necessary conflict, to change your mind if the evidence suggests it."

In this context 'conversation' is a deeper engagement than might often be associated with that term. O'Connell (2001:7) states that

"Conversation is not just sharing in another's folklore, food or art. These sorts of meetings can be important as a prelude to conversation. Conversation is more to do with the type of encounter that enlarges one's sense of connection and responsibility. It …transforms the participants and energises them to work towards what is good for all in society. Where there is a constructive, enlarging engagement with the other, there is a greater commitment to the common good."

Sharon Parks and her co-authors (Parks et al: 1996:70) state that "the single most important pattern we have found in the lives of people committed to the common good is what we have come to call a constructive engagement with the other." This highlights the importance of conversation in this process. The Commission has recognised this and sought to develop conversations in a variety of areas as we have seen already. Sometimes they are called conversation and sometimes not. The issue of conversation is central to Church's involvement as a real actor in these arenas.

The issue of developing communities of discourse which produce a basis for generating change is also relevant here. Wuthnow (1989) has expanded on this in his work. He notes remarkable similarities in the social conditions surrounding three of the greatest challenges to the status quo in the development of modern society i.e. the Protestant Reformation, the Enlightenment and the rise of Marxist socialism. He argues that each episode of cultural ferment occurred during a period of rapid economic growth that fed new resources to central governments at the same time as it uncoupled traditional alignments between the states and factions of their ruling elites. These conditions were receptive to powerful new ideas and also facilitated greatly increased public discourse about social and individual responsibilities. The parallels with today are striking and highlight, again, the importance of 'conversation' that forms the foundation of any community of discourse.

7.3. Being bilingual

We have spoken earlier in this paper of the need to be bilingual in the work the Commission does. One language is spoken in the dialogue with those who share our Faith. A different language, sometimes very different, is spoken in the dialogue with the wider society. In these two conversations there are different assumptions, different core meanings, different perceptions of the world.

The dialogue with the wider society is critically important because those with whom we dialogue are real, they make decisions that have major impacts on people's lives and on the wider world enerally. However, if we fail to maintain a second conversation, i.e. with those with whom we share Faith, then we are very likely to accept uncritically as our own the analysis, the perceptions etc. of the dominant culture in the wider world. In fact we believe that the conversation with those with whom we share Faith is the critically important one of these two conversations.

Church education should therefore be bilingual. Christians should have the capacity to engage in both of these dialogues, speak the appropriate language in both of these conversations.

We believe the language used in the conversation with those who share our Faith would not be effective in the conversation with the wider world. In fact it is likely to be irrelevant. The failure to appreciate this fact, and the consequent need for bilingualism, lies at the root of many failed interventions by Church in wider society debates in Ireland over recent years.

7.4. Vision-building

The Book of Proverbs tells us that "without a vision the people perish". We believe this to be as true today as it was in Old Testament times. The dominant vision being offered at the moment sees wealth, employment and production growing steadily into the foreseeable future. This is seen as producing a world in which everyone has a stake and where the good life can be accessed by all. It assumes that everyone, in a world population twice as large as it is today, can reasonably aspire to and achieve the high-consumption lifestyle enjoyed by the world's affluent minority at present. This is seen as progress. We believe this conventional economic vision of the future is unattainable. Environmental degradation, encroaching deserts, unemployment, starvation, widening gaps between rich and poor, exclusion from participation in either decision-making or development of society: these are the global realities confronting decision-makers today. Social inequality, endemic deprivation and environmental stress accompany economic globalisation. Millions of people in richer parts of the world recognise these problems and are seriously concerned about the plight of the billions of people on all continents whose lived experience is one of constant exclusion from the resources and the power that shapes this world.

The Justice Commission believes that if we are to be serious about the reign of God then we must be serious about this issue of vision-building. This is especially important in the Irish context, as much of Ireland's development is dependent on the wider world providing a positive environment.

Vision-building is not just the work of sociologists or economists. It is very much the work of theologians as well. Historically, the best theologians were not those who repeated the past but those who fashioned a more profound vision and a more vibrant motivation for action for the Christians of their own era and context. It is crucially important therefore, if one is to be a credible actor in the economic, political, cultural and social context, to be involved in vision building.

7.5. On-going action

An approach that is not rooted in on-going action in the economic, political, cultural and social reality is simply not credible in the context we are discussing here. This is clearly acknowledged in Catholic Social Thought (CST). Over the years CST has sought major changes in the socio-economic order. In previous centuries there was huge commitment to action in areas such as education and healthcare. Over the past thirty to forty years there has been a growing realisation that the Churches need to seek deeper changes in socio-economic realities if the reign of God is to be advanced. While there have been calls for "bold transformations, innovations that go deep" there is also a growing recognition that talk alone is simply not enough. Neither is it sufficient to educate people and expect them to go and transform reality without, ourselves, being deeply involved in action for transformation as well. Catholic Social Thought has a range of themes that provide a coherent focus for action. These include:

• Dignity of the human person
• Human rights and duties
• Social nature of the person.
• The Common good
• Relationship, subsidiarity and socialisation
• Solidarity
• Option for the poor. The Justice Commission has believed from its inception that on-going action was crucially important if change was to come and if the Justice Commission was to be credible. These themes have provided a framework to underpin its action. Talking about solidarity is not enough. It is crucial that action is taken to generate the necessary change to build solidarity.

7.6. Being prophetic and resisting the temptation to be absorbed by the status quo.

The more one is involved in the wider reality the greater the danger that one will be absorbed by the status quo. Instead of proclaiming the Good News of Jesus Christ and working for a world that is closer to its core message, there is a likelihood that one may accept the dominant core meaning underpinning the status quo. Brueggemann (1978) has put it succinctly when he argues that it is crucial that we always seek "to nurture, nourish and evoke a consciousness and perception alternative to the consciousness and perception of the dominant culture around us". This is the prophetic task.

This involves critiquing the dominant consciousness and working to dismantle it. But it goes beyond this. It also seeks to energise people and communities. In this context the issue of an alternative vision is central. According to Brueggemann "the key word is 'alternative' and every prophetic minister and prophetic community must engage in a struggle with that notion".

The dominant culture that underpins the status quo is uncritical. More than this, it finds it very difficult to tolerate serious and fundamental criticism and goes to great lengths to stop such critique. At the same time the dominant culture becomes a wearied culture, unable to be energised by alternative ideas or visions. We acknowledge that few people relish critique! The challenge to the prophetic dimension is to hold these two aspects together. Either by itself is not faithful to the Christian tradition. For us, this is the point at which compassion is central. Without compassion the activity lacks a central component of the Judeo-Christian understanding of what it means to be prophetic. As far back as Moses we see a dismantling of the politics of oppression and exploitation and its replacement with a politics of justice and compassion. In the Exodus experience this politics was not just focused on developing a new religion or new religious ideas or a vision of freedom. It was clearly focused on the emergence of a new social community, a community with a history that had to devise laws, a form of governance and order, norms of right and wrong and sanctions of accountability.

Central to this is the notion of the freedom of God. If the God we worship is a static god of order who simply protects the interests of those with resources and power then oppression will follow. On the other hand if the God we worship is free to hear the cry of the poor, free of control by those with resources and power, then that will emerge in what we do and what we are. It will show itself in the work of justice and compassion. Focusing on politics and social change alone is not enough. Focusing on God alone is not enough. Both dimensions are essential if we are to be prophetic.

7.7. Realising credibility comes through involvement

Finally, it is must be recognised that credibility never comes by 'speaking from on high'. Involvement is essential for credibility to be present. In part, at least, this mirrors one of the new characteristics of social partners we identified earlier. Being a voice is not enough. One must also be an actor. If one is to be credible in the economic, political, cultural and social context then it is crucial that one be involved in a real way and not just pronouncing from 'on high'.

The Justice Commission always offers its analysis, critique, vision, alternative ideas, activities etc. as contributions to the public debate on the specific issues addressed. It seeks responses to its positions. It is always conscious that it has no claim on having all the answers or that what it offers is coming directly, or indirectly, from God! Rather it realises that dialogue and conversation with the wider reality are crucial aspects of seeking the truth. It is also aware that it must be open to change in response to what emerges in the dialogue. Too often positions emanating from Church bodies are presented in an unintelligible language and/or depend for their credibility on claims that they are emanating, even if indirectly, from God. This is not a credible position for an actor in these arenas in the twenty-first century.

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Basic Income in Ireland 2002

2002, January 5th: Basic Income in Ireland: Paper presented by Sean Healy at conference on 'Basic Income in Europe', University of Liege, Belgium.

Report of Social Welfare Benchmarking and Indexation Working Group

October 08th, 2001: CORI Justice Commission comments on the Report of Social Welfare Benchmarking and Indexation Working Group

The CORI Justice Commission has commented on the Report of the Social Welfare Benchmarking and Indexation Working Group. The main points made by the Commission were:

• The CORI Justice Commission warmly welcomes the recommendation of the Working Group that the lowest social welfare rates should be benchmarked.
• The Commission also welcomes the recommendations that
  • this benchmark should be index-linked to society's standard of living as it grows and that
  • the benchmark should be reached by a definite date.

These recommendations mark "a major breakthrough in the struggle to tackle poverty and social exclusion in Ireland".

These recommendations were made by a majority of the Social Welfare Benchmarking and Indexation Working Group established as part of the Programme for Prosperity and Fairness (PPF).

The working group's final report has just been submitted to Government and awaits Government decision in the context of the forthcoming Budget and the review of the National Anti-Poverty Strategy (NAPS) which is due to conclude next month.

CORI Justice Commission strongly urges Government to accept the recommendation to establish a benchmark for the lowest social welfare payments that would be reached by 2007.

The Commission also strongly recommends that Government set the benchmark at 30% of Gross Average Industrial Earnings. To do this would have a dramatic impact on reducing income poverty in Ireland and would go a long way towards removing the most fundamental cause of social exclusion.

The index to underpin social welfare payments that the working group chose was Gross Average Industrial Earnings (GAIE).

A majority of the working group agreed that the benchmark for social welfare payments by 2007 should be 27% of GAIE. In 2001 terms this would mean that the lowest social welfare payment (currently at £84 a week) should be £101.

The Community and Voluntary Pillar and the Trade Union Pillar of Social Partners both argued, and continue to argue, that the benchmark should be set at 30% of GAIE. In 2001 terms this would bring the lowest payment for a single person to £117 a week.

The working group also agreed that the benchmark be reviewed every two years and within that process it was accepted that the proposal to set the benchmark at 30% of GAIE could be revisited.

All members of the working group agreed that basic child income support (i.e. Child Benefit and Child Dependant Allowances combined) should be set at 33-35% of the minimum adult payment rate. The C+V Pillar representatives offered qualified support to this position, citing concerns that the minimum adult rate must be set at an adequate level if the proposal is to be meaningful, and pointing to the need for renewed research on the costs of rearing children in order to inform the development of policy in this area.

If the lowest social welfare payments were benchmarked at 27% of GAIE this would mean that by 2007 the basic child income support would be in the range of £47 to £50 per week.

If the recommendations were implemented it would mean that the lowest social welfare payment would rise dramatically. It would also mean that the proposed benchmark for the lowest social welfare payments would be reached within a definite timeframe, and social welfare payments would continue to rise in line with the improving standard of living in the wider society." The only previous benchmark was the Commission on Social Welfare's target that was linked to a specific amount of money and was up-rated only by inflation.

The CORI Justice Commission believes that Government should decide that the benchmark to be reached in 2007 would be 30% of GAIE. This would have a dramatic impact and mark real progress.

The majority of the working group who agreed to the recommendations included the Department of Social, Family and Community Affairs, the Community and Voluntary Pillar, the Trade Union Pillar and the Farming Pillar ( i.e. three of the four pillars of social partners).

The minority who dissented was the Department of Finance, the Department of Enterprise, Trade and Employment and IBEC (representing the employers' pillar of social partners).

This working group was established as part of implementing the Programme for Prosperity and Fairness. Its report is available from the Department of Social, Community and Family Affairs. It can be accessed on the web at: http://www.dscfa.ie/dept/reports/index.htm

Main recommendations of the PPF Benchmarking and Indexation Working Group

• There should be a benchmark for the lowest social welfare payment.
• This benchmark should be based on an independent index linked in some way to the standard of living that grows over time.
• The benchmark should be reached by a definite date-the Budget for 2007.
• The benchmark recommended by the majority was 27% of Gross Average Industrial Earnings. This would be the equivalent of £101 for a single person in 2001.
• The working group accepted that the recommendation of the C+V Pillar and the Trade Union Pillar that the benchmark should be 30% could be looked at in the context of the review of the benchmark. This 30% benchmark would bring the lowest rate up to £117 for a single person in 2001 terms.
• The appropriate equivalence level of basic child income support (i.e. Child Benefit and Child Dependant Allowances combined) should be set at 33-35% of the minimum adult social welfare payment rate.
• There should be a regular and formal review and monitoring of the benchmark to ensure, among other things, that it is having an impact on poverty.
• The Report of the PPF Social Welfare Benchmarking and Indexation Working Group can be accessed at: http://www.dscfa.ie/dept/reports/index.htm

Civil society Its relevance in an Irish and EU context 22 September 2001

Civil Society: It's Relevance in an Irish & EU context by Sean Healy

Summary of presentation to the Wheel conference on civil society
Dublin, September 22nd, 2001

1. What is civil society?

Civil society has been described or defined in a variety of ways. Often, its meaning is determined by what a particular group wishes it to achieve. For some it is synonymous with a search for civility. Conservatives see it as being primarily about giving a larger role to community-based charities to address areas that Government does not wish to be involved in or that Government fails to deal with effectively. For Libertarians civil society is often used in the same sense as privatisation. They argue that the marketplace should be expanded through privatisation and the role of the state should be limited further. For Liberals, civil society plays a key role in the democratic project. Community participation in public projects is deepened, the performance of Government is improved and the public is more willing to accept initiatives, programmes and changes they have played a role in developing. For many the idea of civil society contains some combination of these components.

As a starting point for us it might be best to see civil society as a domain of secondary associations that mediate between the primary domains of market, state and family. This is the description used by Joe Larragy in his paper presented to the Irish Social Policy Association last July. In this Larragy draws on the extensive theoretical work done by Cohen and Arato in 1992.

Larragy describes the three primary domains in a very straightforward and useful way. They are identified as primary because they arise out of the establishment of capitalist property relations. "The market domain is driven by principles of exchange, anonymity, competition and abstract, instrumental rationality - more completely so on the part of capital than labour - with an ever-present tendency to generate social disembeddedness, i.e. disruption of customary social relations, and inequalities. The market itself cannot deal with the tendency towards disembeddedness it creates and which constitutes a threat. Consequently, there is a recognition of the need for a separate domain of civil society."

The family domain is at the other end of the spectrum to the market. The market, however, is dominant and this makes the family vulnerable to the disembeddedness already identified. (It should be noted in this context that some people see families as part of civil society arguing that civil society covers all parts of society where non-political institutions operate. This is one of many contested issues in this arena.)

Larragy identifies the state as the third of the primary domains. It has a monopoly of force within a given territory. It has formidable power yet it is not initially at least a public and accountable entity. Representative democracy and the right to participation of all in the electoral process that chooses governments are hard won gains but are far from sufficient to ensure that the state is accountable. Civil society associations often play a key role in challenging a dominant status quo that may well be oppressive of some groups or sectors in society. The emergence of the welfare state gave greater legitimacy to the state in the second half of the twentieth century. These, however, are now under threat with the spread of globalisation.

The idea of civil society is not a new one, nor is it a passing fad. It has played a crucial role in shaping the western world for centuries. It has impacted especially in the social and political spheres. If one were to include the classical and biblical traditions, its impact goes back millenia.

Civil society represents a search for a greater degree of harmony, balance and cohesion. There is a range of interpretations of what the term means but it can be seen as involving a desire to overcome social division and political inertia or chaos. It names the gaps and the failures, the injustices and the conflicts. It responds to these and seeks to transform them in a variety of ways, many of which are very creative. "While discourse is one expression of civil society, civil society is not only about discourse, but also involves a more practical working out of ideas, passions and frustrations, often demonstrating for the seemingly utopian or against the seemingly inevitable. Often it is simply 'demonstrating the possible'"

Michael Waltzer describes civil society as "the space of uncoerced human association" and "the set of relational networks - formed for the sake of family, faith, interest, and ideology - that fill this space."

Groups, organisations etc. that form civil society are voluntary and seek to serve larger social purposes. They have a 'values' orientation. Their authority does not come from the coercive power of legal monopoly. Rather they have to 'win' their legitimacy. It is their social and democratic purpose that is important in terms of this discussion. Civil society institutions do many things but of particular interest to us are the following:

They mediate between the individual and the large mega-structures of the market and the state, tempering the negative social tendencies associated with each.

They create important social capital; and

They impart democratic values and habits.

2. Civil Society in Ireland

In Ireland, traditionally, there has been a very substantial involvement by people in a wide range of civil society groupings and organisations. The European Values and Attitudes study of 1981 found that over half of all Irish people said they belonged to at least one voluntary organisation and 22% said they did voluntary work for one. In this context there was an exceptionally high involvement in religious, social welfare and youth organisations. The numbers involved in volunteering have fallen dramatically since then. Yet there is still substantial involvement and recognition at many levels that such activity is important in society.

The past two decades have seen substantial developments in the civil society arena. The development of social partnership is the principal one of these. It drew together trade unions, employers and farming organisations to negotiate national agreements with Government. Since 1996 there has been a fourth pillar in this process, composed of organisations and groups in the community and voluntary sector. The inclusion of this pillar followed a long process in which a number of organisations in the community and voluntary sector focused specifically on addressing issues of public policy and impacting on Government decision-making. Detailed analysis of what has happened, its impact and how it should develop in the future is beyond the scope of this presentation. However, it is important to acknowledge that these developments are within the ambit of civil society and should be analysed from that perspective (among others). Of particular interest in this context is the question of whether maintaining independence or developing interdependence is the best approach for civil society organisations and groups. Or whether both can be combined. Or whether these organisations risk emasculation through co-option. Or whether the partnership process in which they are involved, while being far from ideal, is the best available option and more likely to achieve the outcomes these organisations desire.

But there is far more to civil society than social partnership. There are a wide range of other civil society organisations and groups dealing with a wide range of issues. The recent discussions around the publication of the Government's White Paper on Supporting Voluntary Activity served to highlight this fact very strongly.

3. Challenges for civil society today and tomorrow

There are many challenges facing civil society in Ireland and in the EU today and tomorrow. I list a few that I consider to be among the most important but I do not consider this to be in any way an exhaustive listing.

3.1. The quality of public debate. There is an urgent need for public debate on a range of issues concerning the kind of society we wish to develop for the future. In recent years the quality of such debate has been very poor with little or no discussion on key issues. Some of these subsequently erupt into major confrontations between civil society groups and government in which there is little dialogue or listening. The decline in participation in the democratic process is another manifestation of the same problem. The need for ongoing public debate on key issues is a major challenge for civil society.

3.2. The issue of freedom, human dignity and the common good. The rise of an ideology of individual autonomy and the pre-eminence of individual choice has led to a decline in social authority. The question is not one of eliminating basic freedoms but rather of finding a balance between freedoms and the common good so as to ensure that everyone's human dignity is respected and promoted. The common good consists of specific moral and social goods such as justice, compassion and consideration for all others. These are desired and deserved by all human beings. How balances are to be struck and how the common good is to be achieved are major issues in the contemporary world.

3.3. The issue of citizenship. We live in a world where people are seen more and more as private consumers. We need to develop the deeper understanding of people as subjects and citizens. The growing realisation that community-based solutions are likely to be most effective in a great many areas of public policy goes to this point as well.

3.4. The issue of an emerging two-tier society. While there has been marked progress on a range of fronts such as employment, the land of the Celtic Tiger economy is becoming more deeply divided in many ways. Deeply divided two-tier societies are not good for people on either side of the divide. This widening of the gap must be reversed.

3.5. The issue of sustainability. The need for developments to be socially, economically and environmentally sustainable is recognised more and more. Yet much needs to be done to ensure that Ireland's development is sustainable under these headings.

3.6. The issue of progress. What constitutes progress? Now that Ireland has a level of income above the EU average, what do we consider to be progress? We don't have an EU level of infrastructure or an EU level of services. Do we see the attainment of these as progress? What would that demand of us? What else would we consider to be essential if Ireland is to genuinely progress in the years ahead?

4. An idea for progressing civil society

Do we need specific arenas in which issues such as these can be discussed, debated and progressed? One arena already exists in the structures of social partnership. However the social partners with the Community and Voluntary Pillar do not claim to represent all parts of the sector. Nor do they claim to represent all aspects of civil society. While the four pillars of social partnership represent large segments of civil society, they do not represent many others. Brigid Reynolds and I have proposed the establishment of a Forum on Civil Society in which a civil society debate could be conducted on an on-going basis. Some development along these lines is required if civil society's crucial issues are to be addressed.

References

1. Joe Larragy, Civil Society versus Market in Irish Social Policy, Paper presented to the annual conference of the Irish Social Policy Association, Trinity College Dublin, July 27th, 2001.

Jean L. Cohen and Andrew Arato, 1992, Civil Society and Political Theory. Massachusetts: MIT Press.

Larragy, op.cit. p. 3.

Larragy, ibid. p. 5

Michael Waltzer, "The Idea of Civil Society", The Kettering Review, Winter 1997, p. 8.

Cf. Don E. Eberly, The Meaning, Origins and Applications of Civil Society in The Essential Civil Society Reader, Oxford: Rowman and Littlefield Publishers.

Michael Fogerty, Liam Ryan and Joe Lee (1984), Irish Values and Atitudes: The irish Report of the European Values Study, Dublin: Dominican Publications.

Sean Healy and Brigid Reynolds, (2000), Developing Participation in a Changing Context, in Reynolds and Healy (eds.) Participation and Democracy, Dublin: CORI.

Work for All : 14 September 2001

Work for All: Why and How in a World of Rapid Change by Sean Healy and Brigid Reynolds

September 14, 2001

CORI Justice Commission issued a statement highlighting some key points of relevance to Ireland contained in a paper on Work for All: Why and How in a Rapidly Changing World. This paper was presented on September 13th, by Fr Sean Healy S.M.A. and Sr Brigid Reynolds, S.M., Directors of CORI Justice Office, at a conference to mark the 20th anniversary of the Encyclical Letter Laborem Exercens (On Human Work). The conference was held in the Vatican and was organised by the Vatican's Pontifical Council for Justice and Peace and five universities in Italy, Belgium Spain and the United States of America.

The main points in the statement are:

• Everyone has the right to meaningful work and to have sufficient income to live life with human dignity.
• The dominant paradigm in our world today is failing to ensure that everyone has access to meaningful work and sufficient income. Consequently it must be challenged and alternatives sought that can deliver these basics for everyone.
• An alternative paradigm needs to broaden the understanding of work to include a wide range of work that is not paid employment. It also needs to develop an income distribution system that improves substantially on the present model that has failed consistently to eliminate income poverty.
• The often-repeated mantra of Government ministers and other commentators that a job is the solution to poverty does not stand up to scrutiny.
• A job alone is no guarantee that a person's income is sufficient to take him/her out of poverty. Other policies, particularly in the area of income distribution, must be developed alongside job-creation if all those with a job are to be removed from poverty".
• The paper presented by Fr Sean Healy and Sr Brigid Reynolds outlines some major challenges faced by both society and the Catholic Church at the start of a new century. Principal among these are the challenges of ensuring that all people had access to meaningful work and sufficient income to live life with human dignity.
• In 1936 the famous economist John Maynard Keynes stated "the outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes." Despite a further sixty-five years of effort societies across the world are faced with the same failures today.
• Societies need to acknowledge their failures and face the challenge of finding more effective approaches towards ensuring everyone has access to meaningful work and has sufficient income to live with human dignity.
• The failure to tackle income poverty is one of the great failures of modern societies.
• Taking Ireland as an example the substantial increase in the number of jobs available in the Irish economy and the major reduction in the unemployment rate are most welcome. However, while Government acknowledges that there is still some way to go to ensure everyone can access meaningful work, it fails to recognise that there are substantial numbers of people still living in income poverty.
• Many jobs are low-paid and do not provide sufficient income to ensure people can live life with basic dignity.
• It is interesting in this context to note the anomalous situation whereby those with the lowest paid jobs do not benefit from tax reductions in the Budget because they are already outside the tax net.
• Addressing the question of how societies could ensure that everyone has sufficient income to live life with human dignity consideration should be given to the development of appropriate Basic Income systems. Such an approach would be work and employment friendly, would be efficient in labour-market terms and would treat men and women equally. It would also eliminate poverty traps and unemployment traps and could ensure that everyone would receive at least the poverty level of income. Such an approach would also face up to the changes in the global economy.
• The Irish Government's commitment to produce a Green Paper on Basic Income is most welcome. This Green Paper should be published before the end of 2001.
• Focusing on the challenges this situation poses to the Catholic Church the importance Catholic Social Teaching attached to people having meaningful work and sufficient income to live life with dignity needs to be strongly emphasised. However, the Church must not be confined to rhetoric. It must be prepared to provide coherent analysis and possible concrete ways forward. These should not be presented as the answer but rather as contributions to the ongoing comprehensive debate involving all relevant actors. This debate is required in all societies if these issues are to be given the priority they deserve and if they are to be tackled effectively.

Progressing Basic Income on a Range of Fronts

Progressing Basic Income on a Range of Fronts Sean Healy and Brigid Reynolds

BIEN Conference, Paper presented in Berlin, October 2000

Abstract

Debate on basic income has focused mainly on 'what' and 'why'; this paper deals mainly with 'how', where' and 'when'. Our involvement in the ongoing work of proposing the introduction of a basic income system and developing a viable model for implementation has been predicated on the view that basic income is worthwhile because it fulfils certain principles. Various tax reforms are under consideration in Ireland, including basic income and refundable tax credits; these can lead to identical outcomes for citizens in terms of net incomes. In addition, there are other pathways towards basic income. Accordingly, progress towards basic income is best considered across a number of fronts.

1. Introduction

A great deal has been written on Basic Income in recent years and the volume of that writing appears to be growing substantially. Much of what has been written, however, has focused on responding to the questions 'What is Basic Income?' and 'Why should a Basic Income system be introduced?' Far less has been written to address key questions that are constantly raised by policy makers and others once they become aware of basic income and seek either to promote or reject it as a policy option. These questions include

• How could a basic income system be introduced?
• How would it meet some key policy objectives of particular political parties or governments?
• When could it be implemented?
• Are there stages through which its implementation could/should proceed?
• Where can progress be made in the policy context to ensure that the introduction of basic income is more likely?

This paper is about a little 'why' and more 'how' 'when' and 'where'

2. Guiding Principles

First, a little on the question 'why?' Basic Income is not an end in itself. Rather, we support the introduction of a full Basic Income system because it is the best way we know to fulfil certain principles.

There are eight principles that we believe should guide any tax/welfare system.

The first principle we identify is that nature and its resources are for the benefit of all. No one should be excluded from participating in, and benefiting from, economic growth.

The second principle we identify is adequacy. All citizens have a right to an income sufficient to live life with basic dignity. To be adequate payments must prevent income poverty in the contemporary context of a particular society. In its National Anti-Poverty Strategy (NAPS), the Irish government gave 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 which 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 which are considered the norm for other people in society.

A minimum income guarantee should be set at a poverty line as defined by NAPS.

The third principle we identify is that of guarantee. Knowing the level at which an adequate income should be set is not enough. This income level should be guaranteed. The only way this can be done is to place the guarantee on a statutory basis. Only then can we be sure that every citizen will receive an adequate income. It is important to note that having such a guarantee does not mean that all the income would have to come from the State. It could, for example, in whole or in part, come from payment for a job. The statutory guarantee would ensure that unemployed people and those in low-paid employment would be assured of a minimum income which was adequate to live with dignity.

The fourth principle we identify is that the adequate income must be provided on a penalty-free basis. Some welfare systems are experienced as degrading by many recipients. Some tax and welfare systems are linked in such a way that poverty traps abound and many unemployed people face income losses if they take up a job. An adequate income guarantee system should ensure that all receive the adequate income without encountering these or other penalties.

Our fifth principle concerns equity and equality. This means that the system should promote both horizontal and vertical equity. It would also include gender equity. This, in practice, would mean that inequalities in income would be reduced and resources transferred to ensure that everyone received the basic payment to which they were entitled. It would also involve an equitable sharing of the costs of such a system. Within this principle it would also follow that identical needs and circumstances should be dealt with identically.

The sixth principle we identify concerns efficiency. When we speak of efficiency here, we are not referring to economic efficiency alone. Nor do we believe that an adequate income guarantee system has to provide conditions that produce optimal growth. Rather, we believe that this system should have a positive impact, relative to the status quo, on both the situation of the worst-off in society and on the socio-economic situation as a whole.

The seventh principle concerns simplicity. As far as possible an adequate income system should be simple to understand and to administer. Many social welfare systems are complex. This complexity leads to increased administrative costs, constant confusion, delays and (unintended) victimisation. In practice, many people fail to claim their full entitlements. It should not be beyond the capacity of society to devise a simpler system that would also follow the principles listed here.

The eighth principle we propose concerns freedom. We believe that an adequate income guarantee system should promote autonomy and reduce dependency. The present system forces many people into a dependency situation. For example, some social welfare systems force people to do nothing as a condition of receiving their payment. This conditionality creates a dependency culture. In the case of couples receiving social welfare payments one is treated as a "dependent" of the other. In most welfare systems people in receipt of payments lose benefits if they earn money through work, some even lose if they take up study. This reduces their autonomy. A more progressive system is required which encourages and promotes the involvement of every person in the social, economic, political and cultural life of the society.

The principles outlined above were developed to help in assessing whether or not a particular proposal was likely to be acceptable and which, among competing proposals, would be most acceptable.

3. Why Basic Income?

In our work on Basic Income we have always been guided by the core concern of developing an income distribution system that would ensure every person in society had sufficient income to live life with dignity. For us, this has been a core justice issue that was not being given appropriate priority in most economic and political arenas. We were also very attracted to a Basic Income approach because it addressed the huge changes emerging in the labour market and recognised the critical distinction between work and employment. Too often, modern economic and political thinking tended to equate these two concepts and see them as identical. To us it was clear that very large numbers of people were doing a great amount of work every day and this work was not recognised as employment. One consequence of this approach was that much work was/is not valued as an essential component of the progress of society. We have written extensively in other publications on the reasons why we believe policy makers should adopt a Basic Income approach. (1)

At all times we have been very conscious of the social, economic, political and cultural terrain within which we sought the introduction of a Basic Income system. We recognised that introducing a Basic Income system would demand huge transformation in this terrain. We have constantly insisted that we should not allow "the best to be the enemy of the good". We were prepared to consider staging posts along the way to a destination of a full Basic Income system. We have always been prepared to look at a wide range of pathways along which this project could travel before arriving at its final destination.

4. Pathways to a Basic Income

There are four main pathways to the introduction of a Basic Income system. These are:

• All at once
• By Groups
• Step by step

Via Tax credits or negative income tax.

The first of these is the least likely. It would demand a huge change that most, if not all, political systems would be afraid to risk. Insisting on an 'all at once' approach, in our experience, simply frightens politicians and results in the building of substantial, and totally unnecessary, resistance to even looking at or considering a Basic Income system.

Looking at the other three approaches, however, it appears to us that these are viable, individually or in tandem, as pathways to the introduction of a Basic Income system. In their study of the Irish system Charles M.A.Clark and John Healy (2) opted for a step by step approach as the smoothest pathway.

It is important to recognise and acknowledge that suitably configured refundable tax credits and negative income tax can deliver an identical net income to every citizen as Basic Income. Consequently, we believe that Basic Income can be viewed both as an objective in itself and as a criterion for assessing progress towards the most desired destination.

It makes no practical sense to simply insist on the superiority of Basic Income over all other systems while ignoring the substantial similarity between Basic Income, Negative Income Tax and Refundable Tax Credits.

5. The Irish Experience

Developments in Ireland are interesting in this regard. Sean Ward (1998) has provided a comprehensive overview of how the debate in Ireland progressed up to 1998. We will not repeat that here.

The need for integrating the tax and welfare systems has been widely acknowledged for a number of decades. Competing proposals on how to progress such integration have been advocated and discussed. CORI has been to the forefront in advocating the introduction of a Basic Income system.

In the last few years there have been a number of very interesting and useful developments in this area. Among these have been:

• The introduction of a tax credits systems.
• The use of tax credits to make payments to stay-at-home spouses with caring duties.
• The commissioning of a number of studies on Basic Income by a Government-appointed working group. These have examined its viability, its costs, its distributional impacts and its impact in labour market terms. The publication of these studies is imminent (October 2000). This work followed a commitment in the national agreement Partnership 2000 that covered the period 1997-2000.
• The commitment by the present Government to produce a Green Paper on Basic Income. The Taoiseach (Prime Minister) has confirmed this commitment recently.
• The acceptance by the National Economic and Social Council (in December 1999) of the value of investigating the impact of making tax credits refundable.
• The establishment in October 2000 of a working group, chaired by the Department of Finance, to investigate the viability and impact of introducing refundable tax credits. This was a commitment agreed as part of the new national agreement the Programme for Prosperity and Progress (PPF) (2000).
• Agreement, as part of the PPF that a review be conducted of the strategic options for the future of the tax and welfare systems over the next 10 years, taking account of emerging trends and policy objectives. This review is now underway and will include Basic Income as part of its overview. The review is to be completed by September 2001.

What we are witnessing here is a very vibrant, ongoing debate about the shape and integration of the tax and welfare systems. This debate involves Government, civil servants, the Revenue Commissioners (who are responsible for collecting tax), academics and all four pillars of social partners (employers, trade unions, farmers and the community and voluntary pillar).

Substantial changes have been introduced that can be seen as very progressive from a Basic Income perspective. Principal among these has been the introduction of a tax credits system for all income tax payers. All income tax payers now have the same tax credit. Consequently, increasing tax credits in the annual budget, combined with standard rating of all discretionary tax allowances, provides government, at present, with a means of achieving greater equity among the top two-thirds of households in income terms. This is far closer to the Basic Income ideal than the previous tax-free allowance system that gave larger benefits to those with higher incomes. Chart 1 shows the impact on income distribution if the Irish government increased the current tax credit by IR£100 a year in its next budget. It is clear that, once a person has sufficient income to benefit fully from such an increase, all income groups benefit equally.

However, equity between the low-paid and better off would require not only that the value of tax credits be increased but also that tax credits be made 'refundable'. When the tax credit is not refundable those with incomes so low that their tax bill is lower than the value of the tax credit do not benefit from any increase in the value of that tax credit. This is clearly seen in Chart 1 where couples with low incomes do not benefit from the increase of IR£100 illustrated in the example provided.

When tax credits are refundable those whose tax bills are less than the credit receive a payment equal to the difference. The main beneficiaries of refundable tax credits would be low-paid employees. This is illustrated in Chart 2 where we show the impacts if the current tax credit in Ireland were made refundable. All the benefit goes to those on low incomes.

The major advantage of making tax credits refundable would be in addressing the disincentives currently associated with low paid employment. If refundable tax credits were introduced, subsequent increases in the level of the tax credit would then be of equal value to all employees.

The commitment to examine what impact refundable tax credits would have, and the work currently being undertaken in this area, mark significant progress towards addressing the major weakness we identified in the current system. They also move the present tax and welfare system closer to a Basic Income system.

With a refundable tax credit system in place every adult with a job would, in effect, gain the full value of a tax credit. Almost every other adult in the country i.e. adults without a job, are entitled to a social welfare payment. All that is required is to designate a part of the social welfare payment equivalent to the tax credit as a tax credit and reduce the social welfare payment accordingly. Then we have a situation where everyone has an effective tax credit. The simplest way to administer this refundable tax credit system would be to pay it as a Basic Income.

Every child in the country already has a tax-free child benefit payment paid to its parents or carers. This, in effect, is a Basic Income.

Consequently, the path currently being followed in Ireland could be transformed, rather easily, into a Basic Income system. (The issue of adequacy is a separate issue we address later in this paper.)

6. Acknowledging Progress, Challenging Regression

Involvement in advocacy for Basic Income requires acknowledgement of progress where that occurs. It also requires criticism of backward steps (such as widening the income gaps between rich and poor). Consequently, ongoing analysis and critique of policy proposals and budgetary action is required. In Ireland CORI does this analysis on an annual basis. Each year we produce a socio-economic review that analyses and critiques the various policy proposals being advocated in the public arena and/or being considered by government. We also update the Basic Income numbers (e.g. payment levels, tax rates etc.). Each year we also publish a detailed analysis and critique of the government's budget as soon as it has been announced. Within this process we highlight the contrast between the impact of government's actions and the impact of introducing a Basic Income system. In all of this work we take great care to acknowledge progress as well as to challenge regression.

We believe that progress towards substantial Refundable Tax Credits or Negative Income Tax, with the removal of discretionary tax breaks, constitutes progress towards Basic Income. Progress along these lines leads to fulfilment of the principles that Basic Income serves and that we have identified earlier in this paper. Consequently we welcome such developments and acknowledge them as progress.

If/when substantial Refundable Tax Credits or Negative Income Tax has been achieved the switch to BI will be easy. The merits of the switch will be considered under headings such as dignity, customer service, administration costs and simplicity.

7. Advocating Basic Income on Other Fronts

In the ongoing discussions, debates and advocacy of Basic Income it is important to keep in mind that work is required on different fronts. The economics of Basic Income must be constantly assessed. This has both macro and micro dimensions - ranging from its impact on the labour market or migration patterns to the levels at which payments are made and the tax rate it requires or the tax base on which it is to be developed. Work at this level is fundamental and must be constantly pursued. Otherwise the argument may be lost because its viability in economic terms may not be obvious at first glance. For us the issue of adequacy is crucial. Consequently, we have constantly argued that the level at which the Basic Income payments are set for adults and children need not be very high but should be sufficient to enable people live life with basic dignity. This position must also be argued and justified if it is to be accepted eventually.

The politics of Basic Income is another dimension that must be constantly reviewed. A recent study for the Citizens Income Study Centre in the UK, and co-sponsored by CORI, (Jordan et al, 2000) analysed the political cultures of the UK and Ireland on the issue of tax-benefit reform and their implications for the introduction of Basic Income. It took a different approach to that pursued by CORI in Ireland. It sought to persuade the Labour Party in the UK that Basic Income is implicit in various statements of the party's objectives. CORI, by contrast, has sought to present the feasibility, desirability and impact of introducing a Basic Income system in Ireland. Different political situations require different responses. A review of the UK study in the Financial Times engaged with the study's approach in a positive way, which is interesting in this context. In Ireland there is an open attitude to Basic Income, which is recognised in the UK study referred to above. CORI has sought to facilitate analysis and debate in the Irish context and continues to do so with some success in terms of keeping Basic Income on the Irish political agenda.

The cultural arguments for Basic Income also require constant attention. This dimension is crucial because the economic arguments may be won but the political system may reject the introduction of a Basic Income system because it is perceived as being at odds with values such as efficiency, personal responsibility, participation etc. In our view Basic Income supports each of these values. It also supports a range of other values that are considered as important in much of the debate about the core culture of a modern society. This may not be obvious, however, and must be argued and pursued constantly.

Finally, the social dimension of introducing a Basic Income system must also be pursued. Some have argued against it because it would create new exclusions. Others have suggested that it would allow the lazy to benefit at the expense of others. We don't believe either of these suggestions is true. However, the case has to be constantly argued and presented in a way that makes sense to the wider society. Otherwise the overall argument may well be lost. In this context the issue of adequacy arises again. If the payments levels are too low they will not ensure that everyone has sufficient income to live life with basic dignity. If this were to happen then the Basic Income system would fail to meet the requirements of at least one of the guiding principles already identified in this paper, principles we believe should guide any tax/welfare system.

8. Conclusion

CORI's involvement with Basic Income has been predicated on the view that Basic Income is a worthwhile objective to fulfil certain principles. Various tax reforms are under consideration in Ireland, including Basic Income and refundable tax credits. These can lead to identical outcomes for people in terms of net incomes. In addition, there are other pathways towards Basic Income. These have to be presented, analysed and discussed if they are to be engaged with and acted upon. Likewise, the economic, political, cultural and social dimensions of introducing a Basic Income system must be presented, analysed and discussed if this approach is to be adopted. Accordingly, progress towards Basic Income is best considered across a number of fronts

REFERENCES:

Callan, Tim, Cathal O'Donoghue and Ciaran O'Neill (1994), Analysis of Basic Income Schemes for Ireland, Dublin: ESRI.

Callan, Tim, B. Nolan, B.J. Whelan, C.T. Whelan and J. Williams (1996), Poverty in the 1990s: Evidence from the 1994 Living in Ireland Survey, Dublin: Oak Tree Press.

Clark, Charles M.A., and Catherine Kavanagh (1995), "Basic Income and the Irish Worker" in Brigid Reynolds and Sean Healy (eds.), An Adequate Income Guarantee for All, Dublin: CORI.

Clark, Charles M.A., and John Healy (1997a), Pathways to a Basic Income, Dublin: CORI.

CORI (1994), Tackling Poverty, Unemployment and Exclusion: A Moment of Great Opportunity, Dublin: CORI.

CORI (1995), Ireland for All, Dublin: CORI.

CORI ((1998) Priorities for Progress, Dublin: CORI.

Dowling, Brendan (1977), Integrated Approaches to Personal Income Taxes and Transfers, Dublin: National Economic and Social Council.

Healy, Sean and Brigid Reynolds (1994). "Arguing for an Adequate Income Guarantee" in Brigid Reynolds and Sean Healy (eds.), Towards an Adequate Income for All, Dublin: CORI.

Healy, Sean and Brigid Reynolds (1995). "An Adequate Income Guarantee for All" in Brigid Reynolds and Sean Healy (eds.), An Adequate Income Guarantee for All, Dublin: CORI.

Honohan, Patrick (1987), "A Radical Reform of Social Welfare and Income Tax Evaluated", Administration, Vol. 35, No. 1.

Jordan, Bill, Phil Agulnik, Duncan Burbidge and Stuart Duffin, (2000) Stumbling Towards Basic Income, London: Citizens Income Study Centre.

Partnership 2000 for Inclusion, Employment and Competitiveness (1996), Dublin: Stationary Office.

Programme for Prosperity and Fairness (2000), Dublin: Stationary Office.

Report of the Commission on Social Welfare (1986), Dublin: Stationery office.

Report of the Working Group on the Integration of the Tax and Social Welfare Systems, (1996), Dublin: Stationary Office.

Reynolds, Brigid and Sean Healy (eds.) (1994), Towards an Adequate Income for All, Dublin: CORI.

Reynolds, Brigid and Sean Healy (eds.) (1995), An Adequate Income Guarantee for All: Desirability, Viability, Impact, Dublin: CORI.

Ward, Seán (1994), "A Basic Income System for Ireland" in Brigid Reynolds and Seán Healy (eds.), Towards an Adequate Income for all, Dublin: CORI.

Ward, Sean (1998), "Basic Income" in Sean Healy and Brigid Reynolds (eds.), Social Policy in Ireland, Dublin: Oak Tree Press.

Notes

(1) Among our publications addressing this issue are New Frontiers for Full Citizenship (1993), Towards an Adequate Income For All (1994), An Adequate Income Guarantee For All: Desirability, Viability, Impact. (1995), Surfing the Income Net (19997), Priorities for Progress (1998). Other CORI publications addressing the same issues include Pathways to a Basic Income (1997) by Charles M>A> Clark and John Healy and Basic Income in a 21st Century Economy by Charles M. A. Clark (forthcoming).

(2) Pathways to a Basic Income, (1997), Dublin: CORI.

Civil forum and new social contract needed

Civil forum and new social contract needed by Sean Healy

October 2000

A civil society forum and a social contract against exclusion would combat apathy and disillusionment, argues Sean Healy.

 

The changing nature of democracy has raised many questions for policy-makers and others concerned about participation.

Decisions often appear to be made without any real involvement by many of those affected by the outcomes. Voter apathy is widespread. Transparent accountability is demanded but rarely delivered. Recent polls confirm that people, especially young people, have little confidence in the political process.

People are disillusioned because the political process fails to address many of their core concerns. The escalating cost of housing, for example, is putting home ownership beyond the reach of most middle-income people. The scale of social-housing development (including local authority housing) is far too small to reverse the steep rise in the number of households on waiting lists.

Healthcare is another area of real concern to many people. Despite a huge increase in real terms in the Budget allocation for healthcare, waiting lists remain stubbornly long and the reality of a two-tier system is clear.

The widening gap between poor people and the rest of society is now obvious to all. Budget decisions that contributed to this widening have been roundly condemned and polls have continued to show that Irish people want to see this process reversed.

A social contract against exclusion

The failure of the political process to address problems in areas such as housing, healthcare and the widening rich/poor gap contribute in no small way to the growing disillusionment felt by many people with the political process.

Government seeks to respond to these and similar issues but the scale or urgency required in such a response seems to many to be missing. The failure to address these issues adequately is contributing, in no small measure, to the growing apathy and disillusionment with the political process.

The recent MRBI/Irish Times poll contains some interesting results in this regard. It identified house prices, healthcare and the gap between rich and poor as the three most important issues for the next election. A total of 64 per cent of respondents highlighted one or other of these issues as their principal concern.

A new, more radical approach is required if participation is to be maximised and people's confidence restored. A more radical approach is also required if social exclusion is to be given the priority needed to reverse present trends. A new social contract against exclusion is required. Such a contract would involve the development of basic measures in the economic, political, cultural and social fields aimed at maximising participation and eliminating social exclusion.

It could be developed by government and social partners and put into operation immediately. It would build on commitments contained in the Programme for Prosperity and Fairness and ensure that the resources currently available would be used in a concerted way to reverse present trends that are being worsened by inflation.

A forum for dialogue on civil society issues

A second issue that is contributing to disillusionment with the political process concerns the range of civil society issues that are of major concern to large numbers of people. These are issues many people feel are not being addressed adequately and insofar as a discussion or debate does take place they feel they are not allowed to participate in any real way.

Social partnership is one process aimed at improving the participation of various sectors in Ireland. However, it is in danger of being overloaded. The various social partners in the four pillars of social partnership - employers, trade unions, farmers and the community and voluntary sector - represent large segments of Irish society.

However, they do not represent, or claim to represent, all of Irish society. In fact the case is made, with some legitimacy, that none of these social partners represents its own sector entirely.

The development of a new forum within which a civil society debate could be conducted on an ongoing basis would be a welcome addition to the political landscape in Ireland. Such a forum could make a major contribution to improving participation by a wide range of groups in Irish society.

Establishment of such a forum would ensure that civil society issues were not being loaded on to the already extensive work of social partnership in the socio-economic area. It would also be complementary to the work of the National Economic and Social Forum and the National Economic and Social Council, both of whom already have extensive agendas.

In a paper presented by Brigid Reynolds and myself to CORI's recent social policy conference, the case for such a forum was presented. We proposed that Government authorise and resource an initiative to identify how a civil society debate could be developed and maintained in an ongoing way in Ireland and to examine how it might connect to the growing debate at European level around civil society issues.

There are many issues such a forum could address. One that comes to mind, given recent developments, is the issue of citizenship, its rights, responsibilities, possibilities and limitations. Another is the shape of the social model Ireland wishes to develop in the decades ahead. Do we follow a European model or a US one? Or do we want to create an alternative - and if so, what shape would it have and how could it be delivered? The issues a civil society forum could address are many and varied. Ireland would benefit immensely from having such a forum.

Impact on the democratic process

Would a civil society forum and a new social contract against exclusion take from the democratic process? Democracy means rule by the people. This implies that people participate in shaping the decisions that affect them most closely. What we have, in practice, is a highly centralised government in which we are "represented" by professional politicians. The more powerful a political party becomes, the more distant it seems to become from the electorate.

Party policies on a range of major issues are often difficult to discern. Backbenchers have little control over, or influence on, government ministers, opposition spokespersons or shadow cabinets. Even within the cabinet, some ministers seem to be able to ignore their cabinet colleagues.

The democratic process has certainly benefited from the participation of various sectors in other arenas such as social partnership. It would also benefit from taking up the proposals to develop a new social contract against exclusion and a new forum for dialogue on civil society issues.

The decline in participation is exacerbated by the primacy given to the market by so many analysts, commentators, policy-makers and politicians. Many people feel their views or comments are ignored or patronised while the views of those who see the market as solving most, if not all, of society's problems are treated with the greatest respect.

Markets have a limited effect

But it needs to be honestly acknowledged that markets produce very mixed results when left to their own devices. In terms of many policy goals they are extremely limited. Consequently, other mechanisms are required to ensure that some re-balancing, at least, is achieved. The mechanisms proposed here are simply two that would be positive in improving participation in a 21st-century society.

Sean Healy is director of CORI; with his co-director, Brigid Reynolds, he edited the recently published Participation and Democracy: Opportunities and Challenges