It appears from the Summer Economic Statement that the Budget will include billions of euros in one-off measures intended to ease cost-of-living pressures without taking on new annually recurring spending commitments. This approach carries the same weaknesses as it did last year. One-off measures are welcome when they come but they are gone when they are gone. Income adequacy cannot be resolved through one-off measures. There is a marked contrast between the permanent nature of tax reductions and the transient nature of one-off welfare supports. The benefits for the better-off persist while the benefits for the most vulnerable peter out. This simply widens the rich/poor gap and leaves the most vulnerable worse off than they were before. This is surprising because at the recent National Economic Dialogue we heard both the Taoiseach and the Minister for Finance acknowledge that, even though it hadn’t been the Government’s intention, there were vulnerable populations who slipped further behind during the past year, and this would have to be rectified.
Supporting households most in need
Budget 2024 should be guided by one core principle, that the measures adopted prioritise the protection of the most vulnerable groups in our society. Evidence continues to highlight that it is lower income households that are most exposed to the rising cost of living, 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. Adequate levels of social welfare are essential to addressing poverty. Income adequacy cannot be addressed by one-off measures.
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.
Priorities for Budget 2024
“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. Budget 2024 should make a series of one-off investments in our social infrastructure funded from one-off windfall corporate taxation revenues. Government should also adopt recurring taxation and expenditure measures 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 in Budget 2024.
A part of the once-off windfall tax gains should be invested, but only in one off infrastructure projects, and accounted for separately. As well as that, the normal budget should be presented using the regular budget process. This would mean that Government could then ensure that regular Budget expenditure is funded through recurring revenue and there would beno sudden surprises associated with decreases in revenue when the windfall taxes no longer flow. These two parts of the Budget can then be brought together to provide the overall Budget picture.
Taking this approach is not only fiscally prudent, but it would also ensure full transparency of the budgetary process and allow Government the opportunity to outline a clear plan for the management of these windfall revenues, in Budget 2024 and beyond, in the context of the long-term interests of Irish society.