Economic Recovery Plan not on scale required to address the challenges we face

Posted on Tuesday, 1 June 2021
budget realism

The scale of the Economic Recovery Plan announced today falls short of what is required on housing, climate change, inequality and healthcare.  As we slowly emerge from public health restrictions and into a recovery period, sustained public investment is crucial.  During the last economic crisis Ireland’s austerity approach led to insufficient investment in social services, such as childcare and education, and in infrastructure such as social housing, public transport and rural broadband.  The legacy of this lack of investment is evident in a totally inadequate supply of social housing; a two-tier healthcare system; climate change; growing inequality; homelessness; environmental goals not being met, to name but a few. Due to the scale of the challenges we face, additional policies are required in addition to those outlined today if Government is to deliver on its own Programme for Government commitments, and ensure a fair and sustainable recovery for all.

Social Justice Ireland proposes that the following additional policies be implemented:

Sustainable Public Finances - Additional policy actions:

  • Ringfence the COVID-19 related debt and ensure that this is dealt with appropriately at an EU level.  We must review the recovery from the current crisis in two distinct, but connected, parts.  The first is the immediate aftermath of the Covid-19 crisis and the associated costs, and the second is the recovery of the economy and society into the future.  These must be separated out, with the Covid-19 costs ring-fenced and financed through low-cost borrowing.
  • Integrate a Sustainable Development Framework into economic policy.  Sustainable economic growth is vital if future generations are to enjoy the fruits of a vibrant economy and society.  While growth and economic competitiveness are important, they should be considered in the context of sustainability, using a framework for sustainable development which gives equal consideration to the environmental, social, and economic dimensions.
  • Social Justice Ireland renews our call on Government to move to a more just taxation system.  This requires reforming the current system, broadening our tax base, implementing a Minimum Effective Corporate Tax Rate of 6 per cent and committing to increasing our total tax take by €2.5bn to €3bn per annum.
  • Off-balance-sheet investment in affordable housing and rental.  The pervasiveness of the housing crisis, its associated health risks, and its impact on every part of our economy have been brought into stark relief by the pandemic. We need to radically rethink our housing system and, acknowledging the need to address the Fiscal Rules, look for innovative ways to fund the necessary infrastructure.

Helping People back into Work - Additional policy actions:

  • Launch a major investment programme focused on prioritising initiatives that strengthen our green and social infrastructure, such as a much larger social housing programme, and a circular economy programme for each region.
  • Invest in human capital through targeted education and training programmes, especially for older workers and those in vulnerable employment.  This requires targeting older workers for traineeships and apprenticeships as part of the green skills programme. 
  • Upskilling, reskilling and lifelong learning to be delivered in person as far as possible.  Although there may be a temptation to focus on the online delivery of lifelong learning and education and training due to the impact of the pandemic, this would be detrimental to achieving our education and training ambitions.  The crisis provided a powerful test of the potential of online learning, and it also revealed its key limitations, including the prerequisite of adequate digital skills, broadband and the difficulty of delivering work-based learning online. 
  • Increase the minimum wage to the level of the Living Wage.  Around 120,000 workers in Ireland earn the National Minimum Wage (NMW) or less, and up to twice that many again earn below the Living Wage – the rate a single person working full-time must earn to achieve a minimum socially acceptable standard of living. 

Re-building Sustainable Enterprises - Additional policy actions:

  • Dramatically increase investment in infrastructure and services (Primary care services, social housing, broadband, walking and cycling infrastructure).  Supporting investment in infrastructure and services, particularly in high-employment-intensity, smaller scale projects, supports local economies at a time when the SME sector is struggling.  There is time to plan for larger scale projects; however, priority must be given to local and regional development.
  • We must also begin a Just Transition to more sustainable employment in the context of environmental protection and globalisation.  Through a process of employer-led education and training initiatives, workers will be more adaptable and SMEs (small and medium enterprises) more sustainable through the retention of a skilled labour force. 
  • Develop flexible working initiatives to support remote working and increased participation for people with disabilities.  Covid-19 has changed the nature of work in Ireland.  Remote and flexible working has become the norm for many workers who are not on the ‘front line’.  While this has presented challenges, particularly for those juggling education and caring responsibilities, it has also presented the opportunity to test new ways to work.  The provision and mainstreaming of flexible alternatives is vital from the point of view of sustainability, and increasing labour market participation among women and people with disabilities.

A Balanced and Inclusive Recovery - Additional policy actions:

  • We are disappointed that Government did not take this opportunity to reform the social welfare system by benchmarking core social welfare rates at 27.5 per cent of average earnings (which is €222.08 per week) over one or two budgetary cycles as part of the transition for those on the PUP who will now move to the core social welfare rate of €203 per week.  This was a missed opportunity to reform our social welfare system, and reduce poverty.
  • The Low Pay Commission is not the appropriate mechanism to deliver a basic income pilot for artists.  Social Justice Ireland published a study in May which outlined a proposal for a four-year pilot Universal Basic Income for Artists with limited cost implications for the exchequer.  Our proposal provides Government with the means to enact the main recommendation of the Arts and Culture Recovery Taskforce Report and deliver on its own Programme for Government commitment to a basic income pilot in January 2022.
  • Recognise that, while most additional investment should be in once-off infrastructure, there is also a need to invest in recurring expenditure to generate the structural change and reform required.  Covid-19 has emphasised the necessity of capital investment in healthcare, housing, education, and broadband, among other areas.  That investment must also be accompanied by a commitment to current expenditure that supports the relevant functions (for example, primary care teams; wraparound services for Housing First; and reducing the teacher/pupil ratio). 
  • Develop a comprehensive mitigation and transition programme to support communities and people in the transition to a low carbon society.  This strategy must pre-empt some of the challenges we face as we move to a more sustainable form of development.  The development of a national mitigation and transition strategy is a matter of priority if there is to be public support for the significant and fundamental changes required in the years ahead.