Ruairí Quinn
Question:1 Mr. Quinn asked the Taoiseach when the second phase of the study commissioned by the working group on basic income will be completed; and if he will make a statement on the matter. [1350/00]
Ceisteanna–Questions. - Basic Income Study.
John Bruton
Question:2 Mr. J. Bruton asked the Taoiseach when the second phase of the study commissioned by the working group on basic income will be completed; and if he will make a statement on the matter. [2357/00]
Trevor Sargent
Question:3 Mr. Sargent asked the Taoiseach when the second phase of the study commissioned by the working group on basic income will be completed; and if he will make a statement on the matter. [3320/00]
I propose to answer Questions Nos. 1, 2 and 3 together.
I understand that a draft of the report on phase two of the basic income study was received from the consultants recently. The draft has been circulated to the members of the working group which will meet to consider it at an early date.
We seem to be going backwards. An earlier reply to this question was more comprehensive. What is the Taoiseach's attitude to this study? Was it part of Partnership 2000 as set out in paragraph 4.3.5? Has it now reached the end of its natural intellectual life or is the Government serious about pursuing it in a coherent way? Have Father Seán Healy and CORI pursued this matter in the context of the new partnership programme?
It is a commitment given in Partnership 2000 and I intend to pursue it. I do not know what the final outcome will be. Phase one of the study was dealt with by the working group some months ago and arising from that, it asked the ESRI to undertake further studies. The members of the group have, by and large, been occupied by the talks in the past three months and did not have a meeting. They will have one shortly. The second phase of the study has just been completed and has not been looked at yet. It should be pursued to the end.
The Programme for Prosperity and Fairness provides for the achievement of income adequacy to be progressed through a number of measures, which is what CORI has been concerned with in the current talks. Included in the programme are specific social welfare measures in the framework of social inclusion, arrangements for pay which target those on low incomes – which was the original intention – the introduction of a statutory minimum wage and tax provisions which benefit those on low but taxable incomes. The study will be an important part of the ongoing work regarding the new programme.
On the tax provisions concerning those with incomes below the minimum wage, is it not the case that the Programme for Prosperity and Fairness does not contain an explicit irrevocable commitment to take those at or below the minimum wage out of the tax net, as we had been led to believe?
It is Government policy to continue to try to take as many people as possible on lower pay out of the tax net. The matter is still being discussed at the talks – the issue of low pay was probably aired more than any other.
To continue to try to take people earning below the minimum wage out of the tax net is not the same as giving a commitment to do so. Giving a commitment to do something is different from saying the Government will continue to try. Presumably the Government has been continuing to try, even in this year's budget which was the most unjust in recent history.
The Government has successfully continued to make the position of lower paid workers better.
How can the Taoiseach say the Government has done that when it published a budget in which those earning £10,000 a year benefited by £4 a week while those earning £50,000 benefited by £50 a week?
It is sad that, coming up to St. Valentine's Day, we have to talk about broken promises again. Does the Taoiseach recall that the Government programme promised in 1997 that we would have this study within two years? Has the Taoiseach considered that proposals for basic income be linked to the average income level rather than the industrial wage, as the two are often different? Does he accept that the need for flexibility in the labour market favours a type of basic income payment, which would help low-income families?
The overall aim of the study was to try to evaluate the economic and social benefits and the budgetary and administrative basis of the introduction of a basic income system. It depends on the final outcome of the study. It is difficult to examine the long-term dynamics of the effect of basic pay. We will continue the process to the end, with the working group which is treating it seriously, as I am. Then we will see what we can do. It could differ from the first basic income study or it could cover other issues, including the Deputy's suggestion. The effects of the economy have changed since this study was first initiated. We will continue to look at the issue.
The last time this issue was addressed was 9 November. Prior to that, if not on that occasion, I asked if the terms of reference of the study undertaken by the ESRI had regard to the fact that Ireland is part of the Single Market and if the analysis of the efficacy of a basic income was constructed in the context of a European market of 373 million citizens. The Taoiseach was not clear if those terms of reference included that dimension. Does the briefing data available to the Taoiseach indicate whether that is now the case?
It does not. I recall the Deputy raising that point. To the best of my knowledge, after the first report, the ESRI was asked to take a more comprehensive market position. I think the Deputy's point was taken into account but I will double-check it.
Will the Taoiseach write to me about it? It is fundamental.
I will.
I have heard the Taoiseach speak on a number of occasions about basic income. Does he agree with the analysis of the Small Firms Association that basic income would be a disaster for the economy?
I think the association said that a minimum wage would be a disaster. It was not referring to a basic income, which is a different issue. I do not agree with the analysis.
Arising from the reply to Deputy Quinn's question, will the Taoiseach agree that labour is mobile in a single labour market, therefore tax provisions concerning the taxation of labour in the Irish part of a single market would have to take account of the tax provisions applying in other parts of the single labour market? If this is so, will he agree, for example, if Ireland were to have a 53% marginal tax rate to pay for a basic income, there would have to be for administrative purposes—
Where did the Deputy get that?
It depends on how the basic income is set. The tax rate depends on the basic income. It could be 20% if the basic income is set low enough. I am using this as an illustration. Therefore, the only sensible proposal guaranteed to work is where there is European agreement on a basic income, such as advocated by a former member of the European Parliament, Chris O'Malley. He urged the adoption of a European basic income where there would be some form of synchronisation of policy in relation to taxation of labour in all parts of the European Single Market. While that should not be used as an excuse for not proceeding with the matter here, we should at least take serious account of the issue raised by Deputy Quinn. The figure I mentioned was used previously but I assure Deputy Sargent I was using it for illustrative purposes only.
In reply to Deputy Quinn, one must consider what is taking place in the labour market because our foreign direct policy is based on taxation policies. This is a critical area which is taken into account. Our domestic workforce is also a key issue where people are attracted back into the economy. I see no semblance of unanimity among members of the European Council or Social Affairs Council who discussed these issues when I was a member of the Council. They are light years away from coming to an understanding on minimum pay levels. We witnessed this last year when four different countries discussed the issue and came up with entirely different figures within the one calendar year. I do not think it is a likely possibility in this decade. I believe the EU tax directive will be resolved before this issue is resolved.
Arising from the Taoiseach's reply to Deputy Bruton, is he not sure whether the terms of reference of phase two of the study currently undertaken by the ESRI have regard to the implications of a basic income administered by the Irish Exchequer in the context of a single integrated labour market, where our level of unemployment is 4.9% and the average figure is closer to approximately 8%? How can anyone come to a reasonable conclusion if there is not regard to that level of potential mobility? Is the Taoiseach saying that his briefing documentation does not indicate that the study is being conducted by the ESRI without the prospect of the impact on the labour market of 373 million citizens?
Deputy Quinn already raised this question and I replied that I believed it was. When asked by the Deputy for a reply in writing, I indicated that I would provide this.
I am disappointed the information is not—
It is not.
Given the importance of the taxation system involved if there is to be consideration of a guaranteed basic income scheme, will the Taoiseach say whether the NESC report on taxation systems for the partnership agreement will include consideration of moves towards a guaranteed basic income so that we can begin to converge the two issues? Does he agree there is still considerable confusion in the public mind between the debate on a minimum income and a guaranteed basic income? Will he take this on board when trying to articulate a clearer description of the idea being talked about here and in other countries? Will he consider the citizens' dividend or some other name which might clear up the confusion which is of no help to either issue?
A minimum wage is the statutory and legal rate paid to people in employment. There will be a relative wage for part-time workers. The basic income study was commissioned to be carried out in two phases. The overall purpose was to evaluate the economic, social, budgetary and administrative impact of the basic wage system. This is a very different system which would assist those already receiving social welfare benefits. It would have to take into account issues such as wage rates and competitiveness to which Deputy Quinn referred. This is a complex issue. Labour market supply, which raised many questions in the first report, would have to be considered. The position in this regard is not the same as it was in the early 1990s when the issue was raised.
Will the taxation report take into account the guaranteed basic income and how taxation would need to be considered in this regard?
Which taxation report?
I understand a report on taxation is to be drawn up in the context of the partnership agreement.
The CORI proposals were taken into account when considering income adequacy. The operation of the social solidarity fund was also considered.
Does the Taoiseach agree that basic income, by its very nature, treats one and two income families equally, whereas the Government's current tax policy represents a divergence from that principle? Does he agree that when reflecting on basic income, which is assisted by the Government's commitment to tax credits, the Government should reflect on inconsistencies in its other tax policies such as placing a restriction on the transferability of allowances within a marriage?
I note the Deputy's point. This year the tax credit system will be almost fully implemented. This will allow for more flexibility in the system in future.
Restricting transferability of allowances is a move in the opposite direction.