I call Deputy Boyd Barrett. I understand he proposes to share his time with Deputies Finian McGrath, Maureen O'Sullivan, Catherine Murphy, Pringle and Healy.
Income and Living Conditions: Motion [Private Members]
I move:
“That Dáil Éireann:
notes the incontrovertible evidence that the impact of austerity cuts and regressive charges since the economic crash in 2007/8 has contributed to a consistent rise in poverty, deprivation and hardship and that this situation has continued to worsen under the current Government;
notes, in this regard, that:
— the Central Statistics Office’s (CSO) Survey on Income and Living Conditions shows the number of households suffering deprivation has risen from 24.5 per cent in 2011 to 30.5 per cent in 2013 and the number living in consistent poverty has risen from 6.9 per cent to 8.2 per cent;
— the CSO also shows that the levels of deprivation and persistent poverty among one parent families are even more shocking, with the number of one parent families suffering deprivation rising from 49.5 per cent in 2012 to 63.2 per cent in 2013 and the number living in consistent poverty rising from 17.4 per cent to 23 per cent in the same period;
— according to Barnardos, in 2013, 12 per cent of children (aged 0-17 years) lived in consistent poverty - up more than 137,000 from 9.9 per cent in 2012 and double the 6 per cent figure of 2008;
— UNICEF found that child poverty rose by 10 per cent to 28.6 per cent between 2008- 2012, an increase of 130,000 more children living in poverty;
— poverty among older people rose from 1.1 per cent to 1.9 per cent between 2009 and 2011; the deprivation rate has increased from 9.5 per cent to 11.3 per cent over the same period and deprivation among older people living alone is even higher at 15.3 per cent;
— the Age Action survey on Budget 2014 found 90 per cent of respondents said 487 budgetary measures affecting older people were unfair, noting prescription charges, telephone allowance, changes in income limits for medical cards, property tax, fuel allowance and other recent budgetary measures;
— according to the CSO, 45 per cent of people with disabilities experience income poverty and 36 per cent of people with disabilities experience basic deprivation;
— Social Justice Ireland states that a total of 750,000 people, including more than 232,039 children, are living in poverty in Ireland;
— according to the Irish League of Credit Unions 480,000 people have no money at the end-of-month after paying bills and 1.7 million have €100 or less; and
— 16 per cent of adults with an income below the poverty line are working and that according to the Organisation for Economic Co-operation and Development’s (OECD) Employment Outlook 2013 22 per cent of Irish workers are low-paid (earning less than two-thirds of the country’s median income), the second highest level of low-pay in the OECD;
notes an explosion in the housing and homelessness crisis over the last three years, resulting from rent increases, changes to rent allowance, evictions, and a chronic shortage of council and social housing - leading in turn to a dramatic increase in time waiting on housing lists (up to 14 years), families being forced into inappropriate emergency accommodation, and a 21 per cent rise in the number of people sleeping rough;
further notes that:
— shocking increases in poverty, deprivation and hardship have occurred at the same time that total net household wealth in Ireland has increased, corporate profits have risen, and a small minority of top earners continue to enjoy extremely high earnings; and
— significant evidence exists suggesting that a very wealthy minority at the top of Irish society have been fully insulated from the deprivation and hardship suffered by so many Irish citizens;
notes, in this regard, that:
— according to the Central Bank (Quarterly Bulletin Q4 2014) total net household wealth in Ireland stood at €508 billion, marking its seventh consecutive rise since the second quarter of 2012 - an increase of 13.7 per cent in total household wealth; and
— while no definitive statistics on the distribution of this wealth are currently kept by the Department of Finance, a number of reports and analyses exist which all point to a heavy concentration of this wealth in the hands of a small percentage of the wealthiest households and individuals;
notes, for example, that:
— the Credit Suisse Global Wealth Report 2014 states the wealthiest 1 per cent of households own 27.3 per cent of all wealth, the top 10 per cent own 58.5 per cent of all wealth and that there are currently 92,000 millionaires in Ireland;
— Think-tank for Action on Social Change estimates, based on an Economic and Social Research Institute study carried out in 1991 and extrapolated onto current total wealth figures, that the top 5 per cent of households hold 28.7 per cent of all wealth (i.e. 82,919 households hold €145 billion), 10 per cent of households hold 42.3 per cent of all wealth (i.e. 165,824 households hold €215 billion) whereas the bottom 50 per cent of households (829,122) hold just 12.2 percent of this wealth (€62 billion);
— the CSO’s Household Finance and Consumption Survey 2013 suggested that the top 20 per cent of incomes have almost 40 per cent of the wealth, while the bottom 20 per cent have only 11.4 per cent;
— Social Justice Ireland states that the richest 10 per cent of households received 24 per cent of total disposable income, whereas the poorest 10 per cent of households received only 3 per cent of total disposable income;
— the deeply unequal distribution of wealth suggested by the above is broadly in line with the rest of Europe, where the European Central Bank’s 2013 Household and Finance and Consumption Survey shows a similar distribution of wealth across Europe, where the wealthiest 10 per cent of households hold 50.4 per cent of all household wealth and the top 5 per cent hold 37.2 per cent;
— according to the Department of Finance, the top 1 per cent (21,650) of earners have an annual gross income of €8.7 billion, with average earnings of €403,703 per year - more than ten times the average industrial wage; and
— according to the Revenue Commissioners latest available statistics, corporate profits are also increasing, with gross trade profits increasing to €73.8 billion in 2011 up from €70.8 billion in 2010;
resolves to:
— abolish all tax measures that are regressive in nature or that disproportionately affect those on lower incomes particularly water charges, property tax and the Universal Social Charge for those earning less than €35,000;
— reverse all the cuts to One Parent Family Payment recipients including the abolition of concurrent payments, changes to the income disregard and the phasing out of payments to those with children over seven years of age;
— reverse all cuts to the Child Benefit payments;
— urgently establish a comprehensive and affordable early childcare programme;
— restore the full rate of Jobseeker's Allowance to people under 26 years of age;
— abolish individual prescription charges;
— reverse the cuts to the telephone allowance, the fuel allowance and the Household Benefits Package;
— reverse the cut to the Respite Care Grant;
— fund an emergency programme to directly build a minimum of 10,000 council houses per year over the next five years and put adequate appropriate emergency accommodation in place to end the homelessness crisis; and
— introduce rent controls and to increase rent support to a level that ensures no one is made homeless or forced into poverty by unaffordable accommodation costs;
and calls on the Minister for Finance to:
— instruct his Department to immediately draw up a programme for financing the measures above with taxes that focus on wealth, profits and top earners; and
— ensure that all budgetary measures considered in future will be subject to poverty and deprivation impact analysis before being implemented.”
A phrase I really dislike is "the poor will always be with us." Even though most people would not utter this sentiment considering the policies pursued by this Government and Governments over the past 25 years, one would have to conclude that somehow that sentiment is lurking behind the approach to policy, that poverty will be always there and because there is nothing we can do about it, we should not bother even trying.
That is a pretty serious allegation, but sadly the facts bear it out. It is to the great shame of the Government that under its watch poverty, deprivation and inequality in our society have worsened dramatically.
The figures never fully get to the human reality and the cruelty that the people behind those statistics suffer. Nonetheless, they speak volumes about the disastrous failure of this Government to honour a commitment it made and repeated time and again, namely, protecting the vulnerable, that whatever else it had to do, it would protect the vulnerable. All the facts and evidence from every quarter show, to the point where they are overwhelming, that the Government has failed utterly to do that. It has not protected them. In fact, it has persecuted them with the policies that have been pursued over the past three years. The evidence is really shocking and shameful.
As the Minister is aware, UNICEF recently produced a report suggesting that child poverty in this country had reached the obscene level of 28% of our children living in some kind of poverty with 12% living in consistent poverty. We are talking about 232,000 children living in poverty, an increase in recent years of 137,000 children. This is a situation that has dramatically worsened under this Government.
If anything, the situation for lone parents is even more catastrophic. The number of lone parents living in deprivation has gone from 49% in 2012 to 63% now - a shocking increase - with 23% of those lone parents living in consistent poverty. The elderly have also suffered to the point that 11% of our old people live in deprivation and 15% of older people who live alone suffer deprivation.
In light of the fact that the Government that claims it wants to incentivise work, we find a disastrous situation where 16% of those who are working suffer deprivation and we have the second highest level of low pay anywhere in the OECD, trailing after only the US, so we find ourselves second in the league table on almost all the indicators of gross inequality. We now find ourselves in a situation where 27% of the total population of this country - just under one million adults - suffer deprivation. They are going without basic things such as food, heating or housing.
There is, of course, the housing crisis itself, which has reached catastrophic proportions. The number of homeless people on the streets increased by 21%. Housing lists were always shockingly long. We now find that where people would have waited six or seven years, they are now waiting 14 or 15 years to get housed and still have no prospect of getting housed any time soon.
This is really a shameful indictment of this Government. I have laid out a lot of facts and statistics and I thank all sorts of groups like Single Parents Acting for the Rights of Kids, Barnardos, TASC, the Children's Rights Alliance, the CSO and official and bank sources. All of them show the same evidence of a massive increase in deprivation that has accelerated under this Government, particularly given some of the really vicious social protection cuts imposed by the Tánaiste and Minister for Social Protection, a Labour Party Minister. If there is any point in putting a Labour Party into Government, it is surely so that it will do something to protect precisely such groups as I am talking about but, shamefully, under Labour, poverty, deprivation and inequality have got dramatically worse.
This is not the whole picture. Often when these points are made to the Government, it says that we have all had a hard time, everybody has suffered and we have just come out of the troika arrangement and the worst economic crisis in the history of the State. However, the motion shows and the evidence is incontrovertible that while the poor have got poorer and the number of people in poverty has grown, the rich have got richer. It is official and it is a fact. Not everybody is getting poorer. Not only have the top echelons of society not got poorer, they have got a hell of a lot richer. Again, this is not simply an assertion. It is borne out by the facts. The Central Bank quarterly reports show that total household wealth and assets have increased every single quarter since 2012, increasing by 13.7% to the point where there is net wealth in this country of €508 billion that has been increasing during the same years that the poor have got poorer and deprivation has risen for some of the most vulnerable sections of our society. While there is a myriad of reports and the figures vary slightly from one to the other, all of the reports show that the top 5% to 10% of our population own between 40% and possibly 58% of all that wealth I just described. That means that the top 10% own somewhere between €200 billion and €250 billion and this figure has increased at precisely the same time that the poor have got poorer. That is shameful and means that the Government's policies have exacerbated inequality, insulated the super-wealthy and promoted the interests and wealth of the super-elite while ordinary people - lone parents, children, the elderly and the working poor - have been crushed into the dirt.
Unbelievably, Ministers and media commentators wonder why people on the streets are angry. They just have to look at the areas where the protests have been most vociferous to know why they are angry - Coolock, Darndale, Ballymun, Ballybrack, Dublin 8, Crumlin, Ballyfermot and Cherry Orchard. All of these places have been absolutely annihilated with cuts, poverty and deprivation. All of the statistics I have given are far higher in those areas. Other sections of our society have been insulated.
I do not have time to bombard the Minister with all the facts and statistics but they are laid out and have been laid out repeatedly by all the organisations to which I have referred. Could we reverse things like regressive taxes, be they water charges, property taxes, the universal social charge on low-income earners, the cuts to lone parent payments, rent allowance, the telephone allowance, the household benefits package, child benefit and the housing budget, all of which have contributed directly to a rise in deprivation, poverty, suffering and hardship? Could we do that by putting a bit more of the burden on the millionaires and the super-wealthy - the top 10% of earners in this country who have average earnings of €400,000 per year? Could they not afford to pay a bit more tax to stop children and the poor of this country from suffering cruelly?
I welcome the opportunity to speak in this very urgent and important debate on the rise in poverty, deprivation and hardship for many of our citizens. I also use this opportunity to thank Deputy Boyd Barrett for and commend him on bringing this issue before the House and for putting forward solutions to the severe problems facing our people. This Government needs to wake up and face the fact that people on the borders of society are suffering and need our support. We should never turn our backs on these people who are suffering, especially in the current economic climate. We must help our own as a matter of priority.
We should also stand by countries like Greece and work with them to secure a more equal Europe which, sadly, is what this Government did not do recently. Instead, it sided with the big boys and girls against the Greeks. Some of the countries now coming down on Greece have a brass neck, including Germany, which unilaterally defaulted in the 1930s and in 1953 got massive debt relief and Poland, which is now siding with Germany, but had large debts written off in 1989. When is that spoken of in this country or this House? Greece is in trouble. It is a broken country and the European Union should unite to help and support it. We need a collective response not isolation.
In terms of the motion before the House, we need to face the reality of what is going on in this country in 2015. Between 2011 and 2013, the number of households suffering deprivation increased from 24.5% to 30.5% and the number of people living in consistent poverty increased from 6.9% to 8.2%. That is a fact. According to the CSO the levels of deprivation and persistent poverty among one-parent families are even more shocking, with the number of one-parent families suffering deprivation having risen from 49.5% in 2012 to 63.2% in 2013 and the number living in consistent poverty having risen from 17.4% to 23% in the same period. In 2013, 12% of children aged between 0 and 17 years lived in consistent poverty, which is an increase of 137,000 on the 9.9% figure in 2012 and double the 6% figure of 2008.
As mentioned by Deputy Boyd Barrett, UNICEF found that between 2008 and 2012 child poverty rose by 10% to 28.6%, which equates to an increase of 130,000 more children living in poverty. That is the reality and an issue we need to address immediately. All we need is a couple of Ministers to bang their heads together to come up with a solution to this problem. These children living in poverty need to be prioritised over any other issue in this House. The situation is dire. On top of this, is the increase in poverty among our elderly. Between 2009 and 2011 the number of elderly people living in poverty rose from 1.1% to 1.9%. The deprivation rate in this regard increased from 9.5% to 11.3% over the same period. Deprivation levels among older people living alone is even higher at 15.3%. Our senior citizens, who worked hard all their lives and paid their taxes, are now also living in poverty.
The Age Action Ireland survey following budget 2014 indicates that 90% of respondents felt budgetary measures affecting older people were unfair. Prescription charges, changes to the telephone allowance and income limits for medical cards, property tax and the fuel allowance are all measures that hit our senior citizens. It is important to say that. Members on the Government side continually ask from where Government would get the money to reverse these cuts. The answers are in the detail of the motion before the House. According to the Department of Finance the top 1% of earners, 21,650, have an annual gross income of €8.7 billion or an average earning of €403,703 per annum, which is more than ten times the average industrial wage. Despite this those on the Government side continually say there is no wealth in this country. According to the Revenue Commissioners corporate profits have increased with gross trade profits increasing from €70.8 billion in 2010 to €73.8 billion in 2011. They are two obvious areas from which Government could get additional money. A number of my colleagues will give more detail in that regard later.
The Government needs to reverse the cuts to child benefit and restore the respite care grant. These are important issues. We need to focus on the main content of this motion and address poverty in Ireland in 2015.
Is rud dearfach é go bhfuil an díospóireacht seo ar siúl againn agus go mbeidh sé ar siúl amárach chomh maith ionas nach ndéanfaimid dearmad ar na fadhbanna agus ar na deacrachtaí atá ag daoine áirithe sa tír seo.
The Government tells us that austerity is over. While I acknowledge that there are various signs of this, unless ordinary people feel austerity is over, it is not. Those of us who represent particular constituencies, including Dublin Central which I represent, know from the high rates of unemployment, lone parents and extensive housing waiting lists and homelessness in these areas that austerity is far from over. The debate on this motion allows us an opportunity to concentrate on the real world and take a reality check on what has been going on. It is difficult to reconcile the statistics and the percentages which say one thing with the reality on the ground as we see it. One reality that cannot be avoided, as set out in the statistics provided in Deputy Boyd Barrett's comprehensive motion, is the growing inequality in society. We know that income inequality will increase further unless there is a change in economic and social policy. The TASC report, Cherishing all Equally, the basis for which is Revenue tax returns and other data, provides a good picture of the situation and corresponds with the picture of inequality among the people we meet. That report sounds the warning that cutting taxes instead of investing in public services will lead to further economic inequality.
This Government was left with an appalling mess. The more I read of what is emerging at the banking inquiry the more appalling that mess. It appears that in spite of signs and warnings - I know there is an issue around those who were supposed to see the warning signs but did not or ignored them or chose to look the other way - decisions were made or not made, leading to a disastrous situation. The only analogy is that of Nero fiddling while Rome burned. The horrible irony is that all these austerity measures could have been avoided.
In the north inner city, which is part of Dublin Central, which I represent, only 25% of houses are owner occupied. This area comprises private tenants, public authority tenants and social housing tenants and little or no rent control, leading to rent increases every day which threaten the reality of people being made homeless. Unemployment and youth unemployment in this area is very high. I see every day how deprivation leads to increased drug dealing as a means of potential income and an increase in crime by those trying to find money to buy drugs. Continued austerity is feeding this misery. Earlier today the Minister for Finance, Deputy Noonan, acknowledged that youth unemployment in Europe is fostering extremism. I believe it is also fostering many other social ills in our society and, in particular, is affecting the self esteem of our young people.
This motion put forward by Deputy Boyd Barrett is further proof of an issue I addressed in a previous Private Members' motion, namely, the need for agreement that the income gap between the basic social welfare rates and the income required for a minimally adequate standard of living, as measured by the Vincentian Partnership for Social Justice, and minimal essential budgetary standards should be reduced in each year's budget and that, prior to the publication of budgets, the affects of budgetary impacts on people be analysed by a properly conducted social impact survey. If this was done, there would be no need for debates such as the one we are having tonight and tomorrow night.
Community sector workers in Dublin Central and other areas who are providing vital services in areas most affected by austerity are under significant pressure and stress owing to the tendering process for the social inclusion and community activation programmes, which issue I have previously brought to the attention of this House. These community development groups provide educational assistance, job activation programmes, business start-up programmes, affordable child care, after school programmes, youth groups and services for senior citizens in areas where there are no other alternatives. There are parts of this country where people have alternatives in terms of these services but there is a significant number of areas that do not have them. The following is a quote from one of the community workers affected:
Walls have gone up around this Administration and we are unable to access where decisions are being made. Now, we see a drive to privatise the sector, with no engagement with the Minister and no dialogue with him. It is so frustrating and demoralising. What were community-led initiatives will be national programmes feeding into a European programme and the particular needs of communities, particularly those most affected by austerity, is going to be lost in all of that.
Some companies will be successful. What we will see then is community sector workers in competition with each other for jobs. As the motion points out, there are sectors in society most adversely affected. I feel for senior citizens dependent on their State pension given the extent of the cuts to them. I accept the Government had to make difficult decisions but the decisions were disproportionately difficult for certain sections of society, in particular lone parents, senior citizens, disability groups and communities such as those I represent.
One could ask how we address the inequality. One suggestion is that at the very least the full corporate tax is collected or it could be considered to increase it by even 1%.
Hear, hear.
Corporate profit is not a human right. It is time we looked at the human rights of our citizens as opposed to the corporations. That would be one very practical step that could emerge from tonight’s debate.
I welcome the opportunity to speak to this broad-ranging motion, which is focused on the changes that have taken place in recent years. I wish to focus on particular areas to which reference is made in the motion. Housing impacts on so many people. The motion calls for a major construction programme. The Government has committed large amounts of money to it and future Governments to spend on social housing, yet the programme is more limited than what is required. Large amounts of money are to be drawn down from the European Investment Bank. Some of us have been talking about that for some years. That is the way some other European countries fund housing programmes.
We need to arrive at a situation where we have security of tenure and rent certainty for people. We must provide people with a viable rental option in order that they can go to work, where there are not poverty traps and their home is their own and not someone else’s property. Rents are rising. My area is one of those that is leading the charge in that regard. Not a day goes by without me seeing people who face the prospect of homelessness. I have tried to negotiate with the rents units for increased caps on an individual basis. It is a piecemeal approach as opposed to a comprehensive one.
Politics is about choices. The Government is choosing to spend people’s money in a particular way to satisfy the housing need. It does not make economic sense to wait until it is more expensive to buy or to build houses. Neither does it make sense to provide rent assistance when a much more comprehensive building programme than is envisaged could be introduced. While an announcement has been made, there is precious little evidence of work happening on the ground.
I wish to focus on single parents who are one of the groups that has been most impacted by the cuts. A significant number of lone parents will have an 18% cut in their income in July of this year. I do not believe any other sector would be able to sustain such a cut and the group in question is not able to sustain it. A woman came to see me yesterday who was informed she would be offered a place on a Tús course. She has a seven-year-old child but she has no relatives to mind the child. She can attend the course while the child is in school but what is she supposed to do in July and August? It is difficult to understand the point made by certain groups that a child at the age of seven could be minded by someone else or he or she could be left on his or her own. What is happening in that respect is cruel. Lone parents are a group that has been particularly badly affected.
The motion addresses child poverty in some detail. The number of one-parent families suffering deprivation has increased from 49.5% in 2012 to 63.2% in 2013, and the number living in constant poverty has increased from 17.4% to 23%. The numbers do not lie but the problem is that behind those numbers are real people. That is their life and day-to-day reality. According to Barnardos, in 2013 a total of 12% of children aged under 17 years lived in consistent poverty. The number of children affected has increased by 137,000 from 9.9% in 2012, yet we talk about being a family-friendly country. We have just debated child-centred legislation and now we are debating something that has a major impact on the quality of children’s lives. Agencies such as UNICEF capture the extent of the problem.
Water charges are one of the taxes to which reference has been made. It is the straw that has broken the camel’s back. Many households no longer have money in reserve. People simply cannot pay. That is part of the reason so many people will refuse to pay when the bills come in April. I have heard it said that the builders are back building and the bankers are back banking but the people who are carrying the can are the ordinary people who thought they were given an assurance by the Government when it took office that the vulnerable would be protected when in actual fact it is the reverse that has happened.
I welcome the opportunity to contribute to this Private Members’ debate this evening. I congratulate Deputy Boyd Barrett on tabling the motion.
As the motion outlines, there has been an increase in inequality in society, in particular in terms of income inequality. One can see that in stark measure in terms of how much the gap is widening between those who have and those who have not. One of the outcomes of the austerity programme and the impact of the changes that have taken place since the crash is how a permanent change and shift has emerged in the sense that the top 1% will continue to gain and the bottom 50% will continue to lose. That situation will become embedded and enshrined right across society. The most telling aspect of the motion and the actions of the Government in the past four years, and the previous Government before it, is how the changes will become permanent.
Other speakers referred to the broad measures concerning the motion. In my contribution I wish to cite two examples of the impact austerity budgeting and austerity measures have had on people in recent years. Of note is how changes introduced in budgets two to three years ago are only now starting to impact. People could not foresee the impact of measures that would affect them down the line. Budget 2012 is probably one of the most stark examples of that phenomenon, whereby measures are now coming home to roost for one-parent families from July. In budget 2012 the Minister also made sweeping changes on entitlement to jobseeker’s benefit which impacts on casual workers and seasonal workers. People in south-west Donegal in particular are affected as traditionally, seasonal work in fish factories was and still is the only source of employment. Workers get periods of work of approximately four to five months in the year which previously entitled them to get jobseeker’s benefit for the rest of the year. However, because of changes to the qualifying criteria in budget 2012 workers involved in seasonal industries and sectors now find their entitlement to jobseeker's benefit is running out as those measures kicked in last autumn.
Many people have seen their income slashed because their entitlement to jobseeker's benefit has run out and they have had to go onto jobseeker's allowance. What has made it more stark is that jobseeker's allowance is means-tested, based on income over the previous 52 weeks, which leads to substantial cuts. This makes life very difficult for these workers who, through no fault of their own, are unable to get more sustainable or long-term work. They are totally dependent on the seasonal work available in the fishing industry. What is more frustrating for them is they have no chance of qualifying for jobseeker's benefit again, so they will be stuck on jobseeker's allowance the next time the seasonal work ends. This will have huge impacts across the board. It will increase poverty and dependency levels in south-west Donegal. This also has an impact on many part-time farmers who supplement their income with seasonal work. The changes will have a huge impact on them. These unforeseen consequences could not have been explained to people when the budget for 2012 was introduced because it takes several years for the impact to be felt. This is one of the most difficult aspects for the people to take. It is a sign of how the Government is ensuring these changes are permanent. It is also the sign of an attitude and ideology in the Government that if people are underworked or cannot avail of full-time work it is their own fault and they should be made to carry the can for it.
Another impact of the austerity measures can be seen in Letterkenny General Hospital, where 30 to 40 patients have been on trolleys every day for the past number of years. A total of 1,955 people are on waiting lists for inpatient treatment and thousands more are on waiting lists to see a consultant. This is a direct impact of the measures and cuts implemented in the health services. It has reached the stage where a consultant due to retire has left early because he was fed up with the situation. He could not do his job because of the impact of cuts. He should have been doing orthopaedic operations, such as hip and knee replacements, but he could not do so because no nurses or theatres were available. Operations are not taking place to save small amounts of money. Breast cancer treatment services in Letterkenny General Hospital are now under threat simply because of the cutbacks the Government is making in our health services. This example can be seen in every hospital in the country. It shows the impact of the austerity measures the Government is forcing on people.
The motion calls for budgetary measures to be subject to poverty and deprivation impact analyses before they are implemented. These should be carried out without delay, but no Government involving Fianna Fáil, Fine Gael or the Labour Party will do so because it would mean they would have to stand over and explain the cuts they make. Until this is the case, we will not have fairness in society.
Austerity comes in many different forms and is all pervasive for the ordinary people in the country who are the vast majority of the population. The past four years of austerity have come from a Government which has absolutely no mandate for it. During the last general election we heard it was going to be Labour's way and not Frankfurt's way, there was not going to be another cent for the banks, the bondholders were going to be burned and we were going to have a democratic revolution. What has happened? In this country a total of 30.5% of households now suffer from deprivation and 130,000 more children live in poverty. Social Justice Ireland tells us 750,000 people, including 232,000 children, are living in poverty. A total of 360,000 people are unemployed, and 90,000 families are waiting for homes on local authority housing waiting lists. We have seen 100,000 people emigrate. We have house tax, water tax, universal social charge and whatever other tax. We have had savage social welfare cuts, the withdrawal of medical cards, wage cuts, pension cuts, pension levies and disability benefits cuts, all from a Government which has absolutely no mandate for these cuts.
Another specific form of austerity measure is the destruction by employers of defined benefit pension schemes, which is now widespread throughout the country. The employer's motto seems to be never to waste the opportunity afforded by a recession to attack workers' rights and make changes detrimental to workers to defined benefit pension schemes. Such a scenario is now unfolding at a Coillte wholly-owned subsidiary, Medite Europe, in Redmondstown, Clonmel. The company is unilaterally and in breach of procedures attempting to change the existing terms and conditions of its defined benefit pension scheme. The company has already changed to a defined contribution scheme for all new entrants and now proposes to increase the age for pension payment. It also proposes to reduce pension benefit, in some cases by as much as 40%.
On 13 February the company applied to implement these changes under section 50 of the Pensions Act. The company and workforce were at the Labour Court on 14 January and are awaiting the outcome of this hearing and the court's recommendation. In advance of this, the company has applied under section 50 to implement unilaterally the changes. The company has shown absolute disrespect for the workforce and the Labour Court, which is the industrial relations arm and machinery of the State. It is now clear the company's involvement at the Labour Court and in negotiations has been a complete charade. Strike notice has been served. The workforce is very efficient and committed. The company has been in Clonmel for 33 years and there has never been any form of industrial action on the site. The workforce contributed an additional 2.5% of a wage increase to the pension fund. Coillte has funded its own defined benefit pension scheme, but has now unfairly and with great disrespect refused similarly to fund the Medite Europe scheme at Redmondstown.
I call on the Minister for Agriculture, Food and the Marine, Deputy Coveney, and on the Minister of State with responsibility for forestry, Deputy Tom Hayes, to intervene urgently with Coillte to ensure the existing terms and conditions of the defined benefit pension scheme at Medite Europe in Clonmel are continued. It is urgent because the workforce has been forced into a situation where it has had to serve strike notice, which expires early next week. Immediate action is necessary and I demand this be done. This is another form of austerity which is widespread throughout the country, and in this particular instance it is in operation in my constituency. This type of austerity, which attacks workers' rights and changes benefits and defined benefit pension schemes to the detriment of employees, must be stopped. The Minister must take action to do so urgently.
I call the Minister of State at the Department of Agriculture, Food and the Marine, Deputy Ann Phelan, who will be followed by Deputies Tom Barry and Noel Harrington.
I move amendment No. 1:
To delete all words after “Dáil Éireann” and substitute the following:
“acknowledges that the consolidation effort necessary to correct what had become an unsustainable fiscal position has necessarily led to a reduction in incomes and living standards for all groups in society;
notes that:
— the Budgets 2009-2015 had the greatest cumulative impact on household disposable incomes for those in the top decile;
— consolidation of the public finances was paramount and this was conducted in a phased and progressive manner;
— the Government’s budgetary policies have contributed to a turnaround in the fiscal position with the underlying budget deficit falling from €18 billion (or 11 per cent of GDP) in 2010 to just over €5 billion (or 2.7 percent of GDP) in 2015 with the debt-to-GDP ratio declining from 123 per cent of GDP in 2013 to below 109 per cent in 2015; and
— between 2008 and 2014 the gap between the day-to-day spending of the State and taxes collected, that is the underlying deficit, added €100 billion to our debt levels;
notes:
— the strong recovery now underway in the economy, with GDP estimated to have grown by 4.7 per cent in 2014 and projected to grow by 3.9 per cent in 2015;
— that the best route out of poverty is a job and the Government is determined to return the economy to full employment by 2018;
— the progress made to date in this regard and the turnaround in the labour market with employment having increased by over 84,000 since its low point in the third quarter of 2012 and the fall in the unemployment rate of 4.5 percentage points in just three years;
— the highly progressive nature of the income taxation system, with the tax wedge on those at 167 per cent of the average wage as a percentage of those on 67 per cent of the average wage, the second highest in the OECD; and
— the fact that the tax and welfare systems are highly effective in reducing market income equality with the Irish tax and welfare system the most effective in the OECD at reducing market income inequality and that disposable income inequality in Ireland is in line with EU and OECD averages;
further notes that:
— in the face of extraordinary fiscal pressures the Government has maintained core welfare payments, thereby supporting a basic standard of living for welfare recipients;
— the main beneficiaries of the income tax and the Universal Social Charge (USC) changes introduced by the Government in Budget 2015 were those on low and middle incomes and the Government’s intention is, subject to fiscal constraints, to continue to introduce further changes of this nature over the coming years;
— the top 1 per cent of income earners, who earn over €200,000, are projected by the Revenue Commissioners to pay 20 per cent of all income tax and USC in 2015;
— corporation tax revenue collected in Ireland is broadly in line with the EU average and that, in 2013, corporation tax receipts were just over €4.2 billion, which is 11.3 per cent of overall Exchequer tax revenue and equivalent to 2.6 per cent of GDP;
— the increase in net household wealth in recent years is largely driven by increases in house prices and that home ownership is relatively evenly distributed across the income distribution; and
— the Government already carries out an extensive distributional analysis of changes in budgetary policy and its intention to augment this analysis through the preparation of a social impact assessment of future budgets;
further notes the recent announcement of the Government’s Social Housing Strategy 2020 and the Government’s commitment therein to deliver 35,000 new social housing units over the period to 2020;
notes that:
— the consistent poverty rate for older people has declined, from 2.6 per cent in 2012 to 1.9 per cent in 2013, which at present would meet the national social target for poverty reduction for this group;
— the consistent poverty rate for people with illness/disability has reduced by 6.8 percentage points to 10.8 per cent in 2013;
— the Government remains committed to meeting the national social target for poverty reduction, which is to reduce consistent poverty to 4 per cent by 2016 and 2 per cent or less by 2020;
— Government recently adopted a child-specific poverty sub-target which is to reduce the number of children in consistent poverty by 70,000 by 2020, a reduction of two-thirds on the 2011 level;
— the aggregate cost of abolishing the Local Property Tax, Water Charges, and USC for those earning under €35,000, as well as reversing the social welfare measures, as proposed by opposition Deputies, would be an estimated €4.25 billion; and
— the required increase in the 40 per cent income tax rate would be 19 per cent, resulting in a marginal tax rate including USC and PRSI of 71 per cent for PAYE taxpayers which would reduce GDP and employment substantially; and
calls on the Government to continue to implement its successful socio-economic policies which provide the basis for continued increases in employment, reductions in unemployment and improvements in living standards particularly for those on lower and middle incomes.”
The motion proposed by a number of Deputies from the Technical Group is unbalanced and fails to recognise what the Government has achieved in difficult circumstances over recent years. I wish to highlight the seriously adverse consequences that would follow were the proposed tax increases and other measures referenced by Opposition Deputies to be adopted.
I will set out recent economic developments and prospects. After a long period of economic stagnation and uncertainty, the economy has finally returned to strong and sustainable levels of growth. The Department of Finance estimates that GDP grew by 4.7% in 2014. The GDP growth forecast for 2015 is 3.9% and the Department foresees growth rates of approximately 3.5% over the medium term. This is the type of solid and steady economic growth that we want to see in the coming years. If realised, it will lay the basis for tackling a wide range of economic and social issues over that period to the end of the decade.
The turnaround in the economy is down to the difficult decisions taken by this Government and the sacrifices made by the people. Thanks to strong revenue growth on foot of a stronger economy and allied to effective expenditure management, the budget deficit for 2014 was an estimated 3.7% of GDP. For 2015, we are targeting a deficit of 2.7% of GDP, which is beyond the requirements of the Stability and Growth Pact.
Getting our public finances under control is a critical step in laying the basis for improvements in living standards, including for the more disadvantaged in our society. In particular, growth rates of this magnitude will provide the basis for increases in employment and reductions in unemployment. Jobs are the key Government priority as they represent one of the best ways of lifting people out of poverty. We are already seeing the consequences of this focus in the strong employment performance over recent years. We have now had eight consecutive quarters of solid annual employment expansion, with more than 84,000 jobs created since the low point in the third quarter of 2012. Over 90% of the jobs created are in full-time positions. The recovery in the labour market is broad-based with virtually all sectors in the economy experiencing employment growth. Encouragingly, in excess of 10,000 jobs have been created in the construction sector over the past two years. The unemployment rate has fallen steadily by four and a half percentage points in three years. The number of people unemployed has decreased by 87,000 since the peak in the first quarter of 2012. The reduction in unemployment has been concentrated among the long-term unemployed, those unemployed for one year or more, with the number of long-term unemployed people falling by 65,000 since the first quarter of 2012.
The Government has prioritised actions to address the issue of youth unemployment by improving employment prospects for young people through schemes such as JobsPlus, JobBridge and First Steps. These policies have helped youth unemployment rates fall by eight percentage points in two years.
Unemployment is still too high. Through the Action Plan for Jobs we are working to make further inroads. Among other measures, we are improving job search, investing in training for the unemployed and ensuring work incentives remain strong. As a result of the success of the Action Plan for Jobs, which began in 2012, the Government has now brought forward its target of reaching full employment by two years, that is to say, we expect to achieve full employment by 2018, with 2.1 million people at work.
I will outline the benefits of the tax package. A fair, efficient and competitive income tax system is essential for economic growth and job creation. The burden of the income tax system in Ireland is too high and is acting as a disincentive for work and investment in Ireland. The income tax measures announced in the budget are the first stage of a multi-year plan to reduce progressively the marginal tax rate on low and middle-income earners in a manner that maintains the highly progressive nature of the Irish tax system. As outlined on budget day, the Department of Finance estimates that a three-year reform plan along these lines could boost employment levels by as much as 15,000 jobs when the full impact of the changes have taken effect in the economy. The budget measures were primarily targeted at the squeezed middle, which the Government has defined as the cohort earning approximately between €32,000 and €70,000. The Government has also acted to ensure that those on high incomes do not benefit disproportionately from the budget by capping the benefits for those with incomes in excess of €70,000.
The tax package provided for a reduction in the top rate of income tax from 41% to 40%. It also extended by €1,000 the standard rate band on which income tax is chargeable at the lower 20% rate. Together with the accompanying reductions in the two lower rates of universal social charge and extension to the threshold at which USC becomes payable, the budget provisions will ensure that all those who currently pay income tax or USC will see a reduction in their tax bill this year. The measures will also ensure that those on the minimum wage will now only pay a maximum USC rate of 3.5%. As a result of the reduction in the higher rate of income tax from 41% to 40%, the marginal tax rate has been reduced for all income earners who currently earn under €70,000 and pay income tax at the higher rate. It remains unchanged for PAYE and self-employed workers earning more than €70,000. For example, a self-employed person earning €100,000 faced a marginal tax rate of 55% in 2014 and will continue to face a marginal tax rate of 55% in 2015.
The budget also provided for the retention of the exemption from the top rates of USC for medical card holders with incomes that do not exceed €60,000. These individuals will now only be liable to pay a USC rate of 3.5%, down from 4%. This reduced rate will also apply to those aged over 70 with incomes which do not exceed €60,000. Again, this is down from the 4% rate. These changes are designed to ensure that work pays, to help the transition from unemployment and to remove potential barriers that may be deterring part-time workers from taking on additional hours of employment. The resulting increases in take-home pay will have follow-on benefits to businesses and jobs in the domestic economy. The changes announced in the budget will ensure that all those currently paying income tax or USC will see a reduction in their tax bill this year. The Government proposes to continue this reform in future budgets subject to the required economic growth and the consequent fiscal space being available to the Government.
This Government has met the challenge of fiscal consolidation by protecting the most vulnerable. This has been achieved in part because of the focus of the Government on understanding the impact of its budgetary policy on its most vulnerable citizens and by ensuring those with the most pay the most. The result of this focus can be seen. The most recent analysis from the ESRI, published after budget 2015, covering the budgets for the periods 2009 to 2015, indicates that the top decile of the household income distribution lost the highest share, some 15% of their disposable income. That these distributional outcomes occurred at a time of such economic and fiscal pressure reflects the Government's strong commitment to fairness in formulating budgets.
In addition to the ex post social impact assessment of budgets that the Department of Social Protection publishes, the Government has also committed to carrying out an ex ante social impact assessment of future budgets. This will help ensure that distributional outcomes from possible budgetary changes are fully analysed. The statement of priorities published by the Government in July 2014 included a commitment for an income tax reform plan in a manner that maintains the highly progressive nature of the Irish tax system.
Ireland has the most progressive tax system of the EU members in the OECD. Indeed, Ireland is the second most progressive of all members of the OECD. The changes introduced in budget 2015 will be such that the top 1% of tax units by income will pay 20% of all income tax and USC collected in 2015, up from 19%. In contrast, the bottom 76% of income earners will pay only 21% of all income tax and USC collected.
Commentators have recently highlighted that market income inequality in Ireland is the highest in the OECD. One of the main reasons for market income inequality is the number of jobless households in Ireland, which is the largest in Europe. What they have failed to highlight is that the Irish direct tax and social welfare system is the most effective at reducing income inequality in the OECD. This is demonstrated by the performance of the Irish tax and social welfare system in reducing inequality of income after taxes and social transfers are taken into account, resulting in the largest reduction in the OECD. As a result of the Irish tax and welfare system, disposable income inequality has not changed significantly over recent years and is in line with other OECD countries.
This Government maintained core welfare payments in the face of extraordinary fiscal pressure, thereby supporting basic living standards for the citizens of Ireland. The importance of this cannot be overstated. CSO data from SILC shows that in 2013, before social transfers, the poverty rate - that is, the proportion of people on incomes below 60% of the median income - was 49.8%, while the poverty rate after taking account of social transfers was 15.2%, a fall of almost 35%.
The Government remains committed to meeting the national social target for poverty reduction, which is to reduce consistent poverty to 4% by 2016 and 2% or less by 2020. In addition, the Government recently adopted a child-specific poverty sub-target, which was to reduce the number of children in consistent poverty by 70,000 by 2020, a reduction of two-thirds on the 2011 level.
The total cost of the proposals outlined in the original motion - abolition of the local property tax, water charges and USC for those earning under €35,000, as well as the reversal of various social welfare measures - would be an enormous €4.25 billion, with no proposals for how the Government could finance such an enormous sum of money without stifling economic growth or taking on even more debt than that which currently exists, risking further instability in Ireland's future. The motion merely calls for the Government to finance the above outlined measures through taxes on wealth, on profits and on top earners. To attempt to finance the above measures through increased taxes on those tax bases would have serious repercussions for the economy which would be felt by everyone across all income distributions.
The increase in the top rate of income tax that would be required to finance the reductions the motion has outlined would be approximately 19%, although this does not take account of the wider economic implications of having a marginal effective tax rate of 71% for those earning over €70,000 in PAYE income, and a rate of 74% for those earning over €100,000 in self-assessed income. The impact of this on the economy through reduced incentives to work and our ability to attract FDI would be enormous. It would also be grossly unfair. As I have already outlined, the tax system in Ireland is hugely progressive. Ireland already has a number of taxes on wealth. Capital gains tax and capital acquisitions tax are, in effect, taxes on wealth in that they are levied on an individual or company on the disposal of an asset for the acquisition of assets through gift or inheritance tax. Deposit interest retention tax is charged at 41%, with limited exemptions on interest earned on deposit accounts. Local property tax is based on the market value of residential properties.
The addition of a wealth tax, as is normally advanced by some members of the Technical Group and other commentators, would create a risk of capital flight, with negative impacts on investment in the economy. Where tax is levied on movable capital, there is a significant risk that these assets would be moved outside the jurisdiction and outside the Irish tax system. Apart from the fact that no tax revenue would be generated on this capital, it would mean that such capital would not be available to invest in the Irish economy. Investment is key to spurring economic growth, which Ireland needs to create jobs. Wealth taxes can be effective where they are set at low rates and levied on immobile assets such as residential property, which reduces the incentive and capacity of taxpayers to avoid liability for wealth tax.
On the subject of wealth, I note that the rise in net household wealth that has occurred in recent years has been highlighted by Deputies. One of the main drivers of this rise in household wealth has been increases in house prices. Home ownership is high in Ireland compared to other countries and is relatively evenly distributed across the income distribution compared to other forms of wealth. For example, 60% of people in the bottom fifth of the income distribution own their main residence, compared to 89% of the top quintile. As would be expected, the main residence forms a significant proportion - over two-thirds - of the wealth of those in the bottom quintile, compared with 45% for the top quintile. As such, changes in house prices have less of an adverse effect on the distribution of wealth than changes in the value of other forms of wealth.
The Government has no plans to raise the 12.5% rate of corporation tax, as the maintenance of this rate is of paramount importance for Ireland's economy. Ireland, like many smaller member states, is geographically a peripheral country in Europe. A competitive corporate tax rate is a tool to address the economic limitations that come with being a peripheral country when compared to larger core countries. Ireland's corporation tax rate plays an important role in attracting FDI to Ireland and, therefore, in increasing employment here. The FDI sector supports more than 150,000 jobs in Ireland, and changes in the corporation tax rate would threaten these jobs.
This stated position is supported by strong evidence resulting from extensive research undertaken by the Department of Finance in 2014 which sought to quantify the effect of corporation tax policy on the Irish economy. This independent research found that if Ireland had increased the 12.5% corporation tax rate, it would have considerably reduced the amount of foreign direct investment into Ireland. There is research by the OECD and others that points to the importance of low corporate tax rates to encourage economic growth. The Revenue Commissioners have highlighted that corporation tax revenue collected in Ireland is broadly in line with the EU average. In 2013, corporation tax receipts were just over €4.2 billion, which is 11.3% of overall Exchequer tax revenue and equivalent to 2.6% of gross domestic product.
I note that the original motion called for an increase in the number of social housing units provided in the next five years. I hope Deputies are aware of the publication in November 2014 of the Social Housing Strategy 2020, which builds on the provisions contained in budget 2015 and sets out clear, measurable actions and targets to increase the supply of social housing, reform delivery arrangements and meet the housing needs of all households on the housing list. The Government has targeted provision under the social housing strategy of over 110,000 social housing units through the delivery of 35,000 new social housing units, while meeting the housing needs of some 75,000 households through the housing assistance payment and rental accommodation scheme. This will address the needs of the 90,000 households on the housing waiting list in full, with flexibility to meet potential future demand.
The Government's record on ensuring equality in Ireland, while undertaking the enormous fiscal consolidation required of it when it took office in 2011, is strong. This has been achieved through maintaining and enhancing a tax and welfare system which is highly progressive and redistributive, ensuring that those with the most pay the most. As a result, the recent strong economic growth and job creation have allowed a reduction in the tax burden on low and middle incomes. Combined with the provision of social housing as described in the Social Housing Strategy 2020, this will contribute significantly towards achieving the Government's national social target on poverty reduction by 2020.
The House should acknowledge that the Government should continue with the policies that have proven so successful in ensuring that the fiscal consolidation required has been achieved in a fair and growth-friendly manner and that have laid the basis for a turnaround in our economic and employment situation.
I welcome the opportunity to speak on the motion. It is in the context that, between 2008 and 2011, some 250,000 people in the private sector lost their jobs.
The motion states that the percentage of households suffering from deprivation increased from 24.5% in 2011 to 30.5% in 2013. Unfortunately, these figures are out of date. If the Technical Group was running a business, it would not do its cashflow projections on figures going back that far.
Strong recovery is now under way in the economy, with GDP estimated to grow at 4.7% in 2014 and projected to grow by 3.9% in 2015. These are good figures and are the best in the EU. The best route out of poverty is to have a job. The Government is determined to return the economy to full employment by 2018. Since 2012 and 2013, the period to which the survey refers, there have been significant improvements in the economy. For instance, unemployment and long-term unemployment have fallen significantly. The January live register figures published yesterday show a reduction of over 70,000 in the number of unemployed people since 2013. The unemployment rate fell yesterday to 10.5%. We are aiming to have 2.1 million in employment. Those are the figures we should be considering.
The motion refers to the explosion in the housing and homeless crisis over the past three years. A lot of people who come to my office tell me they have been on the housing list for ten years or more. It is a problem, but the Government's social housing strategy and its commitment to deliver 35,000 new social housing units in the period to 2020 has to be welcomed and recognised. Poverty is strongly linked to unemployment and as employment increases, we can expect to see decreases in poverty and deprivation. The best way to reduce poverty is for people to get jobs and the Government has protected the incomes of those in the bottom 20% quintile, as it is termed, by maintaining core welfare rates.
While deprivation has increased, it should be noted that the at risk of poverty rate has declined from 16.5% in 2012 to 15.3% in 2013. The at risk of poverty rate in 2013 is lower than in 2005 when it was 18.3%. The main beneficiaries of income tax and USC changes introduced in budget 2015 were those on low to middle incomes. The Government's intention, subject to physical constraints, is to continue to introduce further changes of this nature over the coming years. I welcome the social impact assessment of budgets from the Department of Social Protection. It is important.
The motion refers to the Credit Suisse global wealth report of 2014, which provides some statistics. For example, there are 92,000 millionaires in Ireland. I had a quick read of the report. On page 97 it states:
We recognise that the rich list data have limitations. The valuations of individual wealth holdings are dominated by financial assets, especially equity holdings in public companies traded in international markets. For practical reasons, less attention is given to non-financial assets apart from major real estate holdings ... Even less is known - and hence recorded - about personal debt.
This country knows plenty about personal debt. There is no point in adding up a person's wealth and assets on one side unless one adds up his or her debt on the other side. Most people would give away a lot of assets which are highly leveraged to the banks. Many SMEs invested in non-core areas and now find themselves in a position whereby they are trying to pay back non-core debts while keeping businesses going.
Farm businesses are investing. While they might seem to have a lot of equity, the income that can be derived from it is actually very low. Last year, 15,000 farmers were in receipt of farm assist payments to bring them up to the level of social welfare payments. There are also people who have large levels of debt because they are expanding to get themselves to the scale that will make them viable for the next generation.
Sometimes referring to reports is a little bit sloppy and skews opinion. I refer to the Think-tank for Action on Social Change, TASC, estimates based on an Economic and Social Research Institute study carried out in 1991. That was 24 years ago. I remember the time very well because as I finished my PhD many more graduates had to emigrate than have to today. All one could hope to earn was £13,000. Thankfully, we are living in different times where people's skills and expertise are recognised and paid for. If one invested money at that time, one would have earned an overnight rate of around 50%. They were very tough times.
The CSO household finance and consumption survey 2013 suggested that the top 20% of incomes have almost 40% of the wealth. Family homes were mentioned. Many of the people to which Deputies have referred are the working poor. They pay all their bills, are trying to put their children through college, do not qualify for grants and have very little left. They come to my office - I am sure other Deputies also know of people in this position.
It has been stated that the top 1% of earners have an average income of €403,000 per year, but I remind the House that they pay a lot of tax. The top 1% of income earners who are paid over €200,000 are projected by the Revenue Commissioners to pay 20% of all the income tax and USC in 2015. Targeting people on higher incomes involves the major risk of excluding people who have very highly transferable skills, such as those in the ICT sector. It is something about which we need to be careful.
Introducing rent controls was mentioned. Many people have second homes which they bought for all sorts of reasons and are now stuck in negative equity. They have paid all their taxes and there is a discussion about interfering with their property rights which would reduce their chances of making an income from those properties. We must remember that the problem pertaining to Dublin cannot be translated to the rest of the country. Rents outside Dublin have not come close to what they were during the so-called boom periods.
The aggregate costs of abolishing local property taxes, water charges, USC and all that goes with that would be about €4.25 billion. We are still borrowing €6 billion. The Technical Group wants to go back to a position where we would be €10 billion out of kilter. We cannot afford to do that. We might love to, but it is not going to happen. Such changes would require the 40% rate of tax to increase to 71%. There would be absolutely no reason for anybody to get up out of bed and go to work. It does not make sense. Inequality can be dealt with in many ways. Education is one of the solutions which should have been mentioned. The role of DEIS schools is highly valuable in Irish society.
Rural growth is happening. Milk quotas will be abolished in a number of weeks. The rural development plan is due to be introduced. Single farm payments have been negotiated. We are seeing an emergence of our rural society for the first time in many years. This motion is very interesting and serious. I would hate people to believe we are in a Dickens-type society because we are not. We are in a society which is emerging from a desperate financial mess and the Government needs to be credited for the work it has done.
I am pleased to have the opportunity to speak to this motion. I thank most of the Technical Group for tabling the motion. I note some signatures are absent from the endorsement of the motion. Did the group consult with the lads? Did it not get around to it? Did they fundamentally disagree with the proposition? I expect it was the latter and therein lies a telling story of a populist, incoherent and fractured group of self-styled socialists that can barely agree on something as catch-all as a motion in opposition. It is long in anger and problems, comprehensive with a sprinkle of fiction and well-written, but terribly short on answers, solutions or facts.
This motion essentially calls for the reversal of the hard and unpopular decisions that have rescued the country thanks to the sacrifices of the people. Decisions have been taken by a Government which has suffered because of them, but the country is recovering as a result. I have read the motion and considered the premise upon which it is based, namely, a survey of income and living conditions that the CSO published based on figures from 2013. As Deputy Barry said, 2013 was a little different from 2015, but at the same time we take the figures as they stand.
They are the latest available figures.
A sub-headline confirms that deprivation was up but poverty rates were unchanged.
With poverty, for example, it is indicated that an "analysis by sociodemographic characteristics showed that most at risk of poverty in 2013 were individuals who were unemployed." With deprivation and people describing their principal economic activities, almost 55% were unemployed. An analysis of consistent poverty rates by principal economic status indicates that consistent poverty rate was highest among individuals who were unemployed. The solution, as indicated in the motion, is to tax labour. The Minister of State has reminded us this country has the most proportionate tax system in the European OECD countries and the second most proportionate taxation system overall in the OECD countries.
The solution to the problems outlined in the motion is a route to work and sustainable, dignified employment. It is in recognising that there are problems in the country, such as intergenerational unemployment. There are major problems with jobless households, which we recognise. However, the solution to these issues is not in the motion but rather it is about engaging on a case-by-case basis with the people who need it most. We can put up schemes likes JobsPlus, with employers getting a fund of up to €10,000 for engaging the long-term unemployed. That will solve some of the problem, although it might not solve the deepest parts. We recognise that but that view is not recognised in this motion.
We have heard recent evidence from the Think-tank on Action for Social Change, TASC, or other groups about a very unequal income distribution system in this country but that is fundamentally wrong. It took figures as if there was no taxation or social protection system to forward the argument of an enormous gap between the highest and lowest earners in the country. It is clearly wrong and designed to mislead. We have a large transfer system and a very punitive taxation system. Ireland is not a low-tax economy or a low-income tax country. It has the fifth highest tax jurisdiction for personal incomes in the European Union: combined with a high unemployment rate, there cannot be a conclusion that we should tax labour more. We should tax labour less, as half of the taxpayers in the country paying the marginal rate would benefit. This would bring about a reward for work and initiative.
The motion would instruct the Minister to focus taxes on wealth, profits and top earners. We have many taxes on profits and there is a high tax on top earners. The tax on wealth is interesting, so we can examine it. The tax on wealth is essentially a proposal to tax all assets, including property, land, family possessions and heirlooms. Where I live, for example, there are people with high-value fishing vessels which earn very little for owners or deck hands. Many of those fishermen are on subsistence earnings. Farm outbuildings would be taxed, along with shops. I am only throwing out these suggestions, as we do not know what exactly would be taxed. One or two Members opposite have indicated the wealth tax would be 1% but somebody else indicated it would be 5%. The gap is enormous so if this is an example of a coherent and agreed policy from the Technical Group, we will have a problem with political and economic stability in the next year.
Is that an election prediction?
Those opposite want to reverse water charges but a third of households in this country do not connect to a public water supply. That is 800,000 households. Nevertheless, these people pay quite a lot of tax. The motion argues that such people should pay more tax for a service they will never get. This is not like the public transport example, as everybody agrees that such transport should be subsidised through taxation because it is good for the economy. Are those opposite asking us to pay for their tickets as well? There is a good chance that everybody who pays tax would probably use public transport anyway but 800,000 households will not connect to a public water supply. The proposers of the motion are asking those people to pay more tax in order to bring up investment. Somebody should explain to me where there is equity, fairness or justice in that.
This Government has brought about political stability that has been followed by economic stability, with a definite correlation between both. We must not reverse that or turn it around. We have come a long way but there is still a long way to go in order to get the country back on its feet. There has been a hard sacrifice by the Irish people which is beginning to pay a dividend. The motion argues that we should reverse engines but it is not time for that.
I welcome the opportunity to contribute to his debate. I welcome the fact that Deputy Boyd Barrett and the Technical Group have put down the motion to trigger a debate on a number of important issues relating to income inequality, poverty, the public finances and the future economic development of this country. I regret that I cannot support the motion, although it is well-intentioned and submitted in good faith.
I can explain the reasons I cannot support it in its entirety and there are a number of reasons. It seems to be fixated on a level of income at €35,000; those earning below that would be entitled to a range of exemptions but people even marginally above that level would not be entitled to such exemptions. The way out of our economic difficulties is not to tax to death people who create wealth in this country. They are invariably employers and the self-employed, or those who generate economic activity. Although it is not explicit, the motion provides for an increase in corporation tax. Although I know Deputy Boyd Barrett firmly believes in that, Fianna Fáil fundamentally disagrees with it.
The motion cites a series of sources of data relating to poverty and deprivation, and none of us can dispute the fact that the amount of spending cutbacks and taxation increases in the past six or seven years has brought a very heavy burden on the Irish people. Very few, if any, people have escaped the impact. Deputy Boyd Barrett's motion cites the Central Statistics Office, CSO, survey on income and living conditions, Barnardo's data and information from UNICEF, Age Action Ireland, the OECD, Social Justice Ireland, the Irish League of Credit Unions etc. These absolutely confirm a trend which we see in our daily lives and our experience as practising politicians. People have found it tough and are still finding it hard. There has been an adjustment in living standards and an attack on incomes. Many people have lost their jobs and those who are still in employment are paying far higher taxes than before. This has inevitably had a very negative impact on people's daily lives. I would be the first to acknowledge that, and the data confirms an increase in poverty rates and deprivation. The most startling statistic concerns the impact on children, as one in eight is virtually living in consistent poverty. We should debate such issues far more in this House than we have done up to now.
The issue of housing and homelessness is quite rightly highlighted in the motion. There is an article in the online version of the Evening Echo which brings home the stark nature of the crisis we are facing, as it indicates there is one property currently available in Cork city that is suitable for a family on rent allowance.
It has an advertised rent rate for a family of two adults and three children that falls within the rent band in Cork. The property is in Knocknaheeny. According to the online article today, no other properties are available in Cork.
This confirms the experience I have as a public representative. People are facing an immediate housing crisis. They might have to vacate their existing property because the rent has increased to a level that is well outside the rent thresholds set out by the Department of Social Protection. I welcome the fact that the tenant protection scheme is being extended to Cork city, whereby Threshold and the Department can work together and in individual cases can sanction a level of rent supplement support in excess of the national guidelines. That is welcome. However, stories such as the one I mentioned show the reality of the crisis that thousands of people are facing throughout the country. It is affecting not just Cork city but also the suburbs, which will not benefit from the extension of the tenant protection scheme. I ask the Government to reconsider that, because the situation in places such as Douglas, Carrigaline and Passage West is equally acute, but people do not have the opportunity to avail of the scheme.
Today, Fianna Fáil formally launched a new Bill to deal with the mortgage crisis. I hope the Government will take it on board. There is a surge in home repossessions, which will add to the crisis in the rental sector and result in more homelessness. The issue we seek to tackle in the Bill is the veto the banks hold in the Insolvency Service of Ireland in respect of the restructuring of family home mortgages. I can offer a statistic. In the year and a quarter, up to the end of last December, that the Insolvency Service of Ireland has been accepting applications, just 199 personal insolvency arrangements have been approved by that service. The personal insolvency arrangements deal with situations in which people are over-indebted, including with secured debt. There is no breakdown of the 199, but it is suspected that the vast majority of them relate to buy-to-let mortgages, where there has been a restructuring or perhaps a write-down of the mortgage balance.
The stated position of Bank of Ireland and Ulster Bank, which was given at the Oireachtas finance committee, is that they will not support any restructuring proposal in the insolvency service relating to a mortgage where there is a write-down of any element of the principal of that mortgage. That figure of 199 should be seen in the context of the fact that 118,000 family home mortgage accounts are in arrears, of which almost half, 60,000, are in arrears of one year or more. That conveys the scale of the crisis we face in terms of family home repossessions. It is no exaggeration to say that, potentially, tens of thousands of repossessions are coming down the track. In Cork alone, more than 400 cases for repossession were brought before Cork Circuit Court from 1 January to the middle of February. That fact is replicated throughout the country and we are seeing the figures coming through in media reports. It is a real crisis. The main Government response to the mortgage crisis was the setting up of the Insolvency Service of Ireland to deal with people who were over-indebted and to provide for more sustainable solutions to their mortgages. It is simply not working; it is failing abysmally. One of the reasons, although it is not the only reason, is that the banks have the power to say "No" to a proposal put forward by an insolvency practitioner. This must be dealt with.
The motion states that there is significant evidence to suggest that a very wealthy minority at the top of Irish society has been fully insulated from deprivation and hardship. There might be some, but I believe they are few and far between. Most assets that people hold have taken a hammering as share values, pension fund values and property values have fallen over the last six or seven years. They are recovering to an extent now and regaining some value, but the vast majority of people who held wealth in this country have taken a hit. That is simply a statement of fact.
The motion refers to the issue of income inequality. I accept, and it is clear to everybody, that we are living in a society that is more divided than ever. There is no doubt about that. I accept Deputy Barry's comments about the primacy of jobs and that employment is the way out of poverty and deprivation. However, the nature of employment is changing. Much of it is transitory and short-term. There are zero-hour contracts. People are being taken on for three months, let go for a week and taken on again for another number of months, so they do not accrue employment rights. All of these trends are emerging. Many of the jobs are low-paid. The nature of employment is changing, and that is creating issues as well. We are seeing the emergence of a growing number of so-called independent self-employed contractors. Companies will not hire people but will allow them to be self-employed. The Revenue Commissioners are now focusing on that issue because of the taxation treatment of expenses that people are incurring going to and from work and so forth. These are the patterns in employment and we must be very conscious of them. They are changing the landscape of employment in this country.
In the past there was far greater potential for mobility for people who were brought up in areas of disadvantage, had deprived backgrounds and lived in poverty. That was through the medium of education. Other Deputies have spoken about this. Education was the means of advancement, in the sense that it is the great leveller in Irish society. If people can get an equal education, they have the opportunity to progress. However, my observation is that there is far less potential for mobility in Irish society now. We are becoming more divided. Those at the top are getting wealthier, but many people are firmly stuck at the bottom of the ladder and are not in a position to climb it. The Government and all politicians must be conscious of that. It is a massive societal challenge. Society, certainly in my view, is far more divided than it ever was previously.
The motion refers to early child care. That is one of the barriers for people who wish to progress in society. A simple measure to take in that regard would be to extend the community child care subvention programme. At present, it is only available in community child care facilities. Fianna Fáil recently tabled a motion which dealt with that and other issues. If that scheme could be extended to private child care facilities it would provide far more opportunity for people who wish to join the workforce and require access to subsidised child care. Undoubtedly there would be cost implications, but the Minister could structure it in a way that would support people in that situation. At present, it is a case of Russian roulette. It depends on where one lives, whether there is a community child care facility available and, if there is, whether there is a space available for one's child in that facility. If one is surrounded by private child care facilities and one is in a low-income household, one is locked out of that system. It is simply unfair and it is a barrier to dealing with poverty in a sustainable way.
Fianna Fáil has set out its critique of the Government's budgetary strategy over the last number of years and I will not play politics with it. Suffice to say that the ESRI has independently confirmed that the Government's approach to budgetary policy has been regressive in nature. I will give one example. When money was being taken out of people's pockets and their income, the same amount was taken from everybody who was in employment with the abolition of the PRSI exemption threshold. Over €260 was taken from everybody, whether they earned €20,000 a year or €200,000 a year. However, when it was time to give something back, as it was in the last budget, far more money was given to people on higher incomes. It was up to €750 for people earning over €70,000 a year, but just a fraction of that, a fifth, for people on the minimum wage. That is a good example of this Government's approach. When it needs to take money from people it will take the same amount from everybody, or proportionately more from people on low and middle incomes, but when it is giving money back it gives a great deal more money to the higher paid. It is indisputable that this is what happened.
If we are genuine about tackling poverty, there is still an issue with the social welfare trap. It is primarily related to the matter of secondary benefits and the loss of certain benefits, such as rent supplement and medical cards, which are highly valued, by people who are trying to migrate from dependency on welfare to employment. That is becoming a very serious problem which must be tackled.
In our view, the consolidation in the public finances had to be done. I welcome the fact that the current analysis of budgetary policy will be beefed up. We have long made the point that the analysis on budget day is selective. For example, in the budget booklet presented by the Department of Finance, there is an analysis of the tax changes but the totality of the impact on a family is not properly measured or analysed. We will, therefore, wait to see the detail of the social impact assessment the Government has committed to carrying out.
We all agree with protecting the vulnerable, who include people who depend on social welfare and many people earning less than €35,000 a year. However, many people earning well in excess of that amount have very large mortgages and financial commitments and, to my mind, they are also vulnerable. They have to pay every tax and charge which is levied in this country yet they do not qualify for medical cards, rental support and so forth. Many of the supports available in the State are assessed on the basis of gross income. This needs to be addressed.
It is difficult to analyse something such as this motion, or the Minister of State's counter-motion as it is accurately called, in five minutes. I can only skim the surface of it.
Since the economic crash, we have been looking at the ghosts of freshly painted shops and businesses have been turning green with moss because their former owners have had to abandon them. Local sports fields are silent because the younger generation who should be playing football, hurling or other games on them are now leaving or have left for lives on other shores. Meanwhile, those left behind are burdened with the loss of services and, in many cases, the loss of community institutions. Local businesses are locked in to upward-only rents, unsustainable rates and water rates and are unable to access sufficient credit from the banks. They have closed and are still closing during this continuing era of austerity. Three weeks ago, five businesses closed in Sligo. This did not make the headlines. They were small businesses, with at most eight employees in each of them, but it has shattered the lives of those people.
The Government speaks about green shoots. The green shoots are cold comfort. Those businesses could not cling on long enough for the Government to deliver on the promises it is making. Those businesses and the people who have lost their jobs look on what the Government is saying about green shoots as election waffle. They could not and cannot hold on any longer.
The level of housing stock is a disgrace. It is ironic that a housing boom caused many of the problems and that we now cannot provide a roof over the heads of people who are homeless or threatened with homelessness. This will stunt not just this generation, but future generations, yet what do we get? We get a report with more promises that we are not to worry because the Government will look after it all.
If the Minister of State were to come with me to any hospital tonight, she would see people who are badly in need of medical care lying on trolleys. Children with disabilities have had medical cards taken from them. Promises were made that they would be returned but in many cases they were not. Domiciliary care allowances were whipped off people and they were left with fights on their hands to get even a little of the allowance back. This is what we have been left with in the post-Celtic tiger era. We are left with hopelessness and promises from a Government which wants to get re-elected.
It is not the fault of our hospital or our health care staff. It is not the fault of the home helps who have been told to cut back on a person's home help hours by ten minutes because they now need to call to another two people within the same amount of hours. They want to do the right thing by that person and by everyone else, but their regulators are the ones who comply with Government directions and tell the home help to cut back on the service to people by ten minutes. The health services are in a critical condition because they have been subjected to death by a thousand cuts. They are in a critical condition, yet we are expected to applause when a Minister announces that there will be no further cuts.
Instead of providing jobs for young people, we provide a scheme which uses them as free labour. JobBridge has been abused by companies attempting to piggyback on a regressive Government policy and unscrupulous employers are using it for their own ends. Instead of providing work for our thousands of young people abroad so that they might come back, the Government is creating a system in which young workers will effectively work for free. It is every rogue employer's wish coming to pass.
We have lost more than our economic sovereignty. Regulation and rules now replace discretion, compassion and decency in the way we treat our most vulnerable citizens. Can we at least stop adding insult to the agony by boasting of illusory green shoots?
Debate adjourned.
The Dáil adjourned at 9.30 p.m. until 9.30 a.m. on Wednesday, 25 February 2015.