Oireachtas Joint and Select Committees

Wednesday, 26 January 2022

Committee on Budgetary Oversight

Indexation of Taxation and Social Protection System: Discussion

Dr. Tom McDonnell:

I will start by saying that I agree completely with everything Deputy Canney and Ms Murphy just said. Of course, like all welfare rates, a constant disability payment should be indexed. In terms of Deputy Patricia Ryan's question, pension payments, carer's allowance and so forth should all be treated the same as all other welfare rates. They should all be indexed but adjusted to a particular benchmark which is based upon the cost of living for different cohorts. That benchmark would need to be established. There would need to be independent analysis to decide what the appropriate benchmark is but then the indexation, plus an adjustment to the benchmark, would be how to treat it year on year. That would be true for all groups, not just pensioners, people with disabilities or other groups. The UK has been pursuing a triple-lock model based on the highest from wages, prices or 2.5% but it is probably going to move away from that model. In my view, the wage indexation model would be sufficient over the medium term to ensure ongoing quality of life improvements and real disposable income improvements for the groups described by the Deputy.

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