Dáil Éireann Debate, Thursday - 5 March 2015
15. Deputy Willie O'Dea asked the Tánaiste and Minister for Social Protection her views on her Department's recent report, which states that better-off families are set to be the main beneficiaries of budget 2015; and if she will make a statement on the matter. [9125/15]
View answerIn January this year, the Department published the social impact assessment of the main welfare and tax measures for 2015, including the new water charges package. Social impact assessment is an evidence-based methodology which estimates the likely effects of welfare and tax policies on households across income levels and social groups.
The assessment was prepared by the Department, which is responsible for the welfare component of the Budget. It is based on the tax/welfare micro simulation model SWITCH developed by the Economic and Social Research Institute. Responsibility for the analysis rests solely with the Department.
It should be noted that certain items are not included in the assessment, for instance, additional expenditure on labour market initiatives (such as the back to work family dividend and the expansion of JobsPlus). In addition, the assessment also does not include non-welfare expenditure measures for 2015, such as healthcare, education, social housing, and the new housing assistance payments, which will remove the barrier to full-time work for long-term recipients of rent supplement. Work is ongoing to quantify these impacts as part of the ESRI SWITCH research programme.
The assessment found that for the first time since the economic crisis, budgetary policy will result in an increase in average household incomes of 0.7 per cent (equivalent of €6 per week). This increase will be experienced across all income quintiles, ranging from a 0.3% gain in average household income for the bottom income quintile to a 1% gain for the top income quintile.
The distributive impact of budgetary policy varies according to the component measures. Welfare increases, such as the increase in child benefit, living alone allowance and the re-introduction of the Christmas bonus, favour lower income households, while tax reductions are more beneficial to middle and higher income groups.
It should be noted that the Government has committed to carrying out a social impact assessment of the main taxation and welfare measures before the publishing of budgets by a cross-Department body led by the Departments of Finance, Social Protection and Public Expenditure and Reform. This commitment will ensure that the social impact of proposed Budget measures is taken into greater consideration in future Budgets.
