Government has the resources to protect people on fixed and low incomes while making strategic investments in Budget 2023
Posted on Monday, 4 July 2022
The Summer Economic Statement shows that Government has the resources to protect the most vulnerable groups in Irish society while also making strategic investments in long-term infrastructure projects in areas such as social housing provision and achieving our climate targets. The figures released in the Summer Economic Statement show that Government will have at least an additional €6.7bn available for Budget 2023. In making decisions on how to allocate these resources Government’s core guiding principle should be to protect the most vulnerable groups in our society.
Supporting households most in need
If Budget 2023 is to be a successful Cost of Living Budget it must focus its attention on those in society who need the greatest assistance with making ends meet. People on fixed incomes and on the lowest hourly earnings are the most exposed to price rises. Consequently core social welfare rates must rise by €20 a week while the minimum wage should rise to the level of the Living Wage i.e. €12.90 an hour. Core income tax credits should also be made refundable to help address the 'working poor’ issue”.
Specific interventions are required to support people in low-paid employment. Making core Income Tax Credits refundable would ensure low income workers who do not earn enough to use their full credits could have the unused portion “refunded”, to support their ability to deal with increasing living costs. It would also make Ireland’s tax system fairer and improve the living standards of a substantial number of people.
An increase in core social welfare rates by €20 a week is the very minimum required to allow people on fixed incomes to just stand still. All available resources must be targeted at those who need them most, particularly households on fixed incomes.
Government should also commit to benchmarking social welfare rates to 27.5% of average weekly earnings in Budget 2023, moving to a target or 30 per cent of average earnings over time. This would provide a stable and adequate income for welfare dependent individuals while not undermining labour market participation incentives. This would also provide certainty to households on fixed incomes, and budgetary certainty for Government.
Investment should be prioritised over blanket solutions
Government must recognise that in the long-term, blanket solutions to cost of living increases do not work for everyone. They can be costly, but very often the benefit does not go to those who are most in need. Decisions around measures to address the rising cost of living must be focussed on improving the situation of those who are most impacted by the rising costs - households on fixed or low incomes. These households are already more than fully stretched financially.
Social Justice Ireland outlined an investment package of over €4bn in our Budget Choices policy briefing including investment in social and affordable housing, childcare, education, regional development and enhanced community care.We also showed how this investment could be funded. Investment in public services and social infrastructure will significantly reduce costs for all households over the medium term.
Social Justice Ireland’s budget briefing Budget Choices 2023 is available to download here. The briefing contains detailed, fully-costed Budgetary packages across more than a dozen policy areas including health, housing, education, welfare, sustainability and more; it also contains a range of costed, revenue-raising proposals.