Thomas P. Broughan
Ceist:1 Mr. Broughan asked the Taoiseach when the Partnership 2000 working group on basic income will report; and if he will make a statement on the matter. [24938/00]
Ceisteanna – Questions. - Report on Basic Income.
Ruairí Quinn
Ceist:2 Mr. Quinn asked the Taoiseach when he will receive the final report of the working group on basic income; when the working group last met; and if he will make a statement on the matter. [25508/00]
John Bruton
Ceist:3 Mr. J. Bruton asked the Taoiseach if he has received the final report of the working group on basic income; and if he will make a statement on the matter. [26381/00]
Joe Higgins
Ceist:4 Mr. Higgins (Dublin West) asked the Taoiseach when the Partnership 2000 working group on basic pay will deliver its final report; and if he will make a statement on the work of the group and its meetings to date. [26551/00]
Trevor Sargent
Ceist:5 Mr. Sargent asked the Taoiseach the date on which he expects to receive the Partnership 2000 working group report on basic income; and if he will make a statement on the matter. [26766/00]
Caoimhghín Ó Caoláin
Ceist:6 Caoimhghín Ó Caoláin asked the Taoiseach when the Partnership 2000 report on basic income will be published. [27818/00]
I propose to take Questions Nos. 1 to 6, inclusive, together.
The consultants' reports have been completed and received by the working group. The group has finalised its consideration of the reports. It had been intended to present the reports to the next plenary meeting of the PPF process, but that meeting was deferred in light of other consultations as part of the pre-budget process.
I envisage that the reports will be discussed at the postponed plenary meeting of the PPF and the Government will give consideration to the views of the social partners in its examination of the reports' analysis.
Why is there a delay with this report? Last June the Taoiseach said the report was imminent, as the group was established under the previous arrangement of Partnership 2000 in December 2000. Since the Taoiseach last answered questions here, has he had an opportunity to see the recommendations in the report and does he find them acceptable?
There have been some delays. There has been an enormous number of meetings and those involved in the working group were also involved in the process of negotiations on the PPF. They did not have meetings during that process, nor did they have meetings while tied up in other events. The report is almost completed – there are some slight amendments to be completed and I checked this yesterday. In the normal course of events it would go to the plenary because it was a report of Partnership 2000, and in all these cases over the years as soon as it goes to the plenary we put it in the Oireachtas Library on the same day.
I have not seen the full document but I have seen some of the findings. Phase 1 entailed a static analysis of the cost and distribution implications of the introduction of a system of basic income. The two main issues which emerged from that phase relate to the tax rate required to finance the basic income proposal and the rate of payment under the examination. The other issue was the distribution implications for respective income groups within the economy, those who would gain or lose out financially under the system being imposed.
Some of the key issues included the tax rate – both consultants agreed that the cost of the hypothetical basic income payment levels would be just over £12 billion in extra tax revenue expenditure savings which would need to be funded either by higher tax or savings in other areas of expenditure. The ESRI calculated that this would require a tax rate of 51.6%. Professor Clarke estimated that the rate would be 47.26%. The steering group asked the Department of Finance to prepare an updated estimate of the required tax rate based on the information available and the estimate was a rate of 47% required for 2001. Further economic growth since this estimate was made would reduce the rate even further.
On the issue of the distributional effects, the distributional analysis compares the outcome in 2001 under the basic income system with the outcomes of three conventional options with access to the same resources. The different methodologies used by consultants to examine the distributional effects yielded somewhat different results. The ESRI found that, on average, there were gains for the bottom six income groups and losses for the top four. The families headed by single, widowed, separated or divorced persons rather than by a couple accounted for most of the potential losers. Professor Clarke found that average households in every sector would have their disposable incomes rise throughout the period from implementation of the basic income system. The increases in average household disposable income under the basic income system would be very progressive, with the largest percentage increases going to those in low income groups and small increases going to the top income group households.
In the context of the focus on basic income and tackling poverty, two points are drawn from the report. First, a total of 70% of households in the bottom four sectors would gain from basic income while 16% would lose compared with conventional options. Second, half of the individuals who would be before the 40% poverty line under conventional options would be brought over this poverty line by basic income.
Why was this report not published before the budget?
As I said in my reply, the report is almost finished but even if it were finished in the last period it still would have required further examination by the Government. The Government has not yet got the report. It has not even gone into the social partnership process, which was the process that instigated it in the first place. I hope the report will be published, but as Deputy Bruton knows, it is a commitment that is to form part of a Green Paper on the other side of its publication.
Is it not the case that work on the completion of this report was deferred until after the budget to allow other work to be done? Does that not imply that the Government deliberately decided that this issue would not be considered in the context of the budget and contrived a situation whereby the report would not be published before the budget so that the distributional issues that are raised in this important report would not even be considered by the social partners and others in the lead in to the budget?
No, that is not the case. It is their call that it will go to the programme and then it will have to go to the Government. The Government is committed to a Green Paper one way or the other. As I said before, this report is not something that will go quickly into the system. It is far too complex for that. As the Deputy knows, from the outset the report was not to come up with recommendations; that was for further examination by Government. The findings in the brief report that I got, and the enormous changes it would make in the system, will not be done overnight.
Do the distribution figures read out by the Taoiseach, which indicate that house holds headed by lone parents would lose, not suggest that under our existing system there may well be a financial disincentive to couples to stay together? Is that not a logical inversion of the report that has been presented and, if so, has the Taoiseach not considered that we need to examine our social welfare code to take account of the fact that there are many disincentives in it currently for couples, particularly parents, to stay together with their children and many financial incentives for them not to do so?
There are some disincentives in the current system but, thankfully, many of those that have existed over the years have been removed, although not all of them. I hope more of those disincentives will be removed tomorrow. In regard to this particular report, it depends on some of the methodologies. That will be the advantage of the Green Paper, which I hope can be produced in the spring, because the Green Paper will take the phase one and phase two findings, the distributional effects, the tax rates and the arguments that have been made on migration, the informal economy and the labour market and put them into the report. I hope this can be done quickly.
The work has been painstaking. The ESRI looked at all models, including what had been done in New Zealand. The report is extremely comprehensive and raises many arguments and debates on the distribution effects. Many of the basic income cases are hypothetical, but it is an important report and I will have it placed in the Oireachtas Library early in the new year.
(Dublin West): Will the Taoiseach agree, on the day when the Society of St. Vincent de Paul Society said that 200,000 people are living in consistent poverty without an adequate income, that there is a huge urgency for the introduction of a minimum basis income for all? Will he further agree that this debate needs to be expedited and the idea of a basic income needs to be implemented without debating it to death, as has happened with other issues on which the Government had reports, for example, private rented accommodation?
Will he also agree that the minimum wage of £4.40 per hour, which is taxed by the Exchequer, is not a good model on which to work and it is disgraceful that workers on the minimum wage, a poverty wage, should have tax taken from them, leaving many of them living in poverty? Will he agree that it is a question of bringing up the living standards and quality of life of all people, rather than pretending to give with one hand while taking away with the other?
Thankfully, we have a minimum wage, which was the highest in Europe on its introduction last April. Some countries may have gone beyond that level. It would be good to ensure that as much as possible of the minimum wage is not taxable. This is not an easy goal to reach as it takes an enormous effort, but it is another goal to try to reach.
As will be seen from the recent independent report published a few weeks ago, lower paid workers here pay less tax than workers in other countries. This is to be welcomed and we should try to do more in this area, while ensuring that people who can work and are healthy are given an opportunity to work. There are other categories of people who would like to work but it is not possible for them to do so. We must, as we did in the 1990s, continue to improve their relative wealth position. As long as there are people in this marginalised position, we must continue to work on it. I would argue strongly that we have done an enormous amount to improve the position of these people and used our wealth in this area. However, as long as there are difficulties we must continue to deal with them.
The findings are relevant to phase 2 of the report, which examined the potential dynamic impact of a basic income system and its long-term sustainability, having regard to the free movement of people, capital and our open borders. That analysis was carried out by the ESRI alone; no other group was involved. A basic income has not yet been implemented in any country, so one cannot benchmark it.
As I said in reply to Deputy Bruton, Professor Clarke and others used all the research available in St. John's University in New York which had been gathered on a world-wide basis. They also looked at what had been done in New Zealand. In trying to make sense of the report, we still have to design something which has not been used anywhere else and see if it can be implemented and is sustainable.
Does the Taoiseach agree Alaska has had a limited form of guaranteed basic income and, therefore, there are models and indicators, although none are of the type being examined in the report? I welcome the Taoiseach's statement that guaranteed basic income would benefit the less well-off and not those on the highest incomes. Given the widening gap between rich and poor, that is not a bad thing.
The Green Paper was due in summer 1999. The Taoiseach said other work got in the way but summer 1999 was a long time ago. Is it true the report was concluded six months ago? If so, why was it not published sooner? Six months is a long time in political terms. Does the report include European Commission research commissioned on guaranteed basic income which would be more relevant in European terms?
Has the Taoiseach had any discussions with his colleague, the Minister for Social, Community and Family Affairs, given that the Minister for Social Welfare in Finland is a well known exponent of guaranteed basic income? Many comparisons have been made between Ireland and Finland.
The Deputy does not take issue with what I said about the Alaskan example. There are some examples but what we are trying to in the guaranteed basic income study has not been done anywhere. The Deputy is correct that some analysis has been conducted elsewhere.
I reported to the House on 21 June that the report was finished. A small amount of work remains to be done and the report was set aside by the group.
Why?
Because it was doing other work and it did not finish the report.
Surely that shows it has a low priority.
A never, never issue.
It is a priority but the group views it as a long-term issue, which will not happen in the short-term. We have lost some time. Last year I also reported that the group had set the report aside for the period of the negotiations.
Why?
Because the same people were involved in the negotiations for the new national agreement and they gave priority to that work.
Does the Taoiseach not think the work should be given to someone else if the group attaches so little importance to it?
Maybe that should have been done at the outset but they have been working on this for some years and that is the position. They believe they could deal with something in the short-term which they could directly influence now rather than some years down the road.
I have asked the working group to clear the report and it agreed to do so within the partnership framework at the November meeting which was not held because there were other issues. It is unlikely that a meeting will be held in December but one has been arranged for January and the report will be cleared then. We will then have to produce the Green Paper as quickly as we can.
The Minister for Social Welfare in Finland is an exponent of guaranteed basic income. Has the Taoiseach discussed the issue with the Minister for Social, Community and Family Affairs?
The Minister has been involved in the preliminary discussions on the document I have been using. We discussed the presentation by the European Commission, which is not in these reports, but it should be taken into account in the preparation of the Green Paper because it is a useful presentation in conjunction with these documents in preparing the overall case.
Given that the Taoiseach has put on record that he accepts that the proposal on analysis is redistributive, we require significant redistribution of wealth between those who increasingly have more and those who are increasingly left behind. Having had an opportunity to examine at least the preliminary conclusions and a précis of the report, does the Taoiseach accept guaranteed basic income is a concept that he will support in Government and begin to put in train or does he view the continuation of the report and the mechanisms of analysis as merely an academic exercise? If the former is the case, will the Taoiseach put a timeframe on serious proposals being available for study by the House or its committees?
I have worked on this for the past few years and, any time any of the groups wished to discuss or debate it with me, I agreed to it. A great deal of the work until this stage was an academic exercise, as the Deputy will appreciate. First, it was a case of finding somewhere that had tried this. I cannot say at this stage that I am absolutely convinced it is workable. Further work needs to be done on it. However, the group certainly dealt with the arguments about this issue put forward in 1995 and 1996 and it analysed other arguments. Certainly the case is put more clearly than in some of the discussion papers and some of the conferences that took place in those years.
A great deal will centre on the social solidarity fund. This was indicated at an early stage in some of the discussions on how the benchmarks can be made to work and who will stand to lose or gain. Professor Clarke said from the outset, and he also said it publicly, so it is not new, that a social solidarity fund would provide a mechanism to compensate significant losers under what are hypothetical figures in a hypothetical scheme he designed. The group has taken up that and has reiterated that these mechanisms are merely indicative to provide a broad view on how such a fund will operate. Therefore, the group did not comment on the viability of the proposals made under the fund. Clearly, someone must do that.
However, the group stated that a social solidarity fund reinforces a form of means testing into the tax-welfare system and applies retention of significant elements of the administrative costs associated with such a system. In the detail I have received, which admittedly is not the full report, it is not spelled out precisely how that can be done. I assume it is expected that the Government will comment on that or at least include it in the Green Paper for discussion by the Houses and committees of the Oireachtas.
When?
We hope to do that quickly. As I said to Deputy Sargent, we should not conduct another analysis but accept the papers we have and try to progress it over the next few months.
Can we do it alone or will we have to do it in an EU-wide context?
I do not believe we need to. No one has done this. If we are examining the proposal, we do so on our own. Anyone who has examined it has moved off it but that does not mean we should too.
Is this a sleeping dog the Taoiseach wants to anaesthetise or is it a real proposal?
I am not too sure what that means.
I will explain it if the Taoiseach wishes.
If Deputy Bruton believes—
Let us get real.
—that we should—
This is supposed to be a place for speaking, not a place for putting people to sleep with talk about which the Taoiseach has not the slightest intention of doing anything.
Deputy Bruton has not made up his mind what we will do and there is not much point in my saying anything to him. However, to other Members who might be interested—
The Taoiseach has not made up his mind, except that he will do nothing but talk.
—it has been argued that basic incomes can do a great deal of good and that they do not and would not prove to be a good system. I can bring forward the argument in its full sense. It is not something in which the entire tax and welfare code, labour market, migration and distribution can be changed, rushed through and bounced into a new system. That is not what we are dealing with because ours is a system which has been designed over decades. Neither is it what the ESRI, Professor Clarke, St. John's University or any other group believes we should do. They say we should examine this carefully. Even in their conclusions, which I gave to Deputy Howlin, they state that significant means of our systems need to be maintained. They are guarding against these systems being turned on their head.
I know St. John was a martyr, but is it not the case, being honest about it, that any political party campaigning seriously for a tax rate of between 51.6% and 47.26% on all income other than the basic income would not receive many votes?
There would be a great deal of explaining to do.
Would the Taoiseach agree that is a tentatively provable proposition?
There is always a danger of jumping on one figure and deciding that—
It is the Taoiseach's figure.
It is, but that does not mean we should abandon all the work.
No.
At the outset, everybody knew a cost would be involved in having a basic income involving hundreds of thousands of people. This was a professional study – not a report for swift implementation – including a major academic element, to examine how such a system would work, and its effects. That is what we are trying to bring to a conclusion. What happens then is another day's work.
Would the Taoiseach agree that one should treat people seriously? Whenever real work comes along, it seems the Taoiseach postpones this study for six months, then resurrects it before halting it again. The Taoiseach is pretending to take this matter seriously when manifestly he does not take it seriously. This is not the way to treat people.
Deputy Bruton obviously thinks I am part of the working group, but I am not. Nor am I directing the working group which is not answerable to me. The working group was part of a process which Deputy Bruton, as Taoiseach, agreed to under Partnership 2000. He set up the form of the working group so he should ask himself that question.
Does the Taoiseach agree that it is difficult to sell a tax rate of between 51.6% and 47.26%? We should publish this report as quickly as possible so that people can see the real implications of what we are talking about, rather than keeping the matter going in some sort of half life. I did not intend it to continue three years after it was established. When it was set up originally, it was intended to be dealt with it quickly. Since the Taoiseach took over, however, it has been postponed instead of being dealt with. Would it not be much fairer to the people who, for good reasons, are advocating the basic income, to publish the report quickly so the public can see the real choices involved? This would be better than keeping the matter going forever so that no conclusion is ever reached, which seems to be the current tactic of those involved.
I think I can speak for the people involved when I say that is not their intention. They have put an enormous amount of work into an extremely complex system. Its purpose was to consider and evaluate the social, budgetary and administrative impact of the introduction of a basic income system, effectively turning the present system on its head. They set about doing it in two ways: first, by examining the economic and budgetary aspects of introducing the system, including the costs, distribution impact and international comparisons and, second, by studying the immediate and long-term dynamic effects of a basic income system. They looked at how it might affect wage rates, competitiveness and tax rates. Deputy Bruton is right about the one issue he picked up on, but it is part of a wider study. Unless something else happens which is not within my control – as the last meetings were not under my control – I can safely say that this report should be issued in January.
Does the Taoiseach accept that the progress that has been made in integrating the tax and social welfare systems, moves us a number of steps towards making it easier to introduce a guaranteed basic income, rather than having to upturn the entire State apparatus which might otherwise have been the case? I welcome the progress that has been made over the years from budget to budget. However, rather than dwelling on a tax rate which obviously sounds quite uninviting, will the Taoiseach examine, and perhaps promote, the issues that need to be dealt with and can be helped by a guaranteed basic income? These include child care, tackling child poverty, working from home, job sharing, farm income support, gender equality and so many other issues that come to our attention every day. How would they be helped by a guaranteed basic income which would, perhaps, represent better value for money than a tax rate? Although he is not a member of the working group, will the Taoiseach, in co-operation with the Whips, set a date on which the issue may be debated in the House to ensure the report is not left hanging in the wind? As so often happens when reports are concluded and presented, things start to happen.
The working group has promised me that I will have the report before the House returns. A date can be fixed with the Whip, which I hope will be adhered to. To be fair to those involved, they have been working on other issues. On the question of winners and losers raised by Deputies Sargent and Bruton, one has to mention a tax rate because it is one of the key issues. There are arguments about every aspect, including the competitiveness of the economy. Assessing the impact of a basic income scheme on growth and competitiveness is even more difficult. The proposal involves factors tending to increase both supply and demand. On one side of the argument, there is the effect on low wages, reducing the supply of low skilled lab our and increasing the demand for higher paid, higher skilled labour. Even if total employment was to remain static within the economy—
What about the effect on immigration?
—productivity and output might be expected to fall. That could have an effect on immigration. That has been one of Professor Clarke's contentions for some time. On the other side, a basic income could improve growth, as the ESRI has argued, by promoting a more flexible labour market and a more stable macro-economic environment and by generating a fairer distribution of income. The report marks the end of what has been three years work.
When will we receive the report?
I will do my utmost to ensure it is published in January.
(Dublin West): It is very important that it is published very quickly, lest it is killed off before we catch sight of it. There have been warnings of 50% plus taxation rates, etc. On what basis is such a taxation rate assumed? Would it relate, yet again, to PAYE workers, as happened in the past? Is there any presumption, for example, as to how much of the £7 billion or £8 billion exported every year by multinational companies or how much of the billions of pounds paid to the banks in interest on the national debt should be taxed and as to whether there should be extra taxes on land speculation and wealth to provide a basic income for our people? Will the report deal with these elements to determine how inequalities should be addressed or is it the case, yet again, that the reliable PAYE workers would be milked, as happened on many previous occasions?
Lest I am blamed, I do not want to kill off the report. Perhaps a reply to the Deputy's questions can wait until the report is published.