JOINT COMMITTEE ON FINANCE, PUBLIC EXPENDITURE AND REFORM debate -
Wednesday, 2 Nov 2011

Budget Submissions: Presentation

Vice Chairman

I welcome Dr. Nat O'Connor, director of the Think Tank for Action on Social Change, TASC, who is accompanied by Ms Sinéad Pentony, head of policy, and Mr. Tom McDonnell, policy analyst and economist. The format of the meeting will see Dr. O'Connor making some opening remarks, following which will be a questions and answers session. I remind members, delegates and persons in the Visitors Gallery to turn off their mobile telephones, as they cause committees significant problems.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person, persons or an entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I hope Dr. O'Connor will keep his contribution short so that members will have more time to ask questions on it.

Dr. Nat O’Connor

I thank the committee for inviting TASC to present to it our budget analysis and proposals. TASC is an independent, progressive think tank concerned with equality. The national budget represents crucial policy choices that can profoundly affect our economy and society. TASC's work highlights Ireland's high level of economic inequality compared with many European countries. Our goal in presenting the TASC equality budget is to show how economic progress is not only compatible with increased equality, but is complementary.

Research, such as the book The Spirit Level by Richard Wilkinson and Kate Pickett, has provided compelling evidence that more equal societies tend to do better economically as well as socially in that there are lower crime levels and people enjoy better health. The Nordic countries are among the most equal and economically competitive in the world.

Recent budgets have not improved equality in Ireland. When we conducted an analysis of the measures in budget 2011, the evidence was that people in lower income households lost proportionally more of their income from tax and benefit changes than people in higher income brackets did. Similarly, single people with children experienced a much higher proportional loss of income than other household types.

The absence of a comprehensive analysis of the distribution of income and wealth is a fundamental problem. It means we are flying blind about some of the effects of budget decisions on that distribution. Such analysis is routine in other countries and information should, as a matter of course, be available to Members of the Oireachtas before they vote on the budget.

The economic context of the upcoming budget is Ireland's home-grown property crash, the global financial crisis and the eurozone political crisis. We must consider what we mean by economic recovery in Ireland, that is, recovery that benefits everyone. TASC argues that this recovery should be balanced between reducing the deficit, supporting jobs and protecting low income groups. There is an obvious equality argument for protecting these groups, but it is also complementary to the economic argument. Tax and spending cuts shrink the economy. With less money going around, there are fewer jobs, less tax income and more welfare spending, leading to an increase in the deficit. Austerity on its own is self-defeating. Creating jobs with the aim of full employment gives everyone an opportunity, increases tax revenue and lowers welfare spending, thereby closing the deficit.

Protecting low income groups and increasing their incomes allows people to live in dignity and increase their spend. Recently, the IMF produced papers arguing that recession-hit economies needed to increase domestic demand. People on low incomes spend almost all of their money meeting their basic needs, usually in local shops and businesses. By using taxation and benefits to redistribute income, we can increase aggregate demand in the economy and lay the ground for job creation.

There is a large deficit in the public finances, but our public spending is at EU average levels. Some of this is temporary cyclical spending due to high unemployment and, therefore, higher than normal welfare spending. As our spending is only now reaching average European levels, we have proposed no overall cuts to public spending in 2012. Savings should continue to be made through the Croke Park agreement and other public sector reforms and should be reinvested in front line services, welfare and capital spending. We calculate that a further €2 billion per year could be saved from 2012-23 were the promissory notes issued in respect of Anglo Irish Bank, now the Irish Bank Resolution Corporation, IBRC, rescheduled over a longer period. It would not be a default, involve bondholders or be covered by the memorandum of understanding with the EU and IMF. However, it would require the Government to renegotiate with the European system of central banks.

To help the economy grow, we propose that €1.2 billion from the National Pensions Reserve Fund, NPRF, be invested in education, skills and training supports every year for four years. Hundreds of thousands of people are unemployed or under-employed. Many, in particular younger men, left education early to take up jobs in the construction industry. We need a mass movement of people back into education to deal with the emergency of mass long-term unemployment. Not only would this investment in education give a short-term boost to the economy but, according to all of the evidence, it is through education that economies innovate, which is the only long-term way to achieve sustainable economic development.

Our tax system collapsed in the two years following the property crash. It had been hollowed out by tax reductions and tax breaks. Tax revenue fell by one third between 2007 and 2009, which is not normally known to happen in advanced economies. Our tax levels are abnormally low in a European context. As they are too low to sustain average level public services, we must find a way to pay for the services upon which many people and businesses depend.

TASC has concentrated on tax measures that will rebuild a stable, sustainable tax base. We have examined the international evidence in drawing up our budget proposals. We have considered how different types of tax have different effects on job creation. We propose €3 billion in taxation measures that are designed to protect low income groups while targeting unproductive investment. Our proposals cover four areas - property, wealth, pension reform and consumption. For example, an equality-proofed residential property tax model would allow people on low incomes or burdened by housing and child care costs to defer payment. Likewise, we have proposed extending the universal social charge to all sources of income equally, which means extending it to income liable for capital gains tax and capital acquisitions tax. Our detailed report, which has been circulated to members, contains a range of other proposals that we might address when answering questions.

I referred to social change. To achieve lasting recovery and equality, we need to change our economics. Mainstream European economic policy involves a more equitable distribution of income, tighter regulation of finance and social investment to give everyone a better quality of life. TASC's proposals are evidence-based, costed and realistic. They are a contribution towards making a break with the failed economic policies of the past, imagining Ireland as a flourishing society and making the decisions required to move us in that new direction.

Deputy Pearse Doherty

I welcome Dr. O'Connor, Mr. McDonnell and Ms Pentony. I am glad that TASC has had an opportunity to present to this committee. I welcome TASC's pre-budget submission, which I have read, and its presentation to the committee.

As time is limited, I will keep my questions as brief as possible. Dr. O'Connor mentioned that the restructuring of the Anglo Irish Bank promissory note would accrue a saving of €2 billion per annum. I have been discussing this matter for some time with various individuals and organisations. TASC argues that extending the period from 50 years to 100 years would see us paying €1 billion each year until 2023, resulting in the €2 billion saving. Will the delegates give details in respect of those savings and on which the calculations are based? In regard to the proposed euro stimulus of €1.2 billion per year over the next four years, what is the expected return on the stimulus, what model is used to calculate that return and what impact will it have on the deficit and employment during that period?

In regard to the impact of austerity of which TASC is critical, what is the corresponding reduction in the deficit? In the last budget the combination of between €5.4 billion and €6 billion in cuts and tax increases resulted in a 1.4% reduction. Why is it that deficit has reduced by such a small margin?

Dr. O'Connor outlined that TASC does not propose any reduction in expenditure. While there are savings to be made, I agree with the principle on which this is founded. Will the witnesses discuss in greater detail the notion that the Exchequer gets a better return from cuts than tax increases? The ESRI modelled an Irish situation where it examined tax increases compared to cuts in expenditure and the benefits that would accrue to the Exchequer as a result of both and in terms of which was more beneficial.

Vice Chairman

I will group speakers for the purposes of efficiency.

Deputy Thomas P. Broughan

I welcome Dr. O'Connor and his team and thank them for a thought provoking analysis. We always find the productions of TASC to be helpful in our work as public representatives. It appears as if the advice submitted is in respect of the 2013 or 2014 budget because a key element of the taxation side is a site valuation tax. Given the commitments in regard to property tax and the fact that the actual structure for introducing the site tax is so complicated, why did it make that suggestion? I agree with the general idea of being opposed to cuts on that side of the budget.

On the issue of promissory notes, should the Government have a position on savings for next year's budget given that a huge chunk of the primary deficit - which we were never told by the media - ultimately relates to the wreckage of the banking crisis and interest payments? Should we factor that in and should we expect the Minister for Finance, Deputy Michael Noonan, the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and the Taoiseach to perform in regard to cuts and the savage burden which is affecting us?

TASC has included some of the old reliables such as taxation and excise duty on cigarettes. Given the losses to the Exchequer, is that considered counterproductive?

In regard to the investment of the €1.2 billion, how did TASC do its cost benefit analysis? What does it expect the capital budget will be next year? What type of stimulus should the Government aim for?

Vice Chairman

I invite Senator Hayden to make her contribution.

Senator Aideen Hayden

I congratulate TASC on its thought provoking proposals. Dr. O'Connor mentioned the importance of taxing wealth and cited it as being a more efficient way of delivering in terms of inputs for the Government. The proposals appear quite modest. Why did TASC rule out the introduction of a third rate of wealth tax on significantly higher incomes? Other groups have proposed a third rate of tax on incomes of more than €150,000 and €160,000.

In regard to capital gains tax and capital acquisitions tax, halving the rate of capital gains tax is one of the reasons we are in this position. In his report, Dr. O'Connor cited the over-reliance on tax from the construction sector. Again the proposals appear to be quite modest. For the sake of argument, why did TASC rule out the rehiking of capital gains tax back to its historic rate before it was halved?

In regard to capital acquisitions tax, Dr. O'Connor said it is an important corollary to the capital gains tax changes because we do not want to use it as a way around capital gains tax. I am concerned that most people who will benefit from capital gains during the next five to ten years will carry forward significant capital losses. Have the witnesses any suggestions to make on that issue? If there is a significant amount of capital losses in the economy, the potential tax take from CGT would presumably be quite low.

What is the view of TASC on the current rates of social welfare payments? I see this as an opportunity to make some significant changes to the way our system works. Our current social welfare system is based on an economy with almost full employment. It does not work in an economy where there are significant levels of unemployment. For example, has TASC considered the potential for changing to a basic income system, rather than the present tax system?

In regard to its proposals for property tax, has TASC proofed them for the impact they may have? For example, the property tax has implications for the rented sector given that many of those providing accommodation in the rented sector have very high levels of negative equity. The sustainability of the sector is perhaps questionable in the short to medium term and could have implications for those who rely on the sector. Similarly, has TASC poverty proofed its proposals in respect of carbon tax for older people and those in poorer rented accommodation?

Vice Chairman

I invite Dr. O'Connor to divide up those questions.

Dr. Nat O’Connor

Yes, we will divide them up. I will defer the question on basic income to Social Justice Ireland which has done work in that area. It is an issue well worth considering and involves much calculation.

On the issue of poverty proofing carbon tax, we saw that raising carbon tax does pose a risk for people who are in fuel poverty. We suggest some of the income from it be offset against fuel allowances or other ways of combatting fuel poverty. That is what we have factored into our figures. I invite Mr. Tom McDonnell to speak about the promissory note.

Mr. Tom McDonnell

The promissory note repayments as currently scheduled to work as follows. Essentially, there are two groups of payments that have to be made. As it currently stands, the Department of Finance estimates of €47.9 billion relate to the direct payments. That does not include the interest paid on the money borrowed to obtain that €47.9 billion so the €47.9 billion is a misleading amount. As members are aware, the payments are €3.1 billion, technically €3.085 billion, on 31 March each year up until 2024. However, all or most of the money will have to be borrowed and that obviously does not come free so what happens is that it will be accounted for within general Government borrowing. When assuming likely interest rates on those payments, they will be synonymous with the expected interest rate repayments for the sovereign. That also highlights the fact that Anglo Irish Bank is, de facto, part of the sovereign, which contradicts some statements that have been made recently.

Calculating out at a rate of 3.7% for 2011 to 2013, as exists under the EU-IMF programme, and assuming a 4.7% interest rate, which is a value that was used in the Department of Finance original note of 4 November 2010 but is also somewhat credible, if anything, it might be quite low in the early years, but it gives an additional amount of interest. The first payment of €3.1 billion must be borrowed and there will be interest on that. The second payment is €3.1 billion on top of the initial €3.1 billion. Interest payments have to be made for both of those amounts. The repayments from the interest on those borrowings increase year-on-year until such time as we get to 2024 or 2025 when the straight-up repayments themselves decline. What we find is that the cost of the estimated annual repayments to the Exchequer, that is money forgone from other public spending or acquired through additional taxation, will peak at more than €5 billion in 2023.

It should also be pointed out that on top of the interest repayments on the initial €47.9 billion, one also has to make interest repayments on the borrowings required for those interest repayments. On top of the €47.9 billion, one has an additional €28.5 billion to pay for the Anglo Irish Bank moneys up to 2031. That €28 billion itself must be borrowed. Again, assuming a 4.7% interest rate, that amounts to an additional €9 billion. The €9 billion itself will have to borrowed and one will end up with a further €3 billion or so that itself has to be borrowed. That is how one arrives at a figure of approximately €85 billion to €90 billion by 2031. It goes without saying that in all likelihood we will have been rolling over the repayments so it will not cease in 2031 but will continue.

What can feasibly be done about that? What we have suggested is that given the likelihood of the European bailout mechanism, the EFSF, eventually recapitalising and restructuring banks throughout Europe, a process that is likely to begin in earnest in 2012, it is almost certain that Anglo Irish Bank's promissory notes could be wrapped up into that process. In other words, that would involve the European bailout mechanism essentially paying the euro system the €30.6 billion upfront and the Irish sovereign then negotiating different terms with the European bailout mechanism.

Obviously a write-down on the debt would be very helpful in that regard but other options also include low interest rates and elongated maturity far out into the future. What would that do? If we again assume a 4.7% interest rate or a 3.7% interest rate for the first few years on the €30.6 billion, one arrives at a sum for capital repayment of approximately €1.3 billion instead of €3.1 billion. That is €1.8 billion of a difference. On top of that one is paying interest on that amount rather than the interest on €3.1 billion and it is in that way that one arrives at the €2 billion difference per year. That would have profound effects in terms of the sovereign's debt sustainability which, let us be honest, is in question, or that the debt to GNP ratio by 2013 or 2014 would be more than 140% and our debt to GDP ratio would be between 115% and 120%. That would go a long way towards helping to restore debt sustainability and it would also reduce borrowing requirements by €6 billion or so over the next three years. That would allow us to go to the markets faster than we otherwise would have.

Dr. Nat O’Connor

Could Ms Pentony speak on a few of those points?

Ms Sinéad Pentony

I will talk on the question of the stimulus, the economic recovery fund. We recommend that €1.2 billion per year would be spent for the next four years with a particular focus on education and training. The reason we recommend that a lot of extra resources would go into that area is because we have an unemployment crisis. We also have a structural unemployment crisis. We have more than 300,000 unemployed, half of whom are long-term unemployed. The reality is that a lot of the jobs in which those people were previously employed are not coming back so in order to prevent them slipping into even longer term unemployment, the best way to address the issue is education and training at all levels. Many young people left school early to take up jobs in construction. Local and community education providers cannot cope with the demand. There is great scope to expand the different types of training and education at local level and to get people back into courses.

A bigger issue arises in terms of the economic recovery. Those members who were around in the 1980s will recall that it was the last time we had the emergence of long-term unemployment. I was working in a different capacity in the late 1990s and we were still looking at putting responses in place to people who became long-term unemployed in the 1980s. One is talking about not just skills, but about mental health issues, addiction and a completely different set of issues that are going to be much more difficult to address and cost more in order to work with those people and those communities in terms of moving back into employment. Long-term unemployment is a drag on the economy, not to mention the social costs in terms of communities, which is why we suggest a strong focus on education and training.

In the long term a sustainable economic recovery must be based on innovation, doing what we do better and doing new things. We cannot do that unless we have a highly skilled population. We have looked at some work produced by UNESCO which suggests that every time the education of the population increases, it contributes 3.7% to economic growth. That is a global figure but it gives an idea of what we are talking about in terms of the benefits to the economy. In addition there are the social benefits not to mention the social costs which I outlined.

We also suggested capital investment. An obvious one is broadband. We could also have a target of not having a single child in a prefab in the next five years. There are practical measures that would also get people off the dole queues into work and also in terms of putting the infrastructure in place that will allow the economy to grow and flourish in the medium term.

In response to Senator Aideen Hayden's question on social welfare rates, they were for a time of full employment. At the launch of the St. Vincent de Paul pre-budget submission we heard that €70 million had been spent in the past year in supporting low-income families to make ends meet. It was outlined that our social welfare rates are not sufficient and that is why we suggested there should be no more cuts to public spending. I accept there needs to be reform but we must spend what we spend better and get better value for money, not to mention the economic argument that low-income groups by virtue of necessity have to spend everything they earn. Good work has also been done by the Vincentian Partnership on looking at minimum essential budgets in terms of what it costs families to live in various situations. Our social welfare rates fall short when one puts them up against the analysis done by the Vincentians and, indeed, Social Justice Ireland.

Senator Aideen Hayden

I was not suggesting our social welfare rates were too generous. What I said was our system of social welfare is not designed to cope with the demand that is put upon it. I was simply asking for an opinion on the current social welfare rates.

Ms Sinéad Pentony

Senator Hayden was talking about the actual rates.

Dr. Nat O’Connor

On the property tax proposals raised by Deputy Broughan, we would ultimately think the State should move towards a site value tax because that is a more economically beneficial type of property tax. A site value tax would not punish somebody, for example, who improves a site or improves a building, particularly a landlord who would improve accommodation that he or she is renting.

We have made property tax proposals for this budget - we had them last year as well - because we think it can be implemented now through a simple system of self-assessment. We suggest that persons would choose to tick a box for the worth of their property in very large bands, for example, between €150,000 and €300,000, and they would pay accordingly. It is possible now to implement a more comprehensive residential property tax which is less damaging to the economy than, say, income tax changes.

In terms of our modest proposals on taxing wealth, we did not look at income tax in our proposals for two reasons. First, it is a type of tax which is more damaging to economic growth, particularly job creation. Second, as the Government had ruled out income tax changes, we wanted everything we proposed to be possible within the parameters of this budget to be realistic and feasible. In the longer term it would make a good deal of sense to have a much more tiered system of income tax, for example, five or seven bands. This is quite normal in other countries. It makes for a more progressive distribution of tax across the income spectrum. Our system, with only two steps, is quite unusual in that respect.

Likewise, in the case of capital gains tax and capital acquisitions tax, our proposals to apply the universal social charge would still mean that those sources of income are under-taxed in comparison to income tax. We were moving within what we think is politically feasible in one budget but there is scope for all forms of income to be taxed in the same way to the same extent. That makes a good deal of sense.

The question of sustainability will always be an issue of any kind of property-based tax, especially in the rented sector. Our preference would be a situation where the owner pays so that those in rented accommodation do not pay a habitation tax. For example, in other countries, such as France, one pays a residency tax or habitation tax, not a property tax. What we propose is a tax on the owner of a property. That could affect rent levels but in the current market, we think that rent levels are relatively low. It would need to be looked at in terms of ensuring that property owners do not pass on the tax to their tenants.

I will ask my colleague, Mr. McDonnell, to answer the question on austerity measures.

Mr. Tom McDonnell

Deputy Doherty asked why the deficit has only fallen by such a small margin given the €20.6 billion, or thereabouts, depending on how it is measured, of cuts to date. The short answer is that the economy is a moving target; it is an evolving complex system. It is not static. At the same time, one introduces a cut and it has knock-on effects throughout the economy. It causes job losses. This leads to increases in public spending through social welfare. If the Government takes money out through procuring less, that means less money for the private sector. If it reduces wages of public sector workers, that takes consumption out of the economy. If the Government increases taxes, it does the same to savings. Of course, the Government, at the same time, in its effort to reduce the deficit, also reduced investment spending which will have long-term impacts on the growth potential of the economy.

All modern economic growth theory that has emerged over the past ten or 15 years would acknowledge that cuts do not equal savings, that we cannot look at the economy as a static system. We know now that persons and institutions operating within a society do not have perfect rationality. It is within this context, and within the context of a deteriorating economic system, both in Europe and in Ireland, that the efforts by the Government through the austerity measures turn out to be somewhat counterproductive.

In terms of the long-term position, there is a danger that short-term tactical decisions can outweigh medium-term strategic requirements. For example, Ms Pentony spoke of the problem of long-term unemployment and how, if one allows that to fester for a number of years, one reduces the opportunities and the human capital, that is, the impeded value of the economy in terms of its future growth and employment potential. There is a crisis in the sense that there is a divergence of the skills available within the economy and the skills that are required, and it cannot be simply a straightforward accounting mechanism of finding €6 billion. All of these measures have impacts.

On the ESRI's numbers about tax and spend, and the existence of fiscal multipliers that have been generated for Ireland, and, indeed, what those fiscal multipliers are likely to be, the short answer, to paraphrase the fiscal council, is that there have been no full studies done of fiscal multipliers in Ireland. However, the IMF has found that 1% of GDP taken out of an economy is equivalent to reducing economic growth by 0.5% in an optimistic scenario in which one has the power of monetary policy, which we do not have, and in a situation where one's trading partners themselves are not engaging in increasing austerity, etc. Therefore, that 0.5% eventually moves to a full one-for-one relationship.

The argument has been made that the multipliers are smaller for Ireland but it relates to what one is investing in. For example, we have talked about investing in people, in education and skills. Those would be people going to institutions within Ireland and much of that investment would be occurring in an Irish context. Also, one must look at the long-term multipliers and the long-term effect. We risk condemning hundreds of thousands who would have left school at an early age and who have non-transferable job skills if we do not act now before it is too late, and there is still money left in the NPRF.

On the specific tax versus spending breakdown, we have looked as comprehensively as possible at many international studies of the impact of various taxation measures or various spending measures, and the results are quite complex and nuanced. It is damaging and simplistic to break it down to a contest between tax and spending. There are significant different effects within taxation. For example, property taxes are the least damaging to the economy. They target non-productive activity - this is true of most other types of wealth as well. They do not distort activity nor do they discourage employment, etc. On the other hand, taxing low-income workers can be counterproductive and is particularly damaging. For these reasons, we would strongly urge no increases in income tax, particularly for low and medium earners. That also applies to the universal social charge.

There are also diverse effects within public spending. The strongest multipliers tend to be associated with capital spending. We would strongly urge the Government not to engage in any capital spending cuts whatsoever this year and to look at the European Investment Bank and European project funds as ways of leveraging additional funds through matching funds. The European Commission has joined the growth mantra. The IMF and the OECD have done the same. There is a realisation that austerity, in and of itself, is incapable of working and a combined growth strategy is required. That is what all of the evidence says.

Vice Chairman

If the delegation does not mind I shall call the next group of speakers because we are restricted for time.

Deputy Richard Boyd Barrett

I am delighted that TASC is here and welcome the emphasis the delegates put on the counter productive nature of austerity and cutting one's way out of recession. They also made the important point that social equality is a question of good economics as well as fairness. To this end TASC's submission calls for taxation to be focused on those with wealth. From the point of view of fairness and sustainable economics, all of that is to be welcomed. We need to stimulate the economy through capital investment and investment in people. I only hope somebody in Europe or the Irish Government is listening.

While I agree with the general principles in the submission, some of the proposals may be somewhat timid. I understand the point about a maximum programme and a minimum programme because it is a concept with which we are very familiar in the socialist movement. What we might like to achieve in an ideal world can be different from what we think we can achieve in the short term.

Even if we are not to solve the problem immediately, those who understand the crippling implications of our debt should perhaps say it is not good enough simply to reschedule it. It is not our debt and it is robbing us of the funds we need for the stimulus that is needed if we are to get out of this catastrophic situation.

The big problem which we are facing is a massive collapse in investment. Levels of investment have decreased by approximately two thirds since the onset of the recession. To restore growth and employment, we need to bring investment levels back to where they were previously, albeit targeting them at strategic projects rather than property bubbles.

I welcome the emphasis on educating people because ultimately people are creative. Education is a long-term investment, as are innovation and upskilling. The cost of losing a job is estimated at €20,000. If 350,000 people became unemployed since the recession began, the cost would amount to €7 billion. The structural deficit is only €10 billion. If we put those 350,000 people back to work in public works programmes, we would get rid of €7 billion of the deficit. All we would need to do is top up their incomes because people should not have to work for dole money. We could find the money to top up their incomes by taxing wealth. What do the delegates think about that simple equation?

While innovation and education are important we should also invest in certain old-fashioned activities. I came across a simple example in the aftermath of last week's floods. Serious flooding occurs because leaves are not swept out of gullies. This is a basic job which depends on the availability of manpower. It is not highly skilled but it is very important. The fact that we no longer have large numbers of people doing simple, old-fashioned tasks like pulling leaves out of gullies means that we pay more in terms of unemployment and in terms of not doing these jobs.

Vice Chairman

Deputy Boyd Barrett -----

Deputy Richard Boyd Barrett

I am just asking a question.

Vice Chairman

There is a rule that when the Chair speaks a Deputy must stop.

Deputy Richard Boyd Barrett

I apologise.

Vice Chairman

We agreed prior to the meeting that we would limit our contributions to five minutes.

Deputy Richard Boyd Barrett

I will make my last point. Would TASC agree that the carbon tax and residential property tax run the risk of becoming regressive stealth taxes? Residential property tax will apply to people on low incomes or in negative equity. Even if one wanted to be discerning in terms of low incomes, the means testing, administration and billing involved will be more costly than focusing on income taxes whereby the wealthy pay more. Why does TASC choose means testing rather than taxing the wealthy, which appears fairer as well as cheaper to apply?

Dr. Nat O’Connor

In regard to the question about whether our proposals are timid, we presented a one year set of budget proposals. Resources permitting, we hope in future to present a multi-annual approach to budget planning to explore issues such as how we can devolve to a different income tax system or introduce larger changes in regard to taxing wealth on a step by step basis.

In regard to the idea of a works programme, I wrote an article for the Social Europe Journal on the principle of a job guarantee scheme. Full employment has to be put back on the agenda as a policy goal. It is essential that everybody be given an opportunity to work but this task would be logistically difficult. The figure of €20,000 which the Deputy cited represents a combined figure for the average loss of tax revenue and the cost of social welfare payments. The difficulty is that the money would still be spent if the individuals concerned were in a public works scheme and there would no saving in the deficit. There are alternative means, such as basic incomes, of creating job opportunities in new and different ways, for example, in the third sector and labour intensive environmental improvement works.

Ms Sinéad Pentony

There has been a huge collapse in investment. When we investigated means of counterbalancing the fiscal adjustment through taxation measures and stimulus, we found that €4.5 billion to €5 billion is all that remains in the NPRF. This would give us €1.2 billion per annum, which is not enough. Given the scale of the unemployment crisis and the collapse of the domestic economy, we need multiples of that figure. Last week the European Commission announced its Europe 2020 project bonds initiative and opportunities also arise through the European Investment Bank, EIB. I was interested to learn that the EIB funds education and health projects as well as infrastructure. We could use the meagre resources that remain to us to leverage additional moneys through the project bonds or the EIB. Private investment is not available at present and we do not know when it will come back. The State will have to step in to fund investment and embed growth in the economy.

Mr. Tom McDonnell

I echo everything Ms Pentony said regarding investment. A minimum level of investment is required simply to ensure that we do not fall behind. Next generation broadband is required and there will be opportunities in the future with regard to energy but gross fixed capital formation, that is, investment, will be lower in Ireland next year than it will be in any of the other countries in the EU27. That means we will fall further behind than any other country. The difficulty is that a country within a monetary union essentially loses full control over fiscal powers during recessionary periods because the markets turn against it and this points to the need for an expansion of the role of the European Investment Bank, EIB. The bank needs to have the same importance and effectiveness as the ECB has in charge of monetary policy. The EIB should be able to provide funding to countries in recessionary periods to tide them through. There are ways this could be mechanically put together and it would not be that difficult. Ms Pentony pointed to the project bonds.

In terms of the need for jobs now and in the future, jobs in the future will be attained by innovation but I stress that, in the context of innovation, this does not mean people in white coats in laboratories. Innovation can happen at any level. It is just doing something differently, more efficiently or better or just doing something new. It can just as equally apply to farming or to baking as to science, engineering and so on. It is just simply change; it is how economic systems evolve over time. That was why the emphasis was on education. It is also about the medium term and where we want to be in five years and not just six months because we have to look at this strategically rather than tactically.

Dr. Nat O’Connor

With regard to the banking debt we have acquired through nationalising and bailing out the banks, it is essentially an immoral debt in the sense that it was acquired through a private, free market system and yet it was nationalised. Part of the problem was we did not have the legal structures we needed such as a bank resolution mechanism to allow us to allow banks to fail and, instead, the problem became nationalised.

With regard to whether property and carbon taxes are regressive stealth taxes, there are a few things. First, they are better taxes for the economy and so that way there will be more money, jobs and opportunities in the economy. Second, some people have wealth and property and do not have incomes so they cannot be got at through income tax. In some ways, a residential property tax can bring people into the tax net who otherwise would not pay through income tax because they may be retired but they may have wealth or a property. Likewise, property tax has a different distribution of the tax burden across people which would take tax away from many people on low incomes who rent because the idea is that people who rent or who are in social housing would not be caught with this tax. That is how we would try to make the taxes target unproductive investment in the economy and also protect low income groups.

Deputy Richard Boyd Barrett

I do not quite get that point. While I accept some of the points made by Dr. O'Connor, I think of many little old ladies in Dun Laoghaire living on their own who happen to have houses that might have a relatively high value but their income is negligible. I do not see how it is beneficial to impose a property tax on them or on people in negative equity or with large mortgages who are seriously struggling to manage. Even if one was discerning in dealing with those problems, one would create a bureaucracy which has to means test people and that would be wasteful. Dr. O'Connor said it is more damaging to go after income. I do not see how it is damaging to go after high incomes because such incomes are not being spent at the moment. I do not refer to low and middle income earners who are spending because they have to. Can high income earners who are saving not afford to take a hit? Is that not fairer and easier in the context of the revenue system?

Senator Aideen Hayden

I was reminded by Deputy Boyd Barrett's question about investment in the economy of similar scenarios in the economy in the 1950s and the 1980s. Governments then used the housing sector as a way to stimulate the economy. That does not appear to be on the table currently. Why not stimulate the construction sector, given almost 100,000 people are on housing waiting lists and no significant construction activity is taking place?

Dr. Nat O’Connor

We have at least 300,000 vacant or incomplete housing units in the country.

Senator Aideen Hayden

Many of them in the wrong places.

Dr. Nat O’Connor

Many in the wrong places but, nevertheless, they are there. It would be hugely wasteful to put many national resources or tax breaks towards a further property boom. We would have to look at the planning infrastructure that allowed our current mode of planning to happen in the first place. One would have to look at a completely different urban policy, which we do not have.

Senator Aideen Hayden

I refer to social housing, as opposed to the private market.

Dr. Nat O’Connor

There could be an argument for developing social housing in niche areas, particularly brown field sites in urban areas such as regeneration projects. On a number of occasions PPP schemes fell through but communities have waited for decades for an improvement in housing. Such schemes could go ahead and thousands of people could be housed through a targeted housing scheme that made sense. However, that would involve direct spending by the Government and not using the housing market as a stimulus and, therefore, I do not know much of an effect that level of stimulus would have on the entire economy.

With regard to the property tax, a deferral system is built in. We assume one in four people would defer payment but rather than means testing, we say people who, for example, are on a low income for which a threshold would have to be set or whose net costs through housing and child care are more than 50% of their net income would simply be allowed to defer payment. The payment would become a charge on the house and the logic of this is that even though people have big mortgages now, over time they will still acquire wealth even if it is a 150% or 200% mortgage. There is an intergenerational wealth transfer going on; that is how wealth is generated into certain groups in society and transferred. One in five people in Ireland will never own a home. They will just pay rent whether through social housing or rented property. They will never have the opportunity for intergenerational wealth transfer through owning a home and passing it on to their children or selling it so it seems reasonable to tax residential property as a form of wealth and we propose a relatively mild form of that.

In terms of the economic arguments about targeting income taxes, there is not enough people on very high incomes. The average income is €33,300 and more people are below average than above average because there is a bottom threshold but not a top threshold on income. There is not enough people on high incomes to make enough money to offset what we are talking about in regard to property tax but we agree high incomes should perhaps be taxed more than they are and we could look at that.

Vice-Chairman

I thank Dr. O'Connor and his team for attending and for their briefing. It was an informative discussion which was well worth it. Is it agreed to publish the TASC submission on the committee's home page? Agreed.

Dr. Nat O’Connor

I thank the committee.

Vice Chairman

From Social Justice Ireland, I welcome Dr. Seán Healy, director, Sr. Brigid Reynolds, director, and Ms Michelle Murphy, research and policy analyst. The format of the meeting will see Dr. Healy making some opening remarks, following which will be a questions and answers session. I remind members, witnesses and persons in the Visitors Gallery to turn off their mobile telephones.

I advise the witnesses that, by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. If they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person, persons or an entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I am sure Dr. Healy has heard these words many times before. He can proceed with his presentation. As he saw from the earlier part of our meeting, we will try to keep the time as tight as possible so that everyone who wishes to ask questions can do so.

Dr. Seán Healy

I thank members for their invitation to attend. We were happy to receive it and take it seriously.

Social Justice Ireland is an organisation of individuals and groups throughout Ireland. It stands alone, in that it is not tied to any other body. Our membership numbers approximately 65 or 70 organisations and several hundred individuals. While organisations and individuals can join, the condition is that they must be committed to working to build a just society in which human rights are respected, human dignity protected, human development facilitated and the environment respected and protected. This is our understanding of the term "just society" and is the basis of our organisation.

Social Justice Ireland believes strongly that a fairer future is possible and deliverable but it is crucial that the Government's decisions and the terms of the bailout agreement to which the Government is working should focus on delivering a fair and just outcome. The adjustments required and the decisions taken should all be in the context of reaching a future that is fair, just and sustainable. It is also essential that the pathway towards such a future must be seen to be just and fair. Both the destination and the pathway are important. Therefore, it is vital that the decisions taken in budget 2012 and beyond take some key steps towards that future in a fair and just manner.

The current situation is difficult and we live in precarious times. The bailout agreement and the conditions it imposes are being honoured and targets are being met but the promised outcomes are not materialising. For example, economic growth is not reaching the targets forecasted, jobs are not being created on the scale required, unemployment is not decreasing at the rate envisaged but, rather, seems to be increasing, finance is not available on the scale required for small and medium-sized enterprises, SMEs, essential services are being reduced to such an extent that the health and well being of citizens is being put at risk and those who are poor or vulnerable are bearing an inordinate share of the pain in the adjustment process. Demand for the services provided by the community and voluntary sector, often the place of last resort for many vulnerable people, has escalated week by week, yet its funding has been reduced dramatically. The essential infrastructure supporting the delivery of public services is being eroded with serious long-term implications. Measures pursuing short-term gains will cause significant long-term pain. This matter is not being addressed.

We will highlight three key problems, although they are not the only ones. We have been drawing attention to them for some time. Growth will not reach the level projected for 2012, which underpins the calculations in the bailout agreement. Domestic demand continues to fall, which is a serious issue if we are trying to generate growth and jobs. The infrastructure supporting the delivery of public services is being eroded.

The bailout agreement to which we are working requires too great a set of changes to be produced at too fast a pace with too harsh consequences. These factors are combining to undermine economic growth and, in turn, any potential for recovery. The adjustments being imposed would need the economy to reach Celtic tiger growth rates to have the prospect of recovery at the forecasted levels underpinning the memorandum of understanding.

I will address the budget and our proposals shortly. We wish to draw attention to a number of initiatives at the macro level that Ireland should take. Some of the debt should be written down, unsecured bondholders should not be paid and a new State-backed bank should be established to provide finance to SMEs. Nothing in the existing system will meet the requirement to which I referred. If members are interested, we would be glad to outline our proposals today or at another time.

We have presented the committee with a 20-page policy briefing, entitled "A Fair Future is Possible", which sets out our views. We will not read through it all, but I will draw the attention of members to some of its elements shortly. Our proposals are fully costed and come to the same destination that the troika wants Ireland to reach, that is, to reduce our borrowing by €3.6 billion in 2012. However, we travel a different route and our choices differ from those contained in the Memorandum of Understanding. We take a different direction because the proposals in the memorandum fail to protect poor and vulnerable people, continue the process of dispossessing poor people so that bankers and bondholders may be repaid in full - a process we consider to be profoundly immoral and unjust - and provide no investment to help generate economic recovery. There are serious doubts concerning whether the future set out in the memorandum's targets and outcomes can be achieved in the changed national and international circumstances, given the global growth projections. Since we are so dependent on exports and domestic demand has decreased, serious questions are being raised about the overall frameworks.

The three of us met the troika in July and last month when it visited Ireland. Both times, the troika assured us that it had no problem with the Government finding different pathways to the same conclusion, that being, reducing borrowing by €3.6 billion in 2012. There are a number of major differences between our proposals and those of the Government and the memorandum of understanding. The borrowing reduction target should be achieved by tax increases and expenditure reductions on a ratio of 2:1, which is the opposite of the memorandum of understanding. There are no reductions in welfare rates and we believe child benefit should not be changed. The situation of the working poor should be improved by making tax credits refundable - at least the top two tax credits. We propose an initiative of scale which would see up to 100,000 long-term unemployed people take up real part-time jobs. I will return to that issue because, for us, that is a critical issue in terms of where we go from here. The support infrastructure for social services would be protected by following what we propose.

We do not believe the parameters set out in the bailout agreement are viable in terms of securing Ireland's development. However, given the insistence by the Government and the troika that they want to travel in this direction we wanted to set out a series of options that would protect poor and vulnerable people. We have done that. I will not go through the whole document. On page 2 of our policy briefing document we have set out some charts, showing the poverty line, effective tax rates and so on. On the following page there are 40 statistics which we consider are critically important if one wants to understands Ireland's social and economic position as of today. On page 4 of the document we recall the bailout agreement agenda and so on. Our guiding principle on page 5 is to protect the vulnerable and we show how that can be done. We want the social infrastructure supported and not demolished any further. Page 6 of the document deals with more appropriate tax expenditure adjustments. This is where we come to the conclusion that the adjustments should be done in reverse direction; the 2:1 ratio should be in the opposite order.

Our concerns about growth are developed in page 6 of the document. The need for welfare reform is accepted but there is no justification for reducing social welfare rates in budget 2012 and we have set out five reasons for that. On page 7 we show the impact that social welfare rate payments have on poverty. Without social welfare payments, including pensions, 46.1% of people in Ireland would be at risk of poverty. That is not to say the social welfare rates are dramatically high but they make a point about people's level of income and the actual impact of State transfers. Consequently it is important to be careful about reducing them.

On page 8 we address the critically important issue that Ireland's total tax take is not sustainable at its present low level. Our view is that it should be moved to 34.9% of GDP, which would still keep Ireland a low tax economy as recognised by EUROSTAT and other agencies but would still give us several billion euro more in income annually which would make a huge difference. We set out our points about reforming the tax reliefs. We propose a corporate profits levy. This is a levy of 2.5% for several years on the profits of corporations, unlike the PAYE workers who has to pay the levy on all or most of the money they earn. This is simply a levy on profits and we think the corporate sector should make a contribution.

We propose that the universal social charge should be extended to all income over €100,000 at 3%. We propose a site value tax. Given that the carbon levy is going ahead we propose that a substantial component of it be reallocated to ensure there are no losses among poor people or rural dwellers who are affected by that levy disproportionate to others. We propose the introduction of a very small text tax and a bad nutrition tax on page 10, not just on sugars but on a range of issues.

We have a proposal on the working poor. Four out of every ten households at risk of poverty in Ireland is headed by a person with a job. Most, if not all, could benefit from having the tax credits made refundable. This is quite affordable despite earlier figures produced that argued for the past decade that it was not affordable. It is affordable even at the present time and would have a huge impact. Some 113,000 low-income people would benefit from it.

Page 12 of our document contains the one proposal we would opt for if asked to choose one. This is a new programme, not another scheme, to create 100,000 part-time jobs for the long-term unemployed people in the public sector and in the community and voluntary sector - not in the private sector for obvious reasons of problems with displacement. These jobs would be created, for example, in the public sector from headquarters of the Department right down to the local library in a local village or town. They could do any job that is useful so long as there is no displacement involved. It would be a voluntary programme. People would work the number of hours required to get their social welfare money plus €20 which is the same as they would get if on community employment. After that they would be free to do whatever they wished. The number of hours worked would vary depending on the amount of their welfare money. They would have a maximum of 19.5 hours. After that, they are free to take up part-time work and pay tax the same as everybody else but would not lose their welfare benefits.

The idea is to create real part-time jobs. We have a certain interest which we should admit to. During the last recession in the mid-1990s this programme was piloted by Sr. Brigid Reynolds and me who ran the programme from 1994 onwards. The programme was mainstreamed in 1997. We piloted the programme in a range of different areas from Blanchardstown and Finglas to the islands off the west coast to the city of Waterford, four towns in south Tipperary, County Laois and north Kerry. We created 1,000 part-time jobs. The programme was mainstreamed in 1997 under the Minister, Deputy Richard Bruton, and the Minister of State, Deputy Pat Rabbitte, both Ministers in the current Government. In the following years, as the economy improved, the programme melted away, which is exactly what it should do, because there were jobs available in the wider economy and people took them up.

We have some proposals on education, health, capital investments programme and pensions. In terms of funding a capital programme there should be a standard rate of pension contributions. We have a series of proposals in pages 16 and 17 of the document. On pages 18 and 19 we set out the full costings. These tables show the exact costings. The costings we are using have been derived from Government publications and others. We have not invented any of this.

There are a few issues that are not included. On the taxation side we did not include the €600 million that we estimate would be the savings on interest payments in 2012 as a result of changes that have emerged since the Government did its original figures in April from which we worked, the stability and growth programme publication at that time. On the expenditure side we did not include the public sector savings coming from the Croke Park agreement which, we believe, are estimated at about €300 million.

At the end of the day we presented a set of proposals, fully costed, to produce a fair budget in a time of crisis, a budget that would protect the poor and vulnerable and operate within the parameters set. If we could choose, we would set different parameters. Given the parameters that Government has and that the bailout sets, this is a set of proposals that would protect poor and vulnerable people and lead to better outcomes.

Vice Chairman

Thank you, Dr. Healy.

Deputy Pearse Doherty

It is unfortunate that the number of Members present is small. As the Minister for Finance is due to speak in the Dáil shortly and I have to respond, I will have to vacate the meeting at that time following the Topical Issue Debate.

I am glad to have this opportunity to welcome the delegates to the committee and to ask them a number of questions. The policy briefing they produced is outstanding. It is no surprise because the material they have produced has been a great resource for policy makers down through the years and has provided an alternative choice continually and consistently. When one reads through back issues of their briefings, one can see where they have been successful, and every organisation needs a certain degree of success. I hope many of their policy choices, although not all of them, as I do not agree with all of them, will be implemented in this year's budget.

There are many questions I would like to discuss with them and I will be as brief as possible. On the need to increase our overall tax take and to continue to have Ireland classed as a low tax economy at 34.9%, Social Justice Ireland sets outs a table on page eight of its policy proposal which shows where the Government is heading, which is to have a tax take of 33% of GDP. The policy document indicates that €7 billion would be the difference if we were to come up to the threshold of still being a low tax economy, as defined by EUROSTAT. Taking the Government's taxation figures, does Dr. Healy believe the Government will achieve those figures? Can he explain why the Government's figures and those subsequently produced by the OECD and EUROSTAT contradict each other. The Government has continually provided projected figures that have shown, for example, that it would have reached a tax take of 30.2% GDP in 2009 but when EUROSTAT and OECD have produced their figures, they show that their tax take is much less. Even if we were to achieve the Government's figures, we would still be well under the projected tax take of 33% in 2014, if the trend continues. I would like Dr. Healy to comment on that.

While the Government is seeking to increase the tax take as a percentage of GDP over the next three years by 3%, the issue is from where it will take that 3%. There has been a lack of debate on where it will make the cuts. I am sure that we would all agree that there needs to be cuts and tax increases but where we differ is where those should be applied.

I would like Dr. Healy to comment further on what he said regarding burden sharing with senior bondholders and, in particular, to give his view on arguments put forward against the comments of those who would like there to be burden-sharing with unguaranteed bondholders in terms of the ECB and the threat that it will not allow it.

On Social Justice Ireland's proposal regarding the working poor, will Dr. Healy elaborate on refundable tax credits, a proposal that I and my party support, and how it would benefit four out of ten households living in poverty who have a family member heading up the household? How would it improve the welfare of that group of people?

I do not agree with Social Justice Ireland or TASC on the big issue of site valuation. We have discussed this previously but I do not agree with them on it. I can see the benefits of it in that the concept of moveable assets would look nice on paper and from the perspective of the Department of Finance it would be a great tax to implement in that it would be simple and straightforward, to a certain degree, once the groundwork has been done, it would take in considerable revenue and nobody could dodge or hide from it, but it would not be fair. There are other ways of collecting revenue in terms of wealth taxes, which is a form of property tax that also takes account of income. The working poor for whom Social Justice Ireland has campaigned - and in some cases it is the lone voice in talking about the working poor - will be caught on the site valuation tax. The proportion of direct taxation to indirect taxation that this State pays is completely out of kilter with our European partners.

An aspect of Social Justice Ireland's presentations I like is that they are clear in terms of the graphs and simply laid out snippets they contain. The issue of the carry-over is addressed in this presentation and it is the first pre-budget document I have seen that has laid it out. There is the issue of €1.5 billion of tax increases which, in reality, would not be €1.5 billion of new tax increases because half or 40% of that was implemented in last year's budget and the carry-over will take place in 2012. I am glad that Social Justice Ireland has printed the memorandum of understanding to tie all of that together.

On the part-time job opportunity programme, if I were the Minister for Finance and the director of Social Justice Ireland, of whose track record I would be aware, came to me with a proposal that 100,000 part-time jobs could be created at a cost of €150 million - having regard to the dramatic increase of long-term unemployment and the consequences of that in terms of a loss of confidence and morale, the cost to society and to the Exchequer in the long-term because of different factors - I would not let him leave the room until we had the contract signed, sealed and delivered. I am sure that Social Justice Ireland has been engaging with the policy makers who sit around the Cabinet table. Perhaps they will run with this proposal but if they do not - they have not announced it to date and this has been an item on Social Justice Ireland's agenda for quite a long time - what is their reason for not running with it? What is the Government saying are the down sides to investing such a small amount of money for such a large return?

Vice Chairman

I will take questions from a few contributors and ask Dr. Healy to bank them. I call Deputy Broughan.

Deputy Thomas P. Broughan

I welcome Dr. Seán Healy, Sr. Reynolds and Ms Murphy. Social Justice Ireland's contribution to the national debate on the budget has been welcome and thought-provoking down through the decades, as it is this year. My first reaction on glancing through its briefing document is to ask if some of the proposals contained in it are inclined to be biased in some respects, against young people? For example, it has come forward with a student loan scheme. The delegates might recall that the campaign against the introduction of university fees in the 1990s started in my constituency and it was subsequently taken up by Deputy Ruairí Quinn and our party leadership. The debate on the issue then was around families who were desperately striving to get the very first generation of their families into third level. They were to the pin of their collar in trying to achieve that. Would this proposal not be a huge disincentive in that respect? I note that other jurisdictions of a comparable size such as Scotland and other sovereign states have considered the provision of universal third level education as a worthy ambition of states. Therefore I question the wisdom of this proposal. Furthermore, registration fees are so high now that some people would say that there is already a type of fee in existence, accepting that it would not meet the cost that the heads of UCD, Trinity College or NUI Maynooth would tell us is the cost per capita per student. I wonder about the wisdom of the proposal on that front.

Dr. Healy mentioned a proposed text tax on the use of mobile phones. In a previous existence I was our party's spokesperson on communications and the problem in regard to mobile phones is termination charges; it is what the cartel of companies charge each other in calls. There are various offers available for texting and so on, but what I cited was the problem in this area and it is an area I would have examined either to force them to change or to introduce some new tax mechanism. Given the ubiquity of texting, especially by younger people, I wonder about the wisdom of this proposal. The same case could also be made for the proposed nutrition tax. Even though it would be better for people, would such a tax have a disproportionate impact on younger people? Is that an aspect the delegates need to examine?

In terms of corporation tax, why not bite the bullet and let us have a 15% rate? I was never convinced of the argument in regard to the 12.5% rate. We have a sacrosanct national policy. We recently appointed a Minister of State, Deputy Brian Hayes, with responsibility for external taxation, the European situation in this area and the CCCTB structure. One could ask why one would just have a levy. The delegates clearly feel there is a reasonable argument for a 15% rate but to be applied as a levy. There are many valuable suggestions such as to have an additional levy on the universal social charge, USC, for those earning more than €100,000. That suggestion has great merit, as has the standard rating of pensions. I also welcome the attempt to take a large number of people off the live register and put them into some kind of employment. Again, that suggestion has great merit.

Senator Aideen Hayden

Like my colleague, Deputy Broughan, I congratulate the delegates on the presentation of their proposals. There is some extremely good and interesting information in the presentation. It is always a pleasure when one gets this type of proposal.

Like Deputy Broughan I was struck by the impact on young people of some of the proposals. I was troubled by the negative developments in the previous budget affecting younger people in terms of their income and access to rent supplement. We have started a trend of differentiating between younger people and other people in society which is not particularly positive.

Like Deputy Broughan I was concerned about the proposals on third level education. As someone who has come up through the student union movement I am conscious of the situation in the 1970s. The statistics were clear that access to opportunity is linked to access to third level educational opportunities. The information from other jurisdictions that have gone down this route is that loans are least likely to be taken up by lower income groups and more likely to be taken up by middle income groups. In terms of changing the culture around third level education it is critically important that we try to expand access to third level education rather than to narrow it.

The text tax reminds me of a film I once saw where someone managed to scam hundreds of millions by adding .0001 to every financial transaction. It sounds like an excellent idea. I suspect that for the current generation of younger people for whom texting is their mode of communication and who, surprisingly can send hundreds of text messages in an average day - that is not an exaggeration - it would not be well received.

On a more serious note, I agree with some of the comments made by Deputy Boyd Barrett on the proposals on property tax. It is an issue that is fraught. The attitude to property tax is that it is some kind of golden calf that we have to get our hands on. However, there is a serious aspect to it around the role of home ownership here, in particular in the protection of older people from poverty in later life. That is something of which we need to be conscious. I understand the response of TASC in that one could put the payment schedule out to be taken from the sale of the property on death. However, one must bear in mind that there is a cultural attitude in Irish society towards home ownership and in particular as people get older they are less likely to be able to move around with the same freedom enjoyed by younger people. I am concerned that we would be kicking the can down the road and creating a problem in the future which would be a cause of concern in particular for older people who are dependent on their homes in later life.

On the proposals on tax, again, I have concerns about the nutrition tax. I am aware of a number of studies that have shown that it is people from more disadvantaged backgrounds who spend larger proportions of their income on less nutritious food largely because it is cheaper. I would not like such a tax to have a negative impact on people who have a smaller proportion of disposable income to spend on luxury goods rather than it bringing about a behavioural change. Has TASC considered targeting the VAT rate on luxury goods which poorer people cannot afford such as cars and holidays and perhaps reducing the level of VAT on necessities such as good quality nutritious food in conjunction with the introduction of a tax on nutritionally poor foods?

What are the views of TASC on access to finance for lower income groups? We have seen an enormous transition in the recent past in terms of access to finance for entrepreneurs and businesses but what about access to finance for poorer income groups? Is there a necessity to consider putting in place a type of third banking force to deal with the latter group whether it be through the expansion of the credit union system or alternatively using some of the pillar banks of which the State currently has ownership?

I congratulate TASC on its proposals but I am somewhat disappointed that after many years of its work on minimum income it has not pushed that proposal forward in the context of the pre-budget submission.

Deputy Richard Boyd Barrett

I will be brief because many of the points have been made. I welcome the fact that TASC is explicitly adding its voice to the criticism of the EU-IMF deal because, we are banjaxed unless we break from this deal. We need to develop a common front of opposition to it. The points have largely been made to TASC. I definitely think the property tax is problematic. It does not convince me that if the money is just put against the house and payments are deferred that it is a particularly good way to deal with the problem that emerges from it. It is ironic that on this issue at least Social Justice Ireland and TASC seem like the real communists. It summons up the spectre of seeing home ownership as in itself problematic and somehow inherently associated with being wealthy which is not true. Tax must be related to income. The bottom line is that if one does it that way I do not see how it can be done fairly without unintended consequences of hitting people who it should not hit.

On a wealth assets tax as the other alternative, what the United Left Alliance proposes is that we should put a 5% wealth levy on assets over €1 million, excluding principal private residence, as well as proposing income tax bands of 50% for income of more than €100,000, 60% for income of more than €150,000 and 70% for income of more than €200,000. How would the delegates respond to that as an alternative approach to taxes on such things as text messages, nutrition and property that all have the potential at least to affect the people they want to protect?

While I welcome the idea of getting 100,000 off social welfare and paying them some extra to work - I think most people want to work and I suspect many people would take up such a proposal - is there a slight danger that we are creating a cheap labour force and we should be a little more ambitious in how much extra people should be paid for taking up 20 hours a week or whatever because of the danger of such a proposal being abused?

Vice Chairman

Would Dr. Healy like to respond?

Dr. Seán Healy

I thank the members for the comments and questions. I will try to cover them all. If I miss anything, I ask them to shout. It will not be because I am dodging it.

The issue about the €7 billion is correct. Deputy Doherty pointed out that there would be an additional €7 billion at the end of 2014 or 2015 - whatever the year was for which we had done the calculations. That would be the level at which the tax take would be and it would still be a low-tax economy. Our view is that if we got ourselves to that point - and we would prefer to get ourselves there quickly rather than slowly - let us see how we do in that space and then we can move on from there depending on what we need to do in terms of investment, support, services, and so on.

The difference between the OECD and EUROSTAT numbers and the ones here is an issue that has baffled us endlessly. We have discussed this with EUROSTAT, with the OECD and with the Department of Finance on a ongoing basis without getting any great coherent response. Part of the problem is that different years are used. Part of the problem is that not everything is included in some of the calculations.

The overall tax take, as we understand it and as we count it, includes all taxation from all sources, all social insurance payments and all local charges. That is the overall picture. We have been trying to get it standardised so that there is no more arguing about what the numbers mean and talking past each other on numbers. We have not been all that successful with that. We work on the basis of the officials numbers that are available.

If the numbers produced by the OECD and EUROSTAT were more reliable than the ones produced by the Department of Finance, then that would give us greater space and more capacity. At present, we do not even need to have that argument resolved because there is certainly the capacity for an additional €7 billion on top of what the Government is proposing at the end of four years that would still leave us as a low-tax economy.

In terms of bondholders and what we say to the European Central Bank, we have had this conversation twice with the European Central Bank. We have put our views quite strongly before its officials. Their standard response is to ignore it. They just give us back a definite line. They do not engage with the arguments we make. Our view is that at the end of the day that is a negotiating position too. The arguments are well known - I need not repeat them here. Our view is quite strong and we have articulated that already.

In terms of the working poor and refundable tax credits, what would happen would be that a person who did not benefit from the full value of the tax credit to which he or she is entitled would have that money refunded. One does not have to change the current system if one pays it back at the end of the year. If one wants to pay it on an ongoing basis throughout the year, then one has to change the system. We think it is better not to generate too much change and then one is much more likely to achieve the outcome. We suggest that we make tax credits refundable and for a fairly small amount of money one can benefit 113,000 among the working poor. It would be a dramatic impact for a fairly small amount of money. It is totally targeted. There is no leakage anywhere. It is a perfect target from that point of view. That is why are quite strong about it.

The carry-over of €700 million mentioned is important. We quoted the document, the memorandum of understanding. The benefit of the carry-over of the tax take, in other words, the full-year effect, is counted as part of the new tax take in 2012. We have simply gone through the numbers the Government produced in Budget 2011. This is not rocket science. The Government stated that this is what it would get in 2011, this is what one gets in a full year, one subtracts one from the other and that is the new money one will get in terms of carry-over. We put it all together, it is €700 million.

That is not the only story. There is also tax buoyancy, which should come if there is some growth in the economy. We did a calculation based on a 1.9% growth rate, although we are sceptical that such a rate will be reached. The growth rate underpinning the memorandum of understanding was 2.5% and we do not think that is remotely close to being achieved.

When one looks at what is achievable, therefore, there is €300 million and €700 million and if one puts the two of those together, one has a €1 billion. There is a carbon tax of €160 million and a household charge, which is already signalled, of another €160 million. There is €1.320 billion down the road. Then if one saved €600 million from interest payments already, one can see oneself not having a great deal to do to make the bridge to €1.5 billion, which the Government is saying. Basically, we are stating it should be €2.4 billion in tax increases as against €1.2 billion in cuts, in other words, the two-to-one ratio reversed out, on an ongoing basis.

We have discussed the part-time job opportunities programme with a range of Ministers. Some of them are positive about it. Some of them have not given us a response on it. We have discussed it with Ministers in both parties. We have discussed it recently with the Ministers, Deputies Noonan, Howlin, Hogan and Burton, and a few others as well.

To us, it is almost a "no-brainer". This has the capacity for creating real part-time jobs, not a low-income workforce, because they would be paid the going hourly rate for whatever job they do. If, for example, it is a €20 an hour job and the person is on the basic payment of €188 a week plus the €20 that is the norm for the Government schemes, he or she would work less than 10.5 hours, would get the going hourly rate for the job and then would be free for the rest of the week. The person would not lose his or her social welfare entitlements and could take up another part-time job and would pay tax like everybody else if he or she earned enough money in that context.

To us, this has considerable potential to make a dent dramatically on the long-term unemployment issue. One must look at the numbers of long-term unemployed or the picture about which we speak. Up to 2008, just before the implosion or whatever one wants to call it, long-term unemployment accounted for 1.2% or 1.3% of the labour force and it now accounts for between 7.5% and 8% of the labour force. Many of those have been in long-term unemployment for the best part of those three years. In the case of those who were perhaps 20 or 30 years employed before this recession and never a day unemployed, and who never took a day of welfare in their lives, suddenly two things happened: they became unemployed which is a huge hit; and they also realised how low are welfare rates, which is an issue of which most were not aware. What happens then?

We are heading into a situation where there is nothing on the table which would suggest that there will be substantial economic growth of a scale to make a serious dent on the long-term unemployed any time soon. This could be the lost generation although there are different age groups affected. We simply suggest a straightforward way of dealing with the issue. Everybody to whom we speak outside of Government circles thinks it is a pretty good idea. For example, it has the support of Congress and SIPTU. It has received considerable support across the system. We do not want to see the creation of a low paid labour force.

We would be appalled at the suggestion that we are biased against young people. We should deal with the components of the matter. Research demonstrates that individuals who receive third level degrees will be better off for the rest of their lives. Their income levels will be higher. Our proposal aims at achieving a number of objectives. It would open up third level education to people who currently cannot access it and we believe it would increase numbers rather than limit them. Our experience does not suggest that people on lower incomes would not take up the opportunities presented. Those on lower incomes would be guaranteed all the money they require in fees and support throughout the time they are in education. They would then start to repay this money once they reached a certain income threshold. This threshold could be set at whatever level one chooses.

Deputy Thomas P. Broughan

What if they are in Australia or the United States?

Dr. Sean Healy

There are tax agreements between most countries. The OECD is undertaking a major project on rolling out tax agreements between countries. Anybody familiar with that organisation would acknowledge that it is only a matter of time before the project is completed. I do not believe there is any danger of that happening.

The question arises whether that is the way people behave. Our response to those who argued that people would not work if they had a basic income was to ask them if they would give up their jobs to live on the small amount provided by the basic income. They had no intention of doing so. Why is it always other people who take advantage of these measures? People who are not well off are much more likely to repay their debts. Who is paying their debts at present and who is not? I remind members of what is happening here and in Europe. We could make a good stab at saying that poor people have a much better track record of paying their debts. They are a much better investment than some people in whom Ireland has been investing. Sin scéil eile.

We are also trying to increase investment in primary education. Under our proposals one quarter of the savings would be reallocated to primary education, which is obviously aimed at children. We did this because that is where everybody is together. It would be terrific if the early childhood care programme could be further developed. The additional money would in part come from the savings made on third level fees.

The other piece of the puzzle is adult literacy. It is often overlooked in discussions about the labour market in Ireland that the targets set out in the action plan for social inclusion, which this Government inherited, include reducing the proportion of the labour force with difficulties at level one literacy to between 10% and 15% by 2016. If we achieve the best outcome of 10%, by 2016 approximately 300,000 members of the labour force would be unable to read directions on a bottle or health notices at a work site. For the most part, they could be excluded from work sites.

As we believe primary education and adult literacy need more money, we were trying to find a way of providing resources for them while making savings elsewhere.

Ms Michelle Murphy

Senator Hayden correctly noted that access to opportunity is linked to third level education. I previously worked in Ballymun, in respect of which it will be interesting to see the most recent CSO statistics. The number of people from disadvantaged areas going on to third level education has not increased dramatically, whereas there is almost full participation in third level education among those on middle and high incomes. The people who most need access to opportunity are not getting it. This is our solution.

Senator Aideen Hayden

Ms Murphy is correct that the most disadvantaged have not been able to access third level education. However, the participation rate among lower working class participants has risen dramatically since free third level fees were introduced. It is important to note that a cohort of people on lower middle incomes benefited.

Deputy Thomas P. Broughan

Dublin 17 had the second lowest rate of third level attendance 20 years ago but the rate of attendance is now approaching 20% or 25%, which is an incredible change. Free third level education enabled people to access college. Like many of us around this table, most of these students worked their way through college. People continue to work when they get the opportunity and are not replaced with migrant workers, as happens in some unskilled jobs. I was for several years a member of the board of Northside Partnership, which believed the fundamental element of accessing third level education was the presence of a general third level college in one's region. UCD's catchment is the heartland of the rugby playing southside, whereas DCU on the northside is a national technological university. It is a complex issue but I would be wary of making it more difficult for the poorest people to attend third level education.

Dr. Seán Healy

I am confident that it would work the other way and that the participation rate would increase. Part-time student fees would also be covered, which is not the case at present. These are important issues.

Senator Aideen Hayden

It is very important.

Vice Chairman

I ask the Senator not to interrupt Dr. Healy. I will allow supplementary questions when he finishes.

Dr. Seán Healy

We have no problem with the text tax proposal. The tax would be 0.3 cent per text. One could sent 300 texts for €1, which is not excessive. However, it would be a simple means of making a certain amount of money. It will not earn a huge amount but it would make a positive contribution.

A more important issue is the bad nutrition tax. One of our objectives is to lengthen the lives of poor people, who are more likely to be obese or suffer from diabetes because of bad nutrition.

We need a combination of initiatives or carrot and stick to promote the healthier eating process. This has a huge implication for public expenditure because people are ill for much longer and they are dying younger. One can come at this in a variety of ways, even using econometric models to show that there is a substantial gain if the health of people can be improved in that context. Likewise, we talk about going after the products that are basically the major causes of obesity, which contain huge levels of salt, sugar, alcohol and saturated fats such as ready meals, soft drinks, confectionery, cakes, biscuits, sugary drinks and salty snacks. These are products that many people pick up - not just poorer people - and a move in that direction might encourage the food industry to produce healthier foods and we would all benefit. We are positive enough about that.

There are a number of reasons we did not propose a 15% rather than a 12.5% corporation tax rate. We have always said there is no evidence to support the idea that if corporation tax were increased to 15%, there would be a mass exodus of transnationals. That would not happen but going the levy route would at least have the value of testing that ground. There is an enormous amount of assertion but no evidence to support the point of view that one cannot touch the corporation tax rate. We went this route on this proposal because we got the idea from somebody else and we thought the person we got if from might be able to have a certain resonance with the business community. We got it from Michael Smurfit who would not be known as a left wing radical or a socialist or even one of the real communists referred to earlier. We reckoned if he thought it was a good idea and the business community could live with it, then why not try it? It seemed to us that those were good bona fides for the proposal.

Reference was made to putting 0.05% of a tax on financial transactions. We have been proposing a Tobin tax for a decade. It has become known in Britain as a Robin Hood tax but that does not matter to us. However, it is getting serious time in Brussels and the European Parliament was quite positive about it, as it passed a resolution in favour of it. It is now part of the draft budget proposed in Germany by the Finance Minister, Wolfgang Schåuble and it seems to be on the agenda of the European Commission for the new European budget. It would have a substantial intake for a low tax level but it has an additional value which is that it starts to act as a brake on financial transactions and the tribunes of transactions that we get day after day which drive much of the nonsense we see in the financial system. There are issues there that might be positive as well.

I refer to the hot potato of the site value tax, on which people disagree. We have written much more comprehensively on it than in the document we submitted. We have proposed a site value tax for more than a decade and the charge would be on the site, not on the building. The value of the property is for the most part determined by inputs that have been put there by the Exchequer. For example, in the area in which the Department of Social Protection is located, one can access the Luas, the DART, trains and buses and one is a few hundred yards from the main street of the capital city. All the infrastructure in the area was put in place at public expense and, therefore, the value of that land has increased dramatically and those sites are worth much more than would otherwise be the case. In a way, a site value tax is a repayment of that money; it is not an anti-home owning tax. We support the idea of people owning their homes.

When TASC representatives were present earlier Deputy Boyd Barrett referred to old ladies in Dun Laoghaire on low incomes with nice houses. In the same way, for example, that the Fair Deal dealt with them, one can get agreement with people about how they pay that tax in the long term because one could wind up in a situation where people's income is proved to be so low that they cannot meet the tax. It can be taken out of the value of the property eventually when the person has passed on. There are ways of dealing with all the legitimate concerns raised. I would not want this idea portrayed as being anti-older people or ageist on either end. Reference was made to ageism in the context of young people earlier.

I would like a framework developed to show how the tax could be implemented. It could be put in place in a relatively short time. Dr. Micheál Collins and Adam Larragy presented a paper at the Kenmare economics conference showing how that could be done in less than a year. The framework can be put in place and the entire country mapped out for the tax. If that is what is proposed, one could then seek out the weaknesses in terms of people being hit. If there is an unfairness in the system, it could be addressed but the reality is people have an asset of some substance; in most cases this is people's largest asset. I recommend that members read our socioeconomic review, A New and Fairer Ireland, which we published in April. It has several pages on this issue, starting on page 103. It is also on our website. We can get copies for members but it is too long to go through it all now.

Having 50%, 60% or 70% income tax rates as people earn dramatically higher incomes is not an issue we have gone after to any great extent, the reason being the same as was pointed out by TASC - the income from it would be relatively small. We think the way to increase income tax revenues dramatically is to start eliminating tax breaks. A start has been made on that but there is a long way to go. The Commission on Taxation produced a good study, the longest chapter - I think it is chapter 8 - of which is on tax breaks. It identifies 131 tax breaks and suggests those that should be scrapped, kept in place or amended. The only proposal we do not support is a tax on child benefit. The money involved is massive. There is in the region of 40 tax breaks on which the Department of Finance or the Revenue Commissioners have no idea of the tax foregone. Of the other 80 or 90 in place, the tax foregone is in the spectrum of tens of billions of euros. It is not peanuts. It is billions of euros beyond anything the Government would collect from having 50%, 60% or 70% income tax rates. That is the area we would pursue to increase the tax take. A fairer tax system with a broader tax base is the way to go and the way to achieve that is to eliminate tax breaks.

I wish to return to an issue that has been close to my heart for a long time. Despite appearances to the contrary, it is not the case that we have not addressed basic income in this set of proposals. If refundable tax credits become a reality, we would have the structure for a basic income system in Ireland. When we started talking about this a long time ago we proposed it in a variety of different ways. There were two major arguments against it. One was that we could not develop a structure through which it could be delivered. The second one was that it could not be paid for. We have worked strategically around a variety of issues to put the pieces in place to put the structure in place in a variety of different ways. We are not too far away from success. It can be done. Studies in Ireland during the past six to eight years show the processes that have to be developed. There is nothing dramatic about it. It would not cause serious disruption and it could be done without any danger to the system in that the tax take would not collapse or people would not starve.

The other question is, can it be paid for? We won this argument a long time ago although that is denied by some people who do not want to examine the evidence. Anybody who wants to examine it knows at this stage that we can afford a basic income. Work on a variety of issues in this area has been done and a piece of work presented at a TASC seminar in Cork recently shows that a basic income system is affordable in Ireland. The point about a basic income system for us was not that we are in some way ideologically tied to it; for us it was by far and away the best way to do a number of different things. For every man, woman and child in the country, it could ensure there would be an income sufficient to live life with dignity. It would allow us to deal with the new world of work. The welfare system we have, about which the Senator spoke to the delegates who were here before us, was designed for a world of close to full employment - which is now gone - where the head of a household-----

Senator Aideen Hayden

People worked 40 hours a week, five days a week.

Dr. Seán Healy

-----worked 40 hours a week, five days a week, had a permanent job for life and earned a family wage. All those things are now gone. The world is completely different. The types of employment and numbers employed are different. We need to deal with those welfare to work situations where people are in and out of work. We also need to recognise that there is a great deal of valid work done for which people are not paid. I refer to community work, caring work and other types of work that people do and through which they develop. We need to seriously re-examine the way we structure ourselves to ensure that everybody has access to meaningful work which we understand is critical, and to a sufficient income to live life with dignity.

The third element of what we consider to be three key elements is the right to participate - participation in a variety of different ways, levels and so on. We strongly support the concept of having a basic income. Much to our delight we recently saw the re-emergence of BIEN Ireland, the Basic Income Earth Network Ireland branch. We were the first country to have an affiliated branch to the BIEN network. There are now close to 20 national networks.

Senator Aideen Hayden

I am pleased to hear that Dr. Healy has not abandoned the fight to have a minimum income system. May I make a brief comment on the point made on third level education?

Vice Chairman

I will allow two short supplementary questions.

Senator Aideen Hayden

I do not have a question but a comment. I am not advocating that we should not expand access to education at primary level and to second chance and third chance education. Dr. Healy made a good point on this. He said that people who get better educated earn more. I am sure we would all agree that there is no doubt that society benefits from others being educated either through having teachers, doctors and all the services we all need as a society, but surely people who earn more should pay more. Therefore we should pay for this through the tax system not by imposing third level fees, which will prohibit people from coming into the third level education system. It comes down to a philosophical perspective on the tax system.

With regard to people who have assets such as a family home and such an asset is passed on to children on the death of a parent, it is not in Social Justice Ireland's proposals to substantially increase levels of capital gains tax?. Why not do that? If a valuable asset is transferred to the next generation that is worth a great deal of money, surely the time to recoup that money is at the point of death?

Vice Chairman

Deputy Boyd Barrett indicated he wished to raise a supplementary question?

Deputy Richard Boyd Barrett

Yes. Notwithstanding my other differences with the Labour Party these days, the Senator was right in what she said on the fees issue. The imposition of fees would act as a disincentive to young people considering entering third level education. There are other ways to deal with the funding issue and the fair way is by way of incomes.

Speakers referred to a property tax and to a proposed nutrition tax, about which I have not thought very much. I agree with Dr. Healy's proposal regarding financial transactions. That is a good idea and that proposal should be implemented instantly. I have no doubt about Dr. Seán Healy's good intentions and in his world or the world of TASC there would be no abuse of property taxes, nutrition taxes or carbon taxes and they would be poverty-proofed and any anomalies would be dealt with. However, what Dr. Healy fails to fully take into account is that once these type of taxes come in they become a tap that governments turn on regardless of the purpose for which they were originally intended and waivers and allowances made for the less well off disappear pretty quickly as soon as there is pressure to find extra funding. That has been the experience, most notably, in recent times when there were bin charge waivers for the least well off, but they have been removed, as we predicted they would be.

Nobody has answered a question I put that relates to a bigger issue of bureaucracy that needs to be highlighted more. It would relate to the Government's proposal to have universal health insurance in the health system. The issue is the failure to take into account the cost of creating a bureaucracy to means test people and having hundreds of people issuing letters, reminders and demands for money. That is an issue that has not been taken into account in the health service. It is the same principle to which I refer. Once one gets into the business of billing, a massive bureaucracy is created and money that should go into directly providing services goes into billing, demands, chasing money, and that is a waste of money.

Dr. Seán Healy

Can I briefly deal with those points?

Vice Chairman

Very briefly.

Dr. Seán Healy

To go back to education and fees, we were looking at various ways in which Government could reduce its expenditure. That was from where we came. We had not come with the proposal before we got into the current financial situation. We would be open to taking a look at the evidence and even testing it. The problem with it is that it needs to be tested over a reasonable period of time and it needs to be tested across the spectrum. One is talking about different levels of people being disadvantaged. If there are to be reductions in expenditure, to find ways of doing that within the Government's parameters and not damaging poorer or vulnerable people, such issues must be considered. That is basically what we are saying.

Raising capital gains tax has been an issue we have promoted for a long time. We are not doing so at the moment simply because the gains will be small. I agree with the earlier comment that we got into the mess in regard to housing when the tax was halved by Charlie McCreevy. We opposed it at the time. We argued with successive Governments going back to 2001 that they were damaging the tax system and that the way housing policy was moving would cause serious trouble on two fronts. The first related to the tax base and the second related to the fact that if we kept expanding house construction the day would come when there would be so many houses we would have to stop building. If one builds twice the number of houses one needs every year, one does not need to be Einstein to know that one day the building would stop and a big problem would then arise with the tax system.

The abuse of taxes by Government is an issue. Reference was made to the charges. We fought to have-----

Deputy Richard Boyd Barrett

No.

Dr. Seán Healy

We fought against putting in place the charges and to have protection and waivers. Therefore, a serious issue must be dealt with in that context.

On the bureaucracy by means testing and billing, we would be more favourable to the idea of promoting universalism than means testing. A serious issue comes into play in that context when one has to build a new bureaucracy, which is always the case. In terms of a site value tax, if that is the issue about which the Deputy is concerned, we could discuss that on another occasion, because there are other issues in play that would make it more viable with relatively low cost and with the protections for some of the groupings about whom the Deputy is concerned. We have commented on everything else. I thank the committee members.

Vice Chairman

I thank Dr. Healy and his colleagues for appearing before the committee for this briefing discussion which has been very good. He is always very informative, which I appreciate. If it is agreed, we will publish the submission of Social Justice Ireland on the committee's homepage? Agreed.

Senator Aideen Hayden

I apologise for not being able to attend tomorrow's meeting.

The joint committee adjourned at 5.05 p.m until 11.30 a.m. on Thursday, 3 November 2011.