I apologise for our late arrival. I understood we were due to come before the committee at 1.15 p.m.
As the Chairman has said, our focus is on the 2015 country-specific recommendations which Ireland received from the European Commission in May. As members may be aware, there are four country-specific recommendations for Ireland. Country-specific recommendations form part of the wider European semester process, which involves, for example, monitoring the Stability and Growth Pact and the Europe 2020 strategy. Overall, the Better Europe Alliance believes that the recommendations present a disjointed approach and continue to reflect an EU semester process driven by economic or fiscal goals which can undermine the achievement of a balanced economic, social and environmental approach under the Europe 2020 strategy. Since the commencement of the Europe 2020 strategy in 2010, consistent poverty rates in Ireland have risen from 4.2% to 8.2%. In 2013 there were 376,000 people living in consistent poverty.
The absence of any comment on the fact that Ireland will fail by a substantial margin to reach its Europe 2020 target for reducing greenhouse gases must be considered a serious omission from the country-specific recommendations. However, there are some elements of the recommendations on taxation, the tapered withdrawal of income supports, accessing employment and child care which, if implemented in a positive manner, could bring about improved outcomes.
In general, the Better Europe Alliance believes that a balanced approach must be reflected throughout the whole of the European semester and Europe 2020 processes. This means that no action should be taken which would result in the social and climate change targets of Europe 2020 being more difficult to achieve. It also requires that the social and environmental impacts of decisions and policies be factored in to all decision-making processes.
I will deal individually with each of the four recommendations. The first recommendations relates to macroeconomic goals. The Better Europe Alliance is extremely alarmed by the statement that the Government is to make its expenditure ceiling in this regard more binding by limiting the statutory scope for discretionary changes. Imposing restrictive expenditure ceilings runs counter to the Europe 2020 strategy vision of smart, sustainable and inclusive growth.
Contrary to advocating the proposals in the country-specific recommendation that windfall gains from better-than-expected economic and financial conditions be used to accelerate deficit and debt reduction, the alliance is of the opinion that they should be invested in Ireland’s social and physical infrastructure. The alliance supports the proposal in the recommendation to broaden the tax base. We also support the proposal to review tax expenditure, including value-added taxes. The alliance is of the opinion that the production of an annual tax expenditure report as part of the budget process has the potential to contribute to greater transparency in Ireland’s taxation system. The alliance believes that, over the next few years, Ireland needs to increase its taxation levels so that they will be closer to the EU average. Ireland’s tax take as a percentage of GDP is 10% below the EU average. As a core principle, the focus of taxation must be on strengthening the fairness and progressiveness of the taxation system, which must reduce inequality and avoid environmental harm.
The second country-specific recommendation concerns health. The current narrow focus in the health recommendation on structural reform of financial systems, particularly within acute hospitals, while necessary, is a partial solution that does not address health inequalities, particularly for those on the lowest incomes, and the wider and historic problem of a neglected primary, community and continuing care sector. This sector is failing the Irish population, particularly those who must depend on rationed, curtailed and, at times, residual service levels.
The objective of improving health outcomes, particularly among disadvantaged socioeconomic groups, must be central to health sector reform. The cost of ill health and a non-functioning health service affects those in most need more profoundly than others. Without investing in primary care, future expenditure will remain high due to continued reliance on the acute hospital system to diagnose and treat conditions that can be addressed within a primary care structure.
The third recommendation is on low-work-intensity households and it also addresses child poverty. At present, the primary focus of the Department of Social Protection’s Intreo service is on people in receipt of a jobseeker's payment and, in particular, those in receipt of one in the short term. As a consequence, the service is not geared up to engage with everyone of working age, regardless of the payment, if any, one is receiving, nor is the service geared up for people working in low-work-intensity households, including those on disability allowance, a one-parent family payment or qualified adults who, in the absence of a re-entry credit, become invisible in the system. In addressing the issues facing jobless and low-work-intensity households, the quality of work available is a critical issue. Little will be done to address the poverty that many in these households face unless they are supported in finding decent and sustainable work.
Ireland’s labour market is very flexible, to the point of being precarious for so many people. The spread of non-fixed-hour contracts is one of the drivers of non-voluntary part-time work and has been particularly notable in sectors where women predominate, such as hospitality and retail. These contracts not only erode incomes but also damage work-life balance and discourage labour market participation. The Government has commissioned new research into the area of precarious work, and it is important that the findings of this research be used to bring in stronger regulation.
We welcome the recommendation from the Joint Committee on European Union Affairs in its political contribution on the mid-term review last year of the Europe 2020 strategy, which called for a job quality target to be introduced alongside the overall employment target.
With regard to early childhood care and education, the State must take the lead in ensuring publicly subsidised delivery of affordable, accessible and high-quality early years care and education. Ireland currently invests less than half the OECD average, 0.8%, in this area, and there is a need for a clear pathway towards increased public investment in this essential social infrastructure. The rewards of investment in this area include greater female participation in the labour force and also, crucially, better outcomes for children and reduced future spending in areas such as education support. We welcome the measures announced in budget 2016 that will support progress towards the type of early childhood care and education system that we need. This must be continued in the coming years.
The fourth country-specific recommendation concerns housing, and also includes a focus on SMEs. However, our focus on this is the housing element. The recommendation represents a missed opportunity to address serious structural flaws in housing provision in Ireland that pose a profound threat to social stability and future economic recovery. Increasing rents that are not matched by increased levels of housing support put families at risk of poverty through a widespread practice of topping up housing payments and through increased risk of homelessness. The delivery of the social housing strategy, however, is heavily reliant on regularising the position of households in receipt of housing assistance in the private rental sector. In the context of the current insecure private rental market, however, over-reliance on this sector is a source of concern. The country-specific recommendation focusing on securing a rapid resolution to the mortgage arrears situation risks compounding this issue, as buy-to-let properties, 30% of which are in arrears, will feature heavily. The forced sale of these properties potentially puts large numbers of renting families at greater risk of homelessness.
With regard to our response to the four country-specific recommendations, I should have said at the outset that the Better Europe Alliance comprises 12 separate organisations. Obviously, they cannot all be here, but we will try as best as we can to answer the questions from members of the committee.