Government should prioritise continued strategic infrastructural investment and cost of living measures in Budget 2023
Budget 2023 should be guided by one core principle, that the measures adopted prioritise the protection of the most vulnerable groups in our society. To this end Budget 2023 should prioritise continued strategic investment in long-term infrastructure projects focused on social housing provision and achieving our committed climate change targets alongside targeted cost of living measures.
The fiscal context for Budget 2023 is one of the most difficult in some time due to an uncertain social and economic outlook. The Budget must respond to the current cost of living challenges but also recognise uncertainties regarding the ongoing Covid-19 pandemic and its legacy effects, geopolitical instability as a result of war in Ukraine, and an ongoing cost of living crisis through 2022 and 2023.
Regardless of fiscal uncertainty, Government must prioritise the protection of the most vulnerable in making its Budgetary decisions.
Social Housing Provision
Housing affordability continues to present a serious issue in Ireland with prospective homeowners facing house price increases of 15.2 per cent this year, and renters facing annual increases of over 11 per cent. In addition to the affordability crisis, we also have a persistent homelessness crisis, with the number of people accessing emergency homeless accommodation exceeding 10,000 in April 2022.
To begin to address this challenge, Government must set a target of social housing stock that is 20 per cent of the overall housing stock by 2030. In order to achieve this Government must double its Housing for All targets for social housing in Budget 2023 at an additional cost of €1.4bn.
In addition, the Help to Buy Scheme, which is contributing to the affordability crisis by keeping prices artificially high should be wound down, and the €200m saving invested in Housing First for Families”.
Climate Action and Just Transition
Budget 2023 provides an opportunity to ensure that our investment strategy supports the ambition of the climate action plan, a just transition to a green economy, emission reductions, and builds a vibrant society and economy”.
Meeting our 2030 targets will be challenging, and every sector must make a fair contribution. Air travel is a significant contributor to transport emissions, yet to date is not subject to carbon taxes. Social Justice Ireland proposes the removal of the exemption of Jet Kerosene from excise and carbon taxes in Budget 2023 to yield €634m. These funds should be invested in renewable energy, upgrading the national grid and retrofitting scheme.
Government should begin the process of ending fossil fuel subsidies and environmentally harmful tax expenditures in Budget 2023. These not-insignificant resources (€2.2bn in revenue foregone in 2020) should diverted to renewable energy programmes, reforming and expanding the fuel allowance, incentivising sustainable agricultural methods and additional investment in Just Transition Programmes to support rural communities who will be among the most impacted by necessary yet challenging climate policies.
Cost of Living
If Budget 2023 is to be a successful Cost of Living Budget it will need to focus its attention on those in society who need the greatest assistance with making ends meet given the significant and ongoing challenges we face. Those most exposed to price rises and those on the lowest hourly earnings.
The rapid increase in prices that emerged from mid-2021 poses particular challenges for low-income households throughout Ireland. These households spend a greater proportion of their income compared to better off households, they are more exposed to price increases; and they also spend a greater proportion of their income on food and energy. As inflation persists, policy will need to more impactfully target these low income households and assist with the growing living cost challenges they face.
Targeted measures to support these households needs to be an essential part of the evolving policy response to the current experience of inflation and should form a core part of the policy measures adopted as part of Budget 2023. Social Justice Ireland is calling for a €20 increase in core social welfare rates, the introduction of refundable tax credits, and the introduction of a Living Wage at €12.90 per hour in Budget 2023.
Budgetary Policy in a time of fiscal uncertainty
Budget 2023 must respond to the current cost of living challenges and a range of uncertainties in a very challenging fiscal context. Should a sudden economic slowdown emerge during 2023, it should not become another missed opportunity for fiscal action to respond and simultaneously stimulate the economy and address Ireland’s infrastructural deficits. State borrowing for prudent investment make sense at the best of times, but even more so should there be a sudden economic contraction.
In Budget 2023 Government must prioritise welfare and public expenditure measures designed to protect the most vulnerable groups in our society from the current cost of living challenges and outline a large scale and targeted fiscal stimulus plan, focused on additional investment in long-term infrastructure, which can be introduced during 2023 if a sudden and severe economic downturn emerges.
Summary of Key Packages:
Housing: €1,442.3m prioritising increased investment in social housing, an end to the Help to Buy Scheme and investment in homelessness prevention. (p. 5 of Budget Choices)
Sustainability and Just Transition: €562m investment including funding for renewable energy, biodiversity, Just Transition and the Circular Economy. (p. 6 of Budget Choices)
Rural, Regional and Community Development: €477m investment prioritising the rollout 400 remote working hub and supporting infrastructure, as well as additional investment in rural transport, and the development of rural enterprise and tourism, and increased funding for the community and voluntary sector. (p. 7 of Budget Choices)
Healthcare, carers and disability: €1,436m investment prioritising social and community care, disability, mental health and Sláintecare. (p. 8 of Budget Choices)
Education: €412m investment in areas such as reducing class sizes, adult literacy, DEIS, skills development, community education, digital education and higher education. (p. 9 of Budget Choices)
Children and Families: €749.7m focused on Early Childhood Care and Education, paternity leave, a Living Wage for childcare workers and implementation of the White Paper on Direct Provision. (p. 9 of Budget Choices)
Pensions and Older People: €1,025.7m prioritising a universal pension, investment in social care and Home Care Packages and increased funding for nursing homes. (p. 10 of Budget Choices)
Taxation Reform:
- Minimum Effective Rate of Corporation Tax - €1,000m
- Standard rate pension-related tax reliefs - €473m
- Standard rate discretionary non-pension tax expenditures - €152m
- Improve the monitoring of tax expenditures.
(p. 13-14 of Budget Choices)
Budget Choices 2023 policy briefing is available to download now.