I thank Deputies Ó Snodaigh and Ó Ríordáin for their contributions. On Deputy Ó Snodaigh's point on refundable tax credits, we believe that the two main tax credits should be refundable. We have shown how this could be funded. The amount involved is relatively small and would have a huge impact on more than 100,000 employees. With one stroke their income could be increased. This would impact on households and approximately 240,000 people, which is incredible capacity. It would also go some way towards tackling the working poor issue. That proposal has much going for it. The tragedy is that the cost of doing this was over-estimated by the Department of Finance, by a factor of 21, from 2001 through 2010 when it estimated the cost to be approximately €2 billion and €3 billion. This issue was discussed at a previous meeting we had with the joint committee prior to the general election. Some members present today attended that meeting as part of the previous Government. The tragedy is that this could have been done at that time when the real cost was less than 5% of the estimated cost, which was unfortunate. That is not the only time these types of mistakes were made by the same source. We must be careful about what numbers are given in response to questions.
On the part time jobs opportunities programme, we must ensure part time jobs are protected and do not become yellow pack jobs. Part-time jobs melt away when an economy picks up. It is in the interests of the organisations involved be they local authorities, community and voluntary organisations, local libraries who want to get maximum capacity from people to ensure this does not happen. If people think they are working yellow pack jobs they will not be too positive about them. Paying the going rate makes a difference. Yellow pack jobs often require people to work 19.5 hours regardless of income. When the going rate for a job, as accepted by unions and employers, is respected within the process it has a huge impact on people. The participants to whom we spoke believed they had real jobs and were making serious contributions.
As regards whether this creates poverty traps, the answer is "No" because there is no loss of welfare benefits and so on. If a full time job becomes available a person can take it and is not tied to the part time job. More than half the people involved during the three years in the mid-1990s when we piloted the scheme left to take up a job. We created 1,000 jobs in different areas, including off the west coast where we created more jobs than Údarás, which we were very proud of. However, that is another story. The reality is that we created 1,000 jobs within 162 organisations, with more than 500 of the people involved moving on to full time jobs or training of other types.
Training is not built into the programme. Government is already providing a substantial amount of training in a variety of ways and is committed to further development in this area. Also, it is targeting those developments at the people who need upskilling in a variety of different ways, including some of the categories mentioned today plus others. However, many unemployed people already have skills. These are people who worked for 20 years or more and are not all construction workers. They have good skills which will be needed in ten or 15 years time. We could create jobs that utilise these skills. People who need further training should enter the training process but we should not confuse the two. There are different programmes to assist people who need improvement. We must keep things simple. It seems to us to work better that way.
I do not see any danger of displacement. The reality is - taking the example of Dublin City Council given by the Deputy - that the council has allowed its maintenance and refurbishment section to wither on the vine. It has lost most of its capacity and does not have people to do this work. This did not just happen during the past few years. People with real skills in the construction area could be taken up by the councils. Maintenance and refurbishment saves money for councils in the long term. These ideas need to be examined and piloted. If there is no long term gain, so be it.
Serious questions on emigration are not being answered. The numbers in this regard are tricky owing to the fact that people who were migrants into Ireland in the first instance are returning home. What bothers me most is that the Government's medium term fiscal strategy document published only a few weeks ago predicts a fall in unemployment levels during the next few years. However, it is almost completely accounted for by people either leaving the labour force or emigrating, not by an increased number of jobs. This worries me enormously because it appears as though a policy option is being taken to the effect that emigration is a route. My colleagues and I were talking about this while waiting outside the room and we seriously question whether that route will be open. Britain could well be heading into a recession as it is in a dodgy position. Europe - the eurozone, in particular - obviously is in trouble. However, it is not just the eurozone, as very slow growth is forecast for the entire European Union. The United States is Ireland's third major place of export - of people as well as products - and it will not be possible to get in there to a great extent, as the position on green cards still prevails. As for Australia, much tighter controls operate there. Consequently, where are people going to emigrate to? While it is true that skilled workers are leaving, they are struggling a lot in the places to which they are moving and I do not discern great space for large numbers to emigrate.
This leads us back to stating we must deal with our own issues here, which is what we should be doing. Perhaps we should return to the idea of having a ten year strategy, in which we consider where we want Ireland to be ten years from now. Consideration should be given to what kind of society it will be, what services and what level of employment it will have. We should examine how services will be provided and in what combinations, how they will be paid for, what the tax level will be, how much people will be obliged to pay and what the contribution will be. These questions should be addressed in order that people will have a clear picture.
I emphasised that Ireland is a low tax country, a point Deputy Ó Ríordáin also highlighted. Chart 2 on page 3 of our submission is one of the most powerful visuals one could use to show that our effective tax rates are low by any standards. I make the point to all members present, be they Government or Opposition or from the Dáil or the Seanad, that it would be much more sensible to look at effective tax rates, that is, the total amount one pays in tax as a percentage of one's total income. I refer to both tax and social insurance in this regard. It all goes together and includes the levies and everything else. The chart shows what the effective rates look like. In our discussions in Ireland we have a fixation with marginal rates, but if one considers effective rates, one gets a much better picture.
We consider the universal social charge to be a move in the wrong direction. It was based on a false premise that people should be making a contribution - as if they were not. Before the introduction of the charge and the tax was applied to people much further down the income chain, it was argued that such persons were making no contribution to the State's coffers. This completely ignored the level, for example, of income from low income households being paid in VAT. When one examines the distribution of VAT payments across society and breaks them down into 10% deciles, one gets a simple chart on which one can see that a very low proportion of income from the top decile goes on VAT. However, as one moves down the income chain, the percentage rises and the proportion becomes dramatic. Our point is that there must be recognition that VAT is a tax people pay. Moreover, it is a tax that everyone, even the poorest person, pays. They do so because they cannot survive otherwise. They pay VAT on most items they buy, albeit not on food. Consequently, such persons pay a lot of their income in VAT and are already making a tax contribution. The universal social charge went in the wrong direction and should not have been put in place. There certainly should be some alleviation in that context.
I will refer to two other issues, one of which is in this context. Members will not be surprised that I will not differentiate between the working poor and people in receipt of welfare benefits. We need a situation where every man, woman and child in Ireland has the resources required to live life with dignity. That trips off the tongue, but at another level, it is absolutely doable, even though we are in a difficult position. However, Ireland is not a poor country. Despite everything that has happened to us in the last four years and more, this is not a poor country. We must make choices, but such choices should not be between the deserving and the non-deserving poor, which is an awful distinction of which I have been hearing more recently, or between the working and the non-working poor, which I personally consider to be nonsense. I acknowledge they are different groups, but both are living without sufficient income to live life with dignity. They are making choices between having money for food or fuel. This is not a choice people should be obliged to make in Ireland in the 21st century, as we have the resources.
I will make one final point because I did not answer Deputy Halligan's question earlier. He asked me what were the responses of Ministers to the proposal regarding part-time jobs. Perhaps I might use the word "enigmatic," but that might be glorifying it. Please allow me to go through the Ministers with whom we have discussed the proposal. We have discussed it with the Ministers for Finance and Public Expenditure and Reform, neither of whom made any comment or gave any reaction, response or observation. Members know them better than do I and can make their own interpretation.
