Joint Committee on European Union Affairs debate -
Wednesday, 21 Oct 2015

Country-Specific Recommendations of the European Semester: Better Europe Alliance

Chairman

We are delighted to be joined by the Better Europe Alliance, the representatives of which will discuss the organisation's response to the 2015 country-specific recommendations. Members and guests will be aware that this forms part of the European semester process - the new process for better budget monitoring and enhanced co-ordination between the governments of members states and the Commission in the context of the budget-setting process.

Before we begin, I remind the witnesses that the privilege notice I read out earlier still applies. I welcome our guests, Mr. Paul Ginnell from the European Anti-Poverty Network, Ms Audry Dean from the Society of St. Vincent de Paul and Ms Joan O'Donnell from the Disability Federation of Ireland.

I understand that Mr. Ginnell is making the opening remarks.

Mr. Paul Ginnell

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.

Chairman

I thank Mr. Ginnell. We have a number of questions already, the first of which are from Deputy Joe O'Reilly.

Deputy Joe O'Reilly

I thank Mr. Ginnell for his presentation. On his last point, I agree that we need action on mortgage arrears and to do our best to force the institutions to deal with individuals on a case-by-case basis to arrive at satisfactory solutions. Much has been done by the Government in this area, but it needs to remain a priority.

In some respects, Mr. Ginnell will accept that the recommendations predate the budget with regard to early childhood education in that it will now be available for free right up to five years of age, at which time children enter primary school. I am a complete believer in early childhood education. It is probably the greatest mechanism for creating a fair society and equality of opportunity and for giving everybody a reasonable break. Those of us who had the privilege of teaching at some stage in our careers, or of having trained professionally as teachers, will recognise that early childhood years are critical to a child's development into adulthood. I presume the delegates have no issue with my saying that the recommendation on early childhood education has effectively been dealt with in the budget.

Let me refer to the recommendation with regard to people with a disability. Tackling this will become a challenge for the Government. It is a matter that we will have to address as times improve and as we start to rebuild a normal society. I know from my clinic work that there are too many people with disabilities who cannot get suitable work in the marketplace. This needs to be addressed. I challenge the view that there is too much focus on the jobseeker's payment. Bearing in mind that I am not saying this joint Oireachtas committee is not a party political forum, I believe the focus of the Government, the Department and the country on job activation strategies has been the right one. I challenge the recommendation in this regard. I am interested in hearing Mr. Ginnell's response on this.

I am not convinced that we have not addressed the primary care issue fairly well. In my constituency, a number of new primary care centres, which I will not list, were opened. Other centres were refurbished. They are up and running, doing well and fulfilling a function.

I am not personalising this in respect of Mr. Ginnell but I do not accept the proposition in the report that primary care is by any means on the hind foot. The focus of administration always has to be on savings and cutting waste without compromising front-line services but I challenge the view that primary care is not very central. I look forward to Mr. Ginnell's response on this.

Chairman

I remind Deputies and Senators that they should stick to two minutes.

Deputy Seán Kyne

I welcome the witnesses to the committee and commend them on their report. I have a question on the process of consultation on country-specific recommendations. This is a response to the 2015 CSRs. Will it also input to the 2016 CSRs? Does the network have a role to play in this? Is there a mechanism whereby it can engage with the powers that be who put these things together? Reporting on the past is one thing but having an input into the future is more important.

Mr. Ginnell said that the budget had helped the situation with respect to child care. Would he also agree that the budget has taken a number of steps to reduce the level of poverty for those most at risk of cuts, such as getting people out of the USC, increases in pensions and fuel allowance, the Christmas bonus etc? We all accept there is a huge problem with housing supply, which is the main issue. We have in the past had an over-reliance on the Part V mechanism whereby city and county councils could buy people out but it has not delivered what we hoped it would have delivered and that has led to a lack of housing stock. Does Mr. Ginnell accept that the Government has a financial plan and that the money is available to build houses but that access to finance for developers and the private sector seems to be the issue, rather than the will of Government to increase supply?

Deputy John Halligan

I imagine there is a more detailed analysis than we have seen but I accept many of the points the report makes. I disagree with Deputy O'Reilly on the subject of primary care and help outside the hospital system, which is way below the European average. It is also hugely expensive and out of the reach of people who can otherwise go to an accident and emergency unit. It means very little to people who do not have private health insurance.

The report calls for an increase in taxation. Has there been any analysis on whether we should tackle tax avoidance or corporate tax, or impose a financial transaction tax or a tax on profits? The report is unclear on how we should reform the tax system. Everybody wants the tax system reformed but we are between 10% and 12% below the European average and the question remains of how we bring in a fair tax.

Low pay is a huge problem and, according to statistics, 167,000 people are on very low income, namely, the minimum wage or slightly above. Has the network considered a living wage rather than a minimum wage? I know Social Justice Ireland has spoken on that subject. Child care is still the most expensive in the European Union and we have done very little on child care in successive budgets. Has a more detailed analysis been done on this and the other subjects to which I have referred?

Senator Aideen Hayden

I will start with housing. It takes up a substantial portion of the report, which is fair given the current scenario. The level of rent increases and family homelessness were noted and since the report was drafted, a number of months ago, the situation has actually deteriorated. At the moment there are some 700 families in homelessness, with a prediction for 1,000 by Christmas. Mr. Ginnell mentioned the issue of supply but it will take at least two or three years to improve the supply of housing. Has he considered supporting the concept of rent certainty, limiting the extent of rent increases to prevent people becoming economically evicted? That is happening at the moment because, according to the most recent statistics, average rent increases in Dublin are in the region of 15%. Would the organisation to which Mr. Ginnell belongs be prepared to row in behind that proposal?

Low-work-intensity households are an issue of major concern and are something we have struggled with as a country even since the Celtic tiger years, when we had the second highest level of low-work-intensity. Other members have identified the high numbers of lone parents as the major issue contributing to low-work-intensity. Does Mr. Ginnell feel that the recent measures will assist with this issue or not?

Deputy Eric Byrne

To deal with such a diverse range of issues in two minutes is a bit of an ask. NABCO is an important housing association but how does one become a member of the Better Europe Alliance?

Two of the questions I wanted to ask have been touched upon. Mr. Ginnell referred to structural flaws in housing. Would he agree that there are more than just flaws in the system? Is it not just that Ireland operates a ridiculous system of encouraging individuals, from gardaí to nurses, carpenters and plumbers to electricians, to buy a house and rent it on? This system seems to be unique in Europe and is an absolute disaster. Senator Hayden asked about rent certainty. Unless we can get rent certainty to prevent private sector landlords asking what they like at any time they wish we will continue to contribute to the housing crisis.

I disagree slightly with the comments on primary health care. In Cherry Orchard and Ballyfermot in my constituency there are the most fantastic primary health care centres, such as St. Michael's Estate and Thomas Street. We are developing another on Curlew Road in the heart of Drimnagh and one on St. Agnes Road in the heart of Crumlin. These primary health care centres are unspeakably wonderful, modern, patient-friendly centres so would Mr. Ginnell not agree that we are making positive moves in that area?

We are doing the best we can, given the economic uplift, in having a Low Pay Commission. We have made structural changes there and since the REAs were deemed unconstitutional we have brought a new basic rate for approximately 50,000 workers in very low paid industries such as security and cleaners.

This is a very important report and there is a complex range of issues to discuss. Each of the bullet points would take a day to debate in depth so perhaps Mr. Ginnell can comment broadly on the issues I have raised.

Chairman

One positive outcome of the Juncker investment plan is that Ireland has received €70 million, 50% of the required funding, for 14 additional primary care centres. We can therefore expect to see even more primary care centres developed over the coming years. I ask Mr. Ginnell to reply. Ms Deane or Ms O'Donnell may also want to reply to questions. I ask that each take approximately five minutes.

Mr. Paul Ginnell

Deputy Joe O’Reilly referred to the focus on jobseeker’s payment. Focusing on the unemployed and jobseekers is important. Intreo offices are the main centres to which people go if they need support but the focus of those offices is on the short-term unemployed. Anyone on a disability payment or a lone-parent payment who wants to obtain support to enter the labour market from an Intreo centre is not prioritised. Our focus is on ensuring equality of access. The Intreo service should be open to all people of working age who seek its support. In the past two months, the Government selected two companies to provide supports for the long-term unemployed.

Our goal is to comment on the current country-specific recommendations and how they have been implemented. This also helps in influencing future recommendations. We engage, on an ongoing basis, with the European Commission staff in Ireland. There are two semester officers in Ireland the focus of whom is the European semester and engagement with stakeholders in the process. They are key for us in engagement and influencing future recommendations. For the first time this year, the Commission published a report in February which outlined what it sees as the priorities for the country. That is a process in which we are engaged.

Deputy Halligan referred to increases in taxation. The country-specific recommendation refers to tax expenditures - tax breaks in other words - and the need to examine those areas. We have asked for an annual report on the value of tax expenditures. Several areas were addressed in recent budgets but there are other areas, such as pensions, which could be addressed in the future. We have other suggestions for this area which we have put forward in a longer document.

Compared to EU levels, Ireland does not fall behind in the context of income tax but rather in respect of social insurance. The level of PRSI is way behind European averages. In most other countries, there are higher levels of taxation at local level. The new property tax in some ways covers that. There are issues in that area which could be addressed. It is stated that people on low incomes pay a higher rate of VAT. It is about increasing levels of taxation but in a proportionate and progressive manner. There is a detailed report on this which we can send to the committee.

On the differences between the living wage and the minimum wage, different members of our organisation would prefer those working would move towards a living wage, which is a higher hourly rate than the minimum wage, although the minimum wage will increase by 50 cent as recommended by the Low Pay Commission. Both the living wage and the minimum wage focus on an hourly rate. If someone is only getting five to ten hours of work a week, however, they will not have a weekly living wage. There is an issue around contracts and precarious work conditions. The Government has commissioned a report from the University of Limerick on precarious work conditions, which will hopefully highlight many of the issues which need to be addressed, alongside the hourly rate to ensure a balanced approach.

Regarding membership of the Better Europe Alliance, it is one of three national alliances established at European level. Most of our organisations are members of a network at European level. It is not a closed organisation and other groups can join this alliance. There are currently 12 members of the alliance.

Ms Audry Deane

The Better Europe Alliance enjoys a robust, positive productive and ongoing relationship with the EU semester officers, one of whom is in the Gallery. We are involved in continuing dialogue in respect of the 2016 country-specific recommendations. This is about reform. For the past two years, the recommendations have highlighted issues of significant concern to civil society organisations in this country, particularly early years child care and education. I have no wish to be pedantic but this is not just about the labour market and plonking kids in child care settings. Rather, it involves development outcomes for our most important citizens. This country is coming from an extremely low, poor, underfunded and unknowing base. There was a significant step-change in this regard in the budget. The interdepartmental group consulted, listened and delivered on this in the budget. It is incumbent on whoever is in the next Government that they continue to honour the options and commitments made in that report because it will be for the betterment of society and our economy.

The lack of policy coherence was a concern around the child care country-specific recommendation. We viewed it as more than a labour market facing mechanism in need of reform but also a measure that can help lone-parent families. It must be remembered that many of the children in these families are living in consistent poverty, namely, material deprivation where they are not in receipt of things that everybody else takes for granted, such as birthday parties, heating, proper nutritious food, and the ability to participate in both school and society. We have flagged the lack of policy coherence to date to parliamentarians and the EU. One cannot have one arm of government saying it needs to get lone parents back into the labour market but then not offer them the supports which would allow them to upskill and be employable to future employers. Our concern is the lack of policy coherence.

It is regrettable the two Deputies who raised primary care are not here to hear our response. This country has an underfunded primary care system. The country-specific recommendation is heavily focused on the financial and structural reforms of the HSE, Health Service Executive, in particular its accounting systems and activity-based funding. We have to ask people to remember those who have the least access to timely interventions of care. It is quite nice to talk about glossy health care centres opening up in the Dublin suburbs and elsewhere but we have got long waiting lists for services which other Europeans take very much for granted. If one does not have access to critical intervention services at the right time, such as speech and language therapy, education and psychological services or community mental health services, one is really racking up problems which will take the lifetimes of future taxpayers to resolve.

We will continue to lobby for increased resources going into primary and continuing community care. It is one matter to have good activity-based funding throughout the acute health system. However, if the primary care system is not there to meet those leaving acute hospitals after successful episodes of care, we are going nowhere. We will continue to flag that issue.

Ms Joan O'Donnell

From a family carer or disability perspective, primary care services are quite weak. There are over 3,000 children waiting for their first appointment for speech and language therapy.

I echo Ms Deane's point that centres are not services. We need a highly robust primary care service that is able to provide services. The recent budgetary increases, for example, to fund the extension of the carer's allowance for 12 weeks beyond bereavement and restore the respite care grant, are meaningless without services. Families who cannot afford to work or are unable to engage in low intensity or precarious work because to do so would risk the loss of medical cards and access to services are is coming under more and more pressure.

On activation and employment, a comprehensive employment strategy for people with disabilities was launched recently after a wait of more than ten years. The documents refer to those who were left behind in jobless households in the good times. While we welcome the new employment strategy for people with disabilities, it is very much divorced from mainstream activation programmes. For example, it is being overseen by the Department of Justice and Equality rather than the Department of Jobs, Enterprise and Innovation. Some of our most disadvantaged citizens, including people with disabilities, those who care for other family members, lone parents and Travellers, are subject to a system of apartheid. This is the broad group of people we seek to represent as part of this alliance.

Mr. Paul Ginnell

Two members asked specific questions about rent certainty. The European Anti-Poverty Network supports the call by different homeless organisations for rent certainty. As Senator Hayden noted, our report refers to the heavy dependence on the private rental market to provide housing, especially for people who are on low incomes. The level of support provided to people under the rent supplement to pay for rent is causing many problems. As the Senator correctly pointed out, our report is slightly out of date as new statistics were published last weekend on the increase in homelessness. The housing organisations dealing with the homeless have clearly identified that people on low incomes who are in receipt of rent supplement are unable to afford rent and this is driving families into homelessness. This issue must be addressed.

I am aware that the Government is discussing the option of increasing rent supplement. However, this is being done on a discretionary basis. I understand, for example, that approximately 4,000 people have benefited from discretionary increases in the payment. A broader approach is needed because rent supplement levels are causing major difficulties for families. Rent certainty would definitely help address the issue.

Chairman

I thank Mr. Ginnell, Ms Deane and Ms O'Donnell for appearing before us to discuss the country-specific recommendations. Last week, I visited Berlin to meet parliamentarians from across EU member states. One of the questions that arose was the level of engagement among member states on country-specific recommendations. Believe it or not, Ireland is ahead of many other member states which have done very little in this regard. It is thanks to organisations such as those represented today that we have an opportunity to debate the country-specific recommendations in public and analyse the issues they raise. I have no doubt our guests will appear before the joint committee again to discuss similar issues.

The joint committee adjourned at 1.45 p.m. until 1.30 p.m. on Wednesday, 4 November 2015.