Vol. 500 No. 1
9 Mr. J. Bruton asked the Taoiseach if, further to Parliamentary Question No. 1 of 30 September 1998, he will provide an update on the recent work carried out by the Working Group on Basic Income which operates under the aegis of his Department; and if he will make a statement on the matter. [1226/99]
10 Mr. Quinn asked the Taoiseach if the Government will publish the Green Paper on a basic income; and if he will make a statement on the matter. [1912/99]
11 Mr. Broughan asked the Taoiseach if the Green Paper on a basic income will be produced by June 1999 as promised in An Action Programme for the Millennium; and if he will make a statement on the matter. [2595/99]
12 Mr. Sargent asked the Taoiseach if he will report on the progress being made to publish the Green Paper on a basic income; and if he will make a statement on the matter. [3699/99]
I propose to take Questions Nos. 9 to 12, inclusive, together.
As I indicated in a reply to the House on 30 September 1998, a Partnership 2000 Working Group on Basic Income was set up under the aegis of my Department. The group has commissioned a study which is being carried out in two phases. The overall purpose of the study is to consider and evaluate the economic, social, budgetary and administrative impact of the introduction of a basic income system. Draft reports from the consultants on the first phase of the study, which examines the costs and distribution analysis of a basic income, were received as expected at the end of October.
As the Deputy will appreciate, the methodologies involved in costing and analysing the distributional effects of a basic income are complex and time consuming. The research team comprising the ESRI and Professor Charles Clark of St. John's University, New York have been engaged in reconciling a number of issues which are fundamental to the conclusions. The Working Group on Basic Income has provided information and assistance to the consultancy team in recent weeks in addressing costings, taxation and the other issues involved.
As a result, the first phase is being finalised, incorporating material now available in respect of the 1998 outturn on relevant variables, and will be presented to a meeting of the working group before the end of the month. The second phase of the study, which will consider the dynamic effects of basic income, will then move ahead rapidly. Progress on the study was reported to the social partners at their recent quarterly meeting.
The study and the report of the Partnership 2000 working group will enable the Government to examine the matter. It is intended that a Green Paper will be published, as outlined in An Action Programme for the Millennium. As the two phases of the study constitute an important input into the preparation of the Green Paper, it is not possible at this stage to indicate the precise date of publication.
In regard to the phase of work that has been completed, what tax rate would have to be applied to taxable income to finance a basic income under which no existing beneficiary of social welfare payments in respect of insurance or assistance would lose out?
A draft report was put forward. The working group put a number of cases to the experts and had to rewrite and configurate the report. Different methodologies were used, but it would be unfair to comment on a tax rate until the report is completed.
Does the report deal with the tax rate that would have to be applied on income to pay for this and, if so, does it deal with it on the assumption that there will be a flat single rate or two or three rates of income tax?
As I understand it, the report deals with the tax rate on income. However, I do not know what mechanism will be used to implement it.
The Taoiseach will be familiar with this subject, which has been abroad for a long period and which is part of the Partnership 2000 agreement. Does the study, with which the Taoiseach will be somewhat familiar refer to residency requirements or will eligibility to a basic income be open to all EU citizens who choose to live in Ireland?
Did the Taoiseach state that the first stage of the report or the full report will be completed by October?
The full report will be completed.
Does he envisage that it will form part of the negotiations for a successor to Partnership 2000?
With regard to the Deputy's first question, I do not know what route has been taken. I assume the study will suggest that anybody should be able to claim eligibility.
Does it comply with standard Irish law?
I assume so, but I have not yet seen the report.
With regard to the Deputy's second question, unfortunately the group was not able to overlap the two phases of the work because so many changes took place during the discussions of the working group on the first report. The same individuals, representatives of the ESRI and Professor Clark, will be involved in the second phase, which can be completed by October. Because the study was carried out under Partnership 2000, we will be obliged to wait to see what will be the view of the social partners on it. As already stated, they were provided with updated information at the recent quarterly meeting but we must wait for their reaction to the report.
As Deputy Quinn stated, this is a complex area. I am aware that in other countries people tended not to proceed with these kinds of studies. We must wait to see how it works. The study emerged from the CORI proposal, with which I was familiar, and it has moved on from that. I have no intention of prejudging the situation, but, one way or the other it will form a useful part of the examination. That will be more interesting than when it originally began because we have introduced changes to the tax credits system. The scope for directing and shaping developments is now different from what it was a number of years ago.
The Green Party appreciates the carrying out of this study because it is important in terms of the changes needed. Does the Taoiseach believe the timeframe by which the study is to be completed will be adhered to, given that he has been replying to similar questions tabled by me and other Members for more than a year? Will the study incorporate a revised means of collecting tax as part of its overall remit perhaps, for example, by shifting the burden of tax from income on to consumption as CORI suggested in its study? Will the feasibility of the guaranteed basic income be evaluated against the current crises affecting child care needs, those who work in the home, carers, etc.? Will that form part of the group's work or will the study be merely an academic exercise? Will it take into account the needs of society and suggest ways that change can be implemented?
In respect of the changes to the tax credit system, these studies, such as the recent child care report, are useful and can be used in conjunction with each other to improve the system and make it more equitable. However, the fact that a report is made does not mean its recommendations will result in expected benefits.
The Deputy asked about the delay on a number of occasions. I advised him last September that matters would proceed more speedily. Attempts are being made to produce a much more analytical report and enormous work has been put into achieving this. It would be better if a comprehensive and thorough analysis were produced, even if it takes time. A draft report was ready by last autumn, but the submission to the working group and the attempt to relate it to the CORI proposal, the original basis of the project, led to an enormous number of changes as attempts were made to reconcile the items to be included in the tax base and to address other issues, such as the services to be defined. In view of this, I am unable to indicate a definite date, but I know the consultants are anxious to conclude matters this year.
As the social partners will be given the report next week, will it be published to enable the public to have an input to the discussion?
I understand they will receive a presentation. As soon as the first phase is ready I can make it available. I am sure it will be in the public domain. I have not received a copy of the first phase yet.
Does the Taoiseach believe the move towards tax credits is positive or negative for the basic income concept?
Given what they are meant to do, tax credits are very important. They will not affect only the basic income. Their purpose is to simplify the system and make it fairer.
I am not concerned with their impact on the system. Does the Taoiseach consider they make the concept of basic income redundant or easier to achieve?
I do not believe they make it redundant. Had tax credits been introduced at the time of its report, it is probable that CORI would have made different proposals. When it published its original proposals it sought a basic income for each individual and a basic allowance for each child. It made these proposals at a time when it was recognised that the tax system favoured those at the top and a means was sought to address that. CORI is now endeavouring to ascertain if it is possible to have a basic income in today's society. I am not sure about the idea and will await the publication of the reports.
