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Neri post budget reflections sinead pembroke 17 oct 18


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Presentation by Dr Sinead Pembroke (TASC) re Budget 2019

Published in: Economy & Finance
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Neri post budget reflections sinead pembroke 17 oct 18

  1. 1. Reflections on budget 2019 Dr Sinead Pembroke TASC
  2. 2. A short-sighted budget  The recovery of the Irish economy from post-crisis stagnation presents the government with policy options that did not exist in the immediate aftermath of the crisis.  The level of social provision in Ireland is low, as many services which are publicly provided elsewhere are provided privately in Ireland. In this regard, TASC recommended increasing the level of social provision so as to increase the living standards of lower-income groups. But this has not been achieved in this budget.  We also need to confront the issue of Ireland being a low tax economy- tax take among the lowest in the EU.
  3. 3. A low pay, high transfers economy Finland Belgium Sweden Netherlands Austria Denmark Ireland UK Income 10% Labour 0.75 0.82 0.68 0.79 0.74 0.73 0.73 0.76 Capital 0.17 0.09 0.15 0.11 0.11 0.19 0.10 0.10 Transfers 10% Received 0.08 0.09 0.17 0.10 0.15 0.07 0.17 0.14 Paid 0.35 0.30 0.34 0.39 0.35 0.40 0.29 0.32 Income 40% Labour 0.40 0.37 0.38 0.52 0.50 0.50 0.24 0.33 Capital 0.12 0.03 0.03 0.03 0.04 0.01 0.02 0.05 Transfers 40% Received 0.48 0.60 0.59 0.45 0.46 0.49 0.74 0.62 Paid 0.17 0.16 0.21 0.23 0.18 0.28 0.04 0.12 Table: Components of household equivalised disposable income per person by income group Source: author’s calculations based on EU-SILC microdata 2016 –Forthcoming FEPS- TASC report on inequality.
  4. 4. Focussing on income tax reductions rather than spending on services Status and yearly earnings How much better off from budget 2019 Single person earning 25,000 26.62 euros Single person earning 50,000 239 euros Single person earning 75,000 289.23 euros (11 times more than single person on 25,000) The savings made for the bottom 40% is cancelled out when an unexpected expense, such as illness is taken into account.
  5. 5. Housing  Welcome 2.4 billion for housing, and 1.25 billion allocated for delivery of 10,000 new social houses (construction, acquisition and leasing).  However, there are three problems: 1. Still not enough for the sheer scale of the housing crisis. 2. Government’s continued reliance on landlords for social housing (HAP). 3. It was a landlord’s budget.
  6. 6. Local authority builds 2008-2018 – 12,743 in last decade This figure is much lower as this figure includes rapid builds, turnkey developments, Part Vs, regenerations and transitional construction. Last year 1,000 ‘builds’ which is less than 1% of social housing need.
  7. 7. Reliance on landlords to meet social housing needs.  Increased HAP allocation of 121 million euros  Total expected spend on HAP is 423 million.  Up to the end of 2018 an estimated 49,700 private tenancies will have been subsidised, and over 70% of all housing solutions – Social Justice Ireland.  This is putting further pressure on the private rental sector.
  8. 8. A landlord’s budget  100% rate of mortgage interest tax relief on rented properties for landlords.  No extra funding for affordable rental model.  No relief for renters to reduce rents or increase security.
  9. 9. Health • As TASC’s report (Living with uncertainty: the social implications of precarious work, 2018) revealed, precarious workers are unable to afford GP costs, yet are not covered by the public system. • According to Connolly and Wren (2017), of those reporting an unmet healthcare need in Ireland, 59% attributed this to affordability, particularly in relation to GP care. • Burke and Pentony (2011) identified three main groups who access the Irish health system: those with medical cards, those with private health insurance and those who have neither. • As long as we have a means-tested medical card system in place, it means that there will always be sections of the population who just miss the threshold. The only way to avoid this is through universal healthcare coverage.
  10. 10. Health in the budget  Need a greater shift to primarycare services.  Increasing threshold of GP only card by 25 euro not good enough – still continuing with means-testing.  Amount proposed for Slaintecare integration fund falls short. An indication that along with the delays in implementation, it is not being taken seriously.
  11. 11. Childcare  Childcare fees in centres and creches are not controlled, making costs very expensive for parents. The average cost of full-time childcare (per week) has increased by 4.3%, from 167.03 in 2016 to 174.16 euros in 2017. (Pobal:2017 p. 7)  Should move towards a direct capitation grants system similar to the primary education sector.  The government should aim to increase investment up to UNICEF’s international target of 1 per cent of GDP in a phased basis.
  12. 12. Childcare in the budget  Welcome the additional 2 weeks paid parental leave  Welcome increased investment in the Affordable Childcare Scheme. The changes in income thresholds enable more children access to the scheme. In addition €32 million of extra funding is to be made available in 2019 to respond to the increasing demand for the ‘September Measures’, (the interim childcare subsidies that will be replaced by the Affordable Childcare Scheme).  However, there are major issues around capacity, low pay and retention of staff in early years services that will be need to be addressed.
  13. 13. Welfare  The social welfare system has played an important role in supporting workers who are unemployed, have caring responsibilities, who are underemployed or who choose to work part- time.  But warn against further subsidizing precarious work.  Policy needs to veer away from social welfare payments, which act as subsidies for employers to hire people on low-hour contracts and work with no guaranteed hours.
  14. 14. Welfare in budget  Welcome extension of JSB to self-employed.  Welcome 5 euro increased to JS.  But it failed to re-instate social welfare for people under 25 back to the normal rate.  This is needed because, According to the National Youth Council of Ireland (NYCI) who conducted research on youth unemployment in Ireland, almost four out of ten young people struggled to make ends meet. National Youth Council of Ireland, (2014). NYCI Briefing Paper 2: Jobseekers’ allowance.
  15. 15. Employment  We hear about the economy growing, and unemployment going down, but questions remain around the types of jobs being created.  The flipside of weak earning power through the labour market is high levels of transfers received, and also low levels of transfers (taxes) paid. Again, this is what we see in Ireland. The bottom 40% receive almost three quarters of their income in transfers from the state and pay just 4% of their income in transfers.  Welcome the 25c increase of the minimum wage.  But it is still 2.10 euros below the living wage (11.90 per hour).  The living wage is a benchmark for living standards for fulltime workers.  We should be aiming to replace the minimum wage with the living wage rate.
  16. 16. We need budgets that addresses the long- term future needs of the population  We need to increase tax take with just measures of taxation  Investment in universal access to public services like health, childcare and housing does not just mean more income in pockets in the long-term, but it also ensures everyone has access to these services.  Work must pay – advantages in terms of increase in taxation and less reliance on transfers, addresses inequality and economic insecurity, and added benefits for productivity levels and economic growth.  There needs to be a change in political will to do this.