Written Answers - Anti-Poverty Strategy.
Thomas P. Broughan
Question:
21
Mr. Broughan
asked the
Minister for Finance
his views on the recent figures released by the national anti-poverty strategy indicating that, in the 1998 budget, the proportion of spending on tax cuts and social inclusion measures has considerably widened in contrast with the 1997 budget figures; and if he will make a statement on the matter.
[9532/98]
The data used by the Combat Poverty Agency in the context of the national anti-poverty strategy compares the budget 1998 taxation and PRSI changes with the additional social inclusion expenditure measures announced on budget day. However, it is more appropriate to compare these measures with the total increase in expenditure on social services — not just increases announced on budget day. This is because the budget day tax and PRSI changes give the complete picture for tax — PRSI measures in that year whereas the budget day expenditure announcements are merely additional to increases already detailed in the Estimates for Public Services (Abridged Version).
On this basis the position is somewhat different from that outlined in the report referred to by the Deputy. The 1998 estimate for social expenditure is £10,322 million, up from the provisional outturn of £9,764 million in 1997. This represents an increase of £558 million as compared to the £517 million full year cost of the budget day tax and PRSI reductions quoted by the agency.
It is also interesting to note that during the past five years, social services expenditure generally, including expenditure on social inclusion, has increased from £8,049 million to £10,322 million. This represents an average increase of just under £455 million per anum. Against this average figure, the projected increase of £558 million for 1998 over 1997 compares most favourably.
Under the terms of Partnership 2000, there is a commitment to invest an additional £525 million on a full year cost basis on the promotion of social inclusion over a three year period. In the 1997 budget, my predecessor allocated £273 million for this purpose. In the recent 1998 budget, I allocated a further £282 million on social inclusion programmes. This means that the resources promised for social inclusion over a three year period will not only be provided within two years, but will also have been exceeded by £30 million.
It is stated in Partnership 2000 that the biggest single contributor to social exclusion and poverty is unemployment. In this regard, it is worth noting the social inclusion measures to integrate the long-term unemployed back into the workforce which have been applied successfully. These include the increased numbers of participants on community employment and on the back to work allowance scheme.
I agree with the widely-held view that the best anti-poverty strategy is the creation of sustainable employment. With this in mind, budget 1998 introduced another initiative — job assist — which designed to help the long-term unemployed back to work. This provides a special tax deduction tapered over three years for persons unemployed for one year or more who take up a job, a double tax deduction for employers employing previously long-term unemployed person. This can last up to 36 months provided the previously long-term unemployed person is still employed by them.
The total number of people at work in Ireland will have increased by 250,000 in the five years ending 1998. In recognition of the need to reduce the burden of personal taxation to reward effort and give people an incentive to take up work, budget 1998 implemented the first stage of significant tax reform that was signalled in the Government's programme, An Action Programme for the Millennium. Among the measures introduced were reductions of 2 per cent in the standard and top rates of income tax, significant increases in personal allowances, a widening of the standard income tax band and an increase in the PRSI-free allowance to £100 per week.
I am confident that the tax measures I introduced are employment friendly and will succeed in maintaining the strong employment growth of recent years which, as I already stated, is the best way of combating social exclusion and poverty.
