Budget 2024 must prioritise protection of the most vulnerable groups in our society
Budget 2024 should be guided by one core principle, that the measures adopted prioritise the protection of the most vulnerable groups in our society. There must be no repetition of the outcome of the last Budget which saw the rich/poor gap widen and left Ireland’s most vulnerable people worse off in 2023 than they had been in 2022. Government must learn from the mistakes of the past and adopt recurring taxation and expenditure measures in Budget 2024 which prioritise the protection of the most vulnerable groups in our society and further protect them, if needed, from ongoing aspects of the cost-of-living crisis.
Prioritising vulnerable groups
Budget 2024 must prioritise the most vulnerable groups in our society. The geopolitical instability triggered by Russia’s invasion of Ukraine continues to unfold and is likely to have further effects on living costs and living standards across 2024. While the scale of these effects are unknown, evidence continues to highlight that it is lower income households that are most exposed to these effects, households that have the least capacity to absorb these higher day-to-day living costs.
If Government is serious about meeting its own poverty targets and supporting households on the lowest incomes who, through good and bad economic times, struggle to live life on a low income, then core welfare rates must increase by a minimum of €25 in Budget 2024. A €50 increase in the monthly Child Benefit payment is also required to address Ireland’s levels of child poverty. Children are one of the most vulnerable groups in any society. Child benefit remains a key route to tackling child poverty and is of particular value to those families on the lowest incomes.
Adequate levels of social welfare are essential to addressing poverty. Income adequacy cannot be addressed by one-off measures.
Fiscal stance
Uncertainty once again dominates Ireland’s social and economic outlook and frames the context for Budget 2024. The Budget must respond to the ongoing cost of living challenges, particularly for lower income households, but also recognise uncertainties associated with taxation revenues; these combined make the fiscal context for Budget 2024 particularly challenging.
The Budget arises in the context of large windfall corporation tax revenues flowing to the exchequer from a very small number of multi-national companies. In the medium-term these revenues will shift from Ireland to other states where the activity and profits arise. The challenge of strategically managing these windfall tax receipts is one that is relevant for Budget 2024 and a number of future Budgets. Budget 2024 needs to articulate a clear strategy for the management of these funds framed in the context of the long-term interests of Irish society.
Meeting current and future challenges
The cost-of-living crisis, the housing crisis and the energy crisis are just three of the challenges facing Government, albeit the ones having the most immediate and dramatic impact on people’s everyday lives. There are other huge challenges that Ireland faces in areas such as low pay, access to healthcare, childcare, public transport, how to deliver vital services to everyone including those fleeing war and how to meet our very challenging climate targets whilst protecting those most impacted. A robust social dialogue process is urgently required.
As a country we face some significant challenges, but we are also in the unprecedented position where we are in receipt of windfall gains from corporate tax revenue. With careful management, prioritising the long-term interests of Irish society, and strategic investment in one-off infrastructure projects, Government, through a social dialogue process could use this as the foundation of a new social contract which would commit the state and social partners to improving economic management with a view to enhancing the standard of living, quality of life and wellbeing of all the republic’s residents.
Summary of Key Packages:
Housing: €170.3m net package including an increase in stamp duty for transfers of property exceeding €1m, an end to the Help to Buy Scheme and investment in homelessness prevention.
A further €1.4bn to be invested from the windfall surplus for the construction of social housing. (p. 8 Budget Choices)
Just Transition: €339.6m net package including investment in renewable energy, biodiversity, Just Transition and the Circular Economy, an aviation tax on commercial flights, and investment in climate research.
A further €1bn to be invested in off-shore wind infrastructure. (p. 14 Budget Choices)
Healthcare, carers and disability: €942.3m investment prioritising social and community care, disability, and mental health.
A further €600m for Sláintecare infrastructure. (p. 11 Budget Choices)
Children and Families: €1,147.7m investment in an increase to Child Benefit, early childhood care and education, and child protection. (p. 12 Budget Choices)
Rural, Regional and Community Development: €667.9m investment prioritising the regional development and transition, rural transport, integration, and community schemes. (p. 10 Budget Choices)
Education: €402.4m investment in areas such as reducing class sizes, adult literacy, DEIS, skills development, community education, digital education and higher education. (p. 12 Budget Choices)
Pensions and Older People: €1,143.7m prioritising a universal pension, investment in social care and Home Care Packages and increased funding for nursing homes. (p. 13 Budget Choices)
Overseas Development and World Hunger: An investment package of €1bn to move towards the UN target of 0.7per cent of national income, properly resource our Climate Finance obligations, and make provision for the Loss and Damage Fund.
An additional €1bn to tackle World Hunger, both funded from the windfall surplus. (p. 16 Budget Choices)
Taxation Reform (p. 5-6 Budget Choices):
Minimum Effective Rate of Corporation Tax - €1bn
Increases to capital taxes - €176m
Introducing a Financial Transactions Tax—€350m