Catherine Murphy (Kildare North, Independent)

The programme for Government aspired to a more equal society which is the value I support. However, equality is not something to which we can aspire and postpone until sometime in the future when the coffers of the State are more plentiful. In dealing with the crisis, it is essential that the mistakes of the past are not repeated and we rebuild towards a better future.

The reason I support reducing income inequality is because there is ample evidence to show that not only is it good for society, it is also good for the economy. Equality is an economic necessity. Income inequality cannot be countered if one starts cutting from the bottom. We do not know the Government policy on the Duffy Walsh report but we know there appear to be differences between Fine Gael and the Labour Party. One only has to listen to the debate over the past two days. It is obvious for all to see.

From the submission made by TASC, an equality think tank concerned by the increasing levels of inequality leading to the economic crisis in 2008, there is evidence that inequality may have contributed to the current crisis. For example, Kumhof and Rancière of the IMF argue that most of the major economic crises in the past century were preceded by a sharp increase in income and wealth inequality and a similarly sharp increase in debt and income ratios among lower and middle income households. They found that the financial crisis was the ultimate result of increasing inequality, driving a sharp increase in debt to income ratios. They concluded that redistribution policies that prevent excessive household indebtedness can reduce the possibility of a crisis and therefore promote macroeconomic stability.

The excellent book by Richard Wilkinson and Kate Pickett, The Spirit Level, which was based on years of research, points out that almost everything from life expectancy to mental illness and violence to illiteracy is affected not by how wealthy a society is but how equal it is. A society with a bigger gap between rich and poor is bad for everyone, including the wealthy.

The TASC submission states that higher wages, especially for those on low incomes, stimulate aggregate demand and through this mechanism can protect existing jobs. Low income earners, out of necessity, spend all their income. Reducing wage rates, particularly for those already on low incomes, will further dampen aggregate demand through reduced consumption. The reduced spending in the economy will create a further pressure for existing businesses and will ultimately lead to job losses and lower economic growth. The cost-cutting approach will also cost the Exchequer money because of direct and indirect losses of tax receipts and through increased Government expenditure on social protection, such as family income supplement, mortgage interest supplement and so on.

Many of the sectors that fall under the remit of JLCs are low paid. They do not constitute a small group. In the region of 200,000 workers, many of whom are in the JLC system, are in the category of the low paid. When one extends that to their dependants, one finds it is a very sizeable proportion of our population. Many are understandably concerned by all the uncertainty. I am in favour of taking good ideas from elsewhere if they can be adapted to our situation.

The low pay commission established in Britain could be replicated here in a modified version. TASC seeks such an approach and states:

The role of a commission might be to monitor, evaluate and review the low paying sectors on an annual basis and recommend to government on areas such as competitiveness and its impact on the various wage floors, the equality impact, the labour market impact and the poverty impact.

I very much hope the Minister will take the submission seriously. Not only does it make good economic sense but, just as importantly, it makes good social sense. It contains a vision of the kind of society we are building.

The programme for Government states that by the end of its term in office, Ireland will be recognised as a modern, fair, socially inclusive and equal society supported by a productive and prosperous economy. The restoration of the minimum wage was a positive move. While there is much to be welcomed in the Duffy-Walsh report, if it ends up being used beyond its stated intention and if cuts in the incomes of some of the lowest paid workers are imposed, the equality society that the programme for Government aspires to can be thrown in the bin along with the hopes and quality of life of many vulnerable workers we are talking about in this debate.

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