Budget 2027: a roadmap for income adequacy

A fitting legacy for this current government would be to complete the work which was started by the commitment to benchmarking in 2007; and deliver a pathway to deliver income adequacy.  This would allow Government to prioritise its commitments to social inclusion in Budget 2027 and to build a sustainable social protection system that can meet the needs of future generations. 

Benchmarking social welfare rates to average weekly earnings

Social Justice Ireland has consistently called for core social welfare rates to be benchmarked against average weekly earnings (AWE), with 27.5% of as a baseline. Delivering this benchmark requires a €15 increase in core social welfare rates in Budget 2027 and a further €10 increase in Budget 2028.  Cost of living challenges are an issue of adequate income. Households on fixed or low incomes are already fully stretched financially and have endured almost four years of increased costs in the basics – food, energy and housing. Adequate levels of social welfare are essential. 

“Achievement of this benchmark over two budgets should be accompanied by a pathway to indexation of the taxation and welfare systems, giving fiscal certainty for future governments, and building a sustainable social protection system that can meet future challenges."

A Roadmap to Income Adequacy

Since 2022, Ireland has experienced a series of energy shocks, resulting in a prolonged spike in energy prices and subsequent knock-on impacts for businesses and households over this period. This has led to a sustained increase in energy and food inflation over this period, eroding income gains for low and middle-income households, reducing their purchasing power. 

As inflation persists, policy will need to more impactfully target these households and further assist with the growing living cost challenges they face. Sustained action is required to support vulnerable households who can’t afford the basics, and a long-term approach to the persistent problem of households who are unable to make ends meet is required. Although previous one-off measures provided temporary relief to some households, they are not an adequate response to persistent challenges with poverty and inadequate income. 

Budget 2027 should set out a pathway to indexation, commencing with a benchmark to 27.5 per cent of average weekly earnings. This could be achieved over two budgets, in line with actions 39 and 40 of the Roadmap for Social Inclusion 2026-2030. A €15 increase is required in Budget 2027, followed by a €10 increase in Budge 2028.

Prioritising vulnerable groups
Essential to the delivery of progressive budgets is a commitment to the principle of benchmarking core social welfare rates to average earnings.  It also requires progressive taxation policies and measures in a fair tax system where those who have more pay more, while those who have less pay less. 

Budget 2027 should increase minimum social welfare rates by €15 per week.  This is the increase required to benchmark welfare rates to average earnings over two budgets.  It is even more critical in light of sharp increases to essentials such as rent, energy and heating costs.  Recent Budgets have focused on temporary measures. What is needed is certainty and permanence for those reliant on social transfers. 

• In addition, the rate of jobseekers for those aged between 18 and 24 (not living independently) is currently inadequate to meet even the most basic of needs and must be increased to the full adult rate.
• Introduce a cost of disability allowance at €20 a week at in Budget 2027 which should be built upon in subsequent Budgets. This will support Government in addressing the high rates of poverty and deprivation experienced by people with a disability and delivery on its Programme for Government commitment to this group. 
• Increase the Domiciliary Care Allowance to €400 per month and pilot a Universal Basic Services and a Universal Basic Income Scheme for Carers in line with the Programme for Government Commitment to a Carers Guarantee.
• Increase child benefit by €20 and increase Child Support Payments for those under 12 by €10 a week and €18 for those aged 12 and over. 
• Extend the fuel allowance by a further four weeks.
• Introduce a system of refundable tax credits to make the tax system fairer for low income workers and increase the PAYE and Personal tax credits by €5 per week.