We in Social Justice Ireland also welcome the invitation from the committee to be here today. We welcome the establishment of the committee and we believe the work it is doing is very important in shaping the future. We have already submitted a 24-page analysis and critique of budget 2017 together with some ideas about the future. My introductory remarks are based on the fact that this document has been submitted, and we can tease it out as the members wish.
A number of the budgetary measures were welcome, including the increases in welfare rates and the child care programme initiative. The tax changes could have been fairer, even if the Government was to insist on a third of the available fiscal space going on tax reductions. It could have done it in a much more fair way. For exactly the same amount of money, €383 million, it could have made tax credits refundable, thus tackling the work poor issue and giving every person with a job a tax credit of €100. That would have been a fairer way to proceed.
The long-range issues Ireland is facing were mentioned in the Budget Statement announced by the Minister for Finance but were not taken up in any substantial way. They include issues such as climate change and the funding of education particularly at third level which is becoming pretty difficult and challenging. There is also the issue of our changing demographics. Ireland will have a million people over the age of 65 by 2031, which is only 15 years away, and, of that, 136,000 will be over the age of 85, which is an increase of 132% on the current situation. We know that will happen and should be planning for it now rather than leaving it until later. There are other challenges around financing local government, repairing and modernising our water infrastructure, paying our rising European Union contribution, funding pollution-reducing environmental initiatives, the issue of what is required by European international agreements and the need to invest in the building of the rural broadband infrastructure. Those are some of the long-range issues which have huge implications and which require serious investment but which were not sufficiently addressed in this budget and need to be on the agenda as we go forward.
We have an issue around the coherence of decisions taken in the budget. For example, in the decisions made on housing, there is a lack of coherence on two fronts. While there is a plan in place, which is welcome and which we fully acknowledge is the biggest plan put in place for a long time, we would point out that it is planned to build 47,000 new units by 2021 when currently, according to the Government's figures, 89,000 units are required for social housing. We will only get half way to achieving that but that does not account for any new need that will emerge from our rising population between now and 2021. That is one issue. Another issue is that we believe the assistance being granted to first-time buyers in budget 2017 is short-sighted and will not do anything to tackle the current cause of the problem, which is the lack of supply.
There is a similar lack of coherence, which has not been highlighted as much in the public arena, in the overall health care budget. The existing level of service together with the new initiatives that are planned to be delivered cannot be delivered for the money that has been allocated. Either some of the new commitments will not be delivered or some of the services being provided will have to be reduced if the budget is to come in on target. Our understanding is that this is the requirement now in the budgetary process, that there cannot be supplementary budgets and that next budget will be next December.
Another issue about which we are seriously concerned is the tax take. The level of revenue remains one of the lowest in the European Union as a percentage of GDP. The low tax model is not sustainable because in practice it means that Ireland does not have sufficient resources to provide the social and economic infrastructure that we require. Our infrastructure is below the European continental averages. It is not possible for us to build the additional infrastructure and maintain it and to do that on the social and infrastructural side generally while having this lower tax take as a very strong commitment. The issue is not about increasing income tax rather it is about widening the tax base, which is the essential prerequisite to increasing the country's total tax take in a fair manner.
Moving on from the tax issue but closely tied to it is the fact that greater public investment is required. The Government claimed that budget 2017 had been Brexit-proofed. What that involves is not very clear but I am convinced that the best way to Brexit-proof the Irish economy is to invest in the infrastructure that we desperately need. That is what is required. That would be good for the economy and for society. Budget 2017 does not address that.
We would also point to the fact that budget-proofing has been ignored. Nowhere else in this society or economy would one be allowed to spend a great deal of money without first having a very clear impact assessment. When organisations in the community and voluntary sector apply for even small amounts of money, they are always asked by the Department or the agency concerned what is their output and what will be the impact, but that question does not seem to have been asked in advance of the budget. It is something that happens afterwards and there is something fundamentally wrong with that.
Looking to the future, we need an integrated policy framework. There are five goals the Government needs to work for simultaneously because they are interdependent, intertwined and interconnected in a big way. We need to build a thriving economy, to move to have just taxation, to have decent services and infrastructure, to have good governance and to do it all in a sustainable manner. It is possible to do that in a serious way and to do it effectively. I am talking about good governance. We welcome very much the improved level of engagement of the Houses of Oireachtas in the budgetary process. We also believe there is a need to improve the transparency of the budget process in the years ahead and the commitment to do that in the programme for Government is very welcome.
We have been analysing and critiquing every budget since 1988. Today, we get less information than we used to get 20 years ago in the budget documentation available on budget night. Something is fundamentally wrong with that, especially in an era when we have all the modern technology, information and so on. Those affected are not only the people outside. It seems to us that Deputies and Senators should have access to all this information. There is far more information than they are getting at the moment.
I will suggest a checklist of things the committee might look at for the future. There is a need to address the issue of the fiscal rules. The rules were put in place as a political solution to an economic problem and they will be changed eventually - I have no doubt whatsoever about that and I said as much years ago when the idea was being considered before it was put in place. We discussed this at the Oireachtas committee at the time and what we predicted has come to pass. We are now blocked from investing because of the rules. We are blocked from picking up the money we need to undertake investment, although interest rates are low. We need to substantially increase investment.
We need to expand the fiscal space as well. We do that principally by broadening the tax base and recognising that we need to do precisely that. We maintain that the full year cost of every change in budget 2018 should be available in the budget documentation when the budget is published. Such information was not in the documentation this year. There were 2017 numbers for 2017, but where taxation was concerned, in particular, the full year costs were not given. As a result, the answers to parliamentary questions since then have shown a substantially higher full-year cost for the tax changes introduced in the budget.
The tax and expenditure carryover should be made available from the beginning. It is not there. The independent budget office should be appropriately staffed. This is critical. We would be concerned if the Oireachtas decided to farm out that work. We believe the Oireachtas needs its own office, properly staffed, to do the new job of budgetary oversight required. We are strongly of the view that this should be done.
Everyone should have access to analytical models. For example, one model gets used a good deal and, although it was paid for 100% by the taxpayer, most people are not given access to it. The organisation using it is able to make a good deal of money on it. I am referring to the simulating welfare and income tax changes model in the ESRI. I am not suggesting people should not use the SWITCH model. However, if it is used, others should have access to it aside from ESRI staff. All manner of assumptions and issues around modelling arise. I am keen to see what the models are based on. I suspect that many people around the Houses would also like to see these details. Any models being used in the analysis, whether macroeconomic models or models like SWITCH for analysing welfare and so on, should be accessible and available to everyone.
Probably the most important thing that needs to be noted for the future is the point that unless we increase our overall tax take in a fair way - I am not emphasising income tax and I am making these qualifications specifically - we will not provide the infrastructure and social services for which Irish people have clearly indicated a preference. Moreover, we will certainly not get anywhere close to the European continental average, especially the EU 15 average, which is where most Irish people believe we should be.
I thank the committee for the engagement. Ms Murphy and I are perfectly happy to answer questions or elaborate on anything members may want us to address.