Vol. 521 No. 5
2 Mr. J. Bruton asked the Taoiseach if, further to his reply to Parliamentary Questions Nos. 1 to 3, inclusive, of 9 February 2000, the draft report on phase two of the basic income study has been considered by the members of the working group examining this issue; and if he will make a statement on the matter. [16488/00]
3 Mr. Quinn asked the Taoiseach if the working group on basic income has completed its consideration of the consultants' report on phase two of the study; when the group first met; when it is expected to be in a position to produce a final report; and if he will make a statement on the matter. [17218/00]
4 Mr. Sargent asked the Taoiseach the progress being made on consideration of the draft report on phase two of the basic income study. [17300/00]
I propose to take Questions Nos. 2, 3 and 4 together.
The working group held its first meeting on 31 July 1997 in Government Buildings and has met on ten occasions in total since then.
I understand the final draft of the phase two report was received from the ESRI at the beginning of June. The working group met on Friday, 9 June, to consider this draft with a view to finalising its overall report. I understand the working group will finalise its report by the end of the month and, as I have previously indicated, the working group's report will be published at the earliest opportunity.
Does the Taoiseach believe recommendations will be made on this, and will these recommendations be taken into account in the budget?
My information is that it will make recommendations. According to the notes that I have been given, it is examining what it would cost, the distribution effects relative to more conventional tax and welfare policies, its impact on labour supply and migration, the informal economy, the labour market generally and economic growth. It has gone into the subject in enormous detail. It was delayed somewhat in the winter because all the individuals involved were involved in the talks on PPF but the group is working on it now and will make recommendations.
If the social welfare and tax codes are to be replaced by a basic income system, will that mean there will be still available special assistance for people who face special crises, for example, elderly people who are in private rented accommodation and who find they are faced with a rent review where their rent is to be trebled and they will be on the side of the road because they cannot pay?
The question anticipates the report.
The rent review report, will be out, I hope, in the next week or so. I do not want to pre-empt what will happen. The changes in this will be quite fundamental and may be even revolutionary if they are to follow some of the originally envisaged recommendations. In the first part of the study, when the group looked at the economic and budgetary aspects of the introduction of a basic income, it looked at the costs and distribution impacts. They can be quite severe. If the system were to be introduced, there would be areas which would have to be supported because the distribution impacts cannot be structured in a way that falls easily.
There will be losers as well as winners.
There definitely will be. In phase two the group examined the immediate and long-term dynamic effects of a basic income system and factors such as labour supply, demand, responsiveness, wage rates and competitiveness, which are all major economic issues. As Deputy Bruton will recall from previous questions I have answered on this, the reports on this were to be part of a paper published on the matter. However, we will have to see the fallout. The studies have been done now and the concepts have been examined. We have been in touch several times with CORI, the people who did good work on this. They re-ran the system on the computers and we will have to see how it looks.
Am I correct in my understanding that the working group did not have a remit to make recommendations but just to analyse the workings of the optimum guaranteed basic income system? Perhaps the Taoiseach could clarify that, because that was my understanding. Second, does he agree that the guaranteed basic income concept may result in less growth but more equity in society and given his stated commitment to equity and social inclusion, would that be the aspect he would support as well, since less growth seems to help in reducing inflation too?
The commitment given in the programme for government was that there would be a Green Paper on guaranteed basic income. That is my understanding. Is the Taoiseach able to say that when this report is finalised, there will then be a Green Paper from the Government based on what information is received by Government, and when could that Green Paper be expected?
The terms of reference were that a study would be required and the question of a basic income would be examined having regard to our open borders, free movement of people and capital within the EU, but the group went into various aspects of that in great detail afterwards. It examined the social solidarity fund and issues of migration and labour markets and so on. Whether their conclusions are termed recommendations or conclusions, it will be the same thing. It has returned to CORI and other organisations and to the social partners on these things. It has been trying to reach a position in which it will be clear what is good and what is not workable.
On the second question, as I indicated previously, the report of the working group incorporating the two phases of the consultancy will be forwarded to the Government and then will be used in the preparation of the Green Paper. That is still the intention.
When?
We will wait until we see what is in the report but we will move on it straight away.
Since we will not be able ask this question effectively again until late autumn, I presume the Taoiseach has been directly briefed by the representatives of his Department who are associated with this committee. Is he in a position to indicate, with the briefing he has received from the people who advise him, whether the Government will be in a position to accept the conclusions which are now effectively in draft form?
I am not in that position because the working group report is still being finalised, but from what I have seen – there are measures on social welfare, arrangements for pay and suggestions targeting low incomes – there are some very good measures in it, some of which will be workable and others which will not. The introduction of the statutory minimum wage is very useful and will solve many of the issues the group has raised on foot of the first report. The tax provision which targets low and taxable incomes is among some very good initiatives. There are helpful measures, but I do not want to say whether the whole report could be taken and implemented until I see it.
On the issue on which the Taoiseach replied, concerning the Green Paper, does the Taoiseach accept there was a promise given that this would be forthcoming within two years in the programme for government? Would he now like to revise the number of years in the revised Programme for Government?
It will not be two years, anyway.
If one has a Green Paper and does all the work on it, it will take some time. At the outset, people said if one could work towards this position in a decade, one would probably be doing well.
It was the Taoiseach's promise.
Even prior to that, when Professor Charles Clark was examining this in the first place a long time ago and before the ESRI and St. John's University started with the group, it was indicated that it was a long-term matter. In three years, it has done a very good job to complete its studies and its work. It raises many issue and many questions. It is not a simple thing to examine the whole welfare and pensions systems and try to redesign the entire system.
The reason the group has spent so much time going back and forward is that this has not been done anywhere else. It was suggested to me two years ago, not in the House, that we should look at the New Zealand model and that would give all the answers. It did not. It did not cover 10% of the issues. That is a nonsense. They did certain things but they did not go into all these details.
