The current cost of living crisis highlights the deep disparities in our society. In fact, a recent report from Oxfam found that the two richest people in Ireland have more wealth than 50 per cent of the country’s poorest combined, and the top 1 per cent of wealth-holders owns more than a quarter of the country’s total wealth, at €232 billion (Oxfam, 2023). Social Justice Ireland has long argued for the adoption of counter-cyclical fiscal policies. We were deeply disappointed that Budget 2023 increased the Rich-Poor gap by €199 per year while providing tokenistic payments to the poorest and most marginalised in society.
What both the pandemic and the current cost of living crises have highlighted is:
- The importance of the welfare system in providing a safety net for all.
- The inadequacy of most rates of core welfare payments.
- The challenges faced by low paid workers and their families.
- The opening divides between those in stable employment and those with precarious jobs; and
- The underfunding of our health, housing and social care systems.
Ireland, like all other European countries and most other developed world states, has relied on large scale borrowing to cope with the reduction in tax revenue and pay for the various welfare and enterprise supports necessitated by the Covid-19 pandemic. Fortunately, the accommodative approach of the European Central Bank has allowed Government to easily access funds and at historically low interest rates.
Figures from the documents accompanying Budget 2023 revealed the current and expected levels of debt, and debt financing costs, that Ireland is facing. The impact of the pandemic is still being felt, with net national debt climbing from 82 per cent of national income (as measured by GNI*) in 2019 (Budget 2020) to 100.8 per cent in 2021 and an anticipated 86.3 per cent by 2023 (Government of Ireland, 2022). Fortunately, interest costs remain low with these costs expected to be €3.3 billion in 2023. However, although debt costs are low now, the scale of debt remains an issue and a strategic risk to the state in the longer term.
To minimise future debt financing challenges, and to avoid the adoption of unnecessary austerity measures in the years to come, Social Justice Ireland believes that Government should prioritise the development of a European-wide debt warehousing strategy for the additional debt brought on by the pandemic and the Russian invasion. This debt should be separated from the existing national debt and financed by a 100 year ECB bond with a near-zero interest rate.
Government of Ireland. (2022). Budget 2023 Economic & Fiscal Outlook. Dublin: Stationery Press.
Oxfam. (2023). Survival of the Richest. How we must tax the super-rich now to fight inequality. Oxfam.