Vol. 494 No. 2
1 Mr. Sargent asked the Taoiseach if he will be bringing a greater urgency to the Green Paper on basic income which the Government promised upon coming into office, in view of the recent findings of the CSO that food prices have had a significant jump over the past year. [17484/98]
In line with a commitment under Partnership 2000, a working group on basic income, which operates under the aegis of my Department, is examining the viability and suitability of introducing a system of basic income. My Department has commissioned a study to be carried out in two phases by economic consultants. This independent study will assist the working group in producing as comprehensive and robust a consideration of the subject as possible.
The overall purpose of the study is to consider and evaluate the economic, social, budgetary and administrative impact of the introduction of a basic income system. The first phase, which examines the costs and distributional analysis of a basic income, is now nearing completion. The second phase, which will commence shortly, will consider the dynamic effects of such a system from a broad economic and social perspective and will draw on the findings of phase one. I hope the overall study will be completed in the spring of 1999.
This study is the first step in the Government's consideration of the question. When the findings of the independent study are available, the matter will be considered in detail by the Government and a Green Paper will be published as per An Action Programme for the Millennium.
Ba mhaith liom fáilte a chur roimh an Taoiseach tar éis sos an tsamhraidh.
Go raibh maith agat.
There is an element of déja vu about this. A similar question was the first tabled following the Christmas recess. The answer is not much different. Does the Taoiseach need to be reminded that the Government presides over more poverty since last Christmas? More people have become richer, the gap is widening and both are linked. Will he give this matter greater urgency? He mentioned spring as a publication date. Will he be more specific about when the first and second phases of the report will be published so that we can prepare to consider the matter more fully?
The first phase of the work is almost complete. The first report is in and some work is being undertaken to finalise it. It will hopefully be ready in one month. The first part will involve the evaluation of the economic, budgetary and distributional impact of the introduction of the basic income system in Ireland. That work was carried out by a team comprising the ESRI and Professor Charles Clark from St. John's University, New York, who was the co-author of Pathways to a Basic Income. Getting Professor Clark to work with the ESRI was felt more likely to resolve the fundamental issues of what was possible. They will try to reach an agreement, sign off on it and then move to the second phase. It appears they will begin the second part in November. Realistically, it will take them about three months so it will be early spring before the work is completed.
Does the Taoiseach agree that the family income supplement as constituted provides a basic floor under family income, with one or two exceptions, one being that it is not available to the self-employed and farmers where their incomes fall below this floor? Is the Government considering the extension of FIS to comprehensively include all occupations and not just some as a step towards basic income?
I am sure the studies will look at how best a basic income can be provided and if it is possible to do so. The big difficulties in the basic income system will be the distributional effects, the necessary increases in taxation and whether the system will operate. I am very familiar with the CORI work originally carried out on this and the argument centred on distributional effects. I am sure they will look at how best to do it. Of course, FIS is one area which can be looked at, but there are downsides in the way is it calculated. It is calculated in a way that is not behind the thrust basic income is trying to achieve.
Is it true as reported that the Taoiseach said if one was to extend FIS to the farming community and the self-employed it would cost £70 million extra annually? Is he aware that I was told only yesterday by the Department of Social, Community and Family Affairs that the extra cost would be no more than £30 million per year?
Figures range from £20 to £70 million for this issue. It will cost approximately £50 million extra if it is expanded across all the categories. The 1994 figure was £30 million.
Will the Taoiseach publish accurate figures and the basis for calculation?
I will ask the Minister for Social, Community and Family Affairs about that.
I know Professor John Clark's work which is very reputable and I look forward to the report given his involvement is central to it. In the context of Government policy, does the Taoiseach recognise the need for complementary taxation reform to make this proposal a reality and that it is not sufficient to merely use the CORI proposals which are confined to a remit that is a Government one? Will he take into account that, aside from the different allowances, the benefit of a guaranteed basic income is its unconditional nature and the way it would remove the level of dependency that has besieged many poor people who fear they may lose their allowances? That is its appeal which must be sold to the policy makers.
I have undertaken to ensure this report will be as comprehensive as possible and published as soon as possible. That will lead to a Green Paper on this issue, which is a commitment in this regard. The Government is committed to maintaining and enhancing our growing competitive economy and making sure that the fruits of that are spread as evenly as possible through existing mechanisms and, if necessary, new ones.
(Dublin West): The concept of a basic income is to establish a floor of income below which the income of a family or individual would not fall. Therefore, it should be set at a level to eliminate poverty and hardship which so many families endure. Will the Taoiseach agree that the setting of a legally underpinned minimum wage is a step in the direction of providing a decent basic income for everyone? In view of the rising cost of living, the drastic situation in the housing market and the large profits accrued by business over the past few years, will the Taoiseach bring forward the timetable for the legal implementation of a minimum wage? Will he also agree that in view of the points I made, the £4.40 hourly minimum wage level set for the year 2000 is derisory and that a £6 hourly minimum wage should be the minimum contemplated with immediate effect?
Work is ongoing on a minimum wage and discussions are taking place on how it can best be achieved. I do not consider the hourly rate of £4.40 derisory, but in the fullness of time the figure will have to be considered and agreed. The figure is hotly disputed on both sides. It is important that we give all the people concerned an opportunity of employment. The more people who get employment, the better the opportunities they will have to break the cycle of exclusion, poverty and disadvantage. The Deputy is correct in that a legal minimum wage is part of the solution. Deputy Sargent's question was more concerned with those who are unemployed. When the final study is completed in spring it will show the distribution effect of a basic income.
Will the Taoiseach tell the House if the £4.40 hourly rate is the figure he has in mind or is it lower or higher than that? Will he agree that tackling basic income is not much good unless we tackle poverty traps such as the use of gross income to assess entitlement to a medical card and local authority rents? That needs to be tackled in tandem with introducing a basic minimum wage if poverty traps are to be removed.
As the agreement and discussions between the social partners and the Tánaiste on the minimum wage have not been concluded, I do not want to speculate on what the figure will be, but, as Deputy Higgins said, figures have been mentioned. All measures possible should be taken to eliminate poverty traps and make the system easier. A number of poverty traps have been eliminated by the Department of Social, Community and Family Affairs and the health boards in recent years. This has made the system easier to use and ensured the level of social welfare benefits or take home pay of less well off people can be used to better effect. Anything that can be done in that regard is a help.
Does the Taoiseach agree in principle to the establishment of a basic income? If so, does the Minister for Finance and his Department also agree?
The Government undertook to examine whether the system would work. I am not prepared to state my conclusion until the report is available. As Deputy Quinn is aware, there were huge divergences in previous studies by CORI and the ESRI on this area. Each side did not accept the findings of the other. An effort will be made in this study to reach an agreed conclusion, if that is possible given the dynamics of the changes involved. Such changes have not been made elsewhere. Examples of the position in other countries have been given but they do not involve a basic minimum wage.
There is no agreement.
The Government is committed to producing a Green Paper following the examination. It was stated in Partnership 2000 that there should be a comprehensive discussion of this issue.
