Dr. Se?n Healy:

Social Justice Ireland is very grateful for the invitation to address the select committee and to present our views. The Government’s budget for 2023 will widen the gap between rich and poor by €199 next year. This calculation does not include any salary increases to be received by those with a job. Despite the welcome temporary measures to address the cost-of-living and energy crisis, in the long run, this budget will be seen as regressive and unfair. While one-off measures are welcome, when they are gone, they are gone. What we are left with is a skewed distribution of resources that favours those on higher incomes.

The rich-poor barometer introduced in our analysis of budget 2023 measures the gap between those on €100,000 and those depending on core social welfare payments. This gap is currently €979 per week. It seems to us that policy should be focused on reducing this gap. Instead, the Government chose to widen it and prioritised the better-off over the long term. Ministers also made a single-income couple on €50,000 a year a further €192 better off than a couple on social welfare. The €12 increase in core social welfare rates lags behind anticipated inflation in the cost of necessities in the coming year. A €20 boost was the minimum required to set Government on the path to benchmark rates to 27.5% of average weekly earnings over a two-year period, the target set and delivered by Government way back in 2007.

Social Justice Ireland does not accept aspects of the budget that widen income gaps, fail to respect Ireland’s most vulnerable people and leave Ireland’s poorest worse off when budget 2023’s one-off measures are discontinued. We call on Government to revisit its decisions in these areas and to make the necessary adjustments in the forthcoming social welfare Bill to ensure the most vulnerable are prioritised. In particular, we urge Government to increase core social welfare rates by an additional €8 a week to bring them up to €20, which was the minimum required. Anything less is simply abandoning the poor.

We believe one-off payments are not the answer. Government’s focus on one-off payments cannot conceal the fact that those on the lowest incomes, that is, those on social welfare and low pay, will fall further down the income ladder once the one-off elements of the budget have been worked through. By their nature, one-off supports cannot tackle the embedded low-income culture that has prevented our Republic from eliminating poverty.

An additional double week payment to those on social welfare is welcome but is simply a one-off event. It fails to benchmark social welfare rates to ensure they provide a minimally adequate standard of living. It also fails to compensate for the rise in the cost of living, particularly in recent months. In reality, social welfare recipients will be worse off next year than they are now. We very much recognise that poverty is never about income alone, but it is always about income. The Government is continuing to betray the social contract that, at critical times in the past, generated solidarity and social cohesion in this Republic.

In addition, the Government’s focus on one-off payments assumes that all will be well for low-paid workers and welfare-dependent households next year. This is a huge gamble that is likely to backfire on the least well off among us. It is gambling with the standard of living of Ireland’s poorest and most vulnerable people and is totally unacceptable as a strategy. We should consider how this will ramp up anxiety levels in low-income households considering sending a young person to college next year, embarking on a course of private medical care or moving to a larger apartment. For them, after this budget, there remains a fraught present and a bleak future unless Government begins to systematically combat income poverty.

Government policy is expecting the impossible of poor people. This development and what Government has done in this budget is particularly worrying in light of the impact of the pandemic and then the cost-of-living crisis on the weakest among us. A total of 595,000 people in Ireland are living in poverty, of which around 164,000 are children. In 2023 the core rate for jobseeker's benefit for a single adult will be €220 per week. That is €220 a week to provide for accommodation costs, heat, light, food, clothing, personal care, entertainment, education, transport, a television licence, communications, refuse collection, household goods, health, insurance and bank charges. In an ideal world, it is also expected to allow recipients to save for contingencies. That is an impossible challenge for people on such a low income and yet Government decided not to increase the core payments by €20, not to move to benchmark this welfare payment at the required level and not even to protect its true value compared with last year. Instead, it decided to increase the income going to a person with an income of €100,000 by more than €900 a year. This is the wrong priority.

Every household is experiencing rising prices caused by inflation but not every household is in crisis. It is well-documented that low-income homes suffer most. I refer to people on low hourly wages or fixed incomes such as welfare entitlements. Supporting these households requires ongoing targeted measures rather than one-off payments.

There are also failures with regard to taxation policy. Some €1.26 billion was allocated to tax initiatives in this budget. We regret that 67% of the resources devoted to income tax changes were allocated to benefit higher-rate taxpayers. These are permanent changes, unlike a major part of the resources allocated to poorer people, which are temporary.

We welcome the €2.6 million to support delivery of the circular economy strategy. However, Government missed the opportunity to invest in and secure our energy infrastructure, progress the implementation of the climate action plan and ensure a just transition to a green economy.

On housing, the capital allocation, which has increased to €40 million from what was already committed, means funding is insufficient to meet the current target. An increase of €1.4 billion would be required to increase the target of 9,000 social homes to the 14,000 required to address the social housing crisis. To meet the demand for social housing, 14,000 are required while 9,000 have been planned for and it looks like even that target will not be achieved. The additional money is certainly nowhere near what is required to meet the basic requirement of building a housing system that ensures everyone had appropriate accommodation.

I have a question, which is more for the committee and other Members than for the Government, although it is also for the Government. Why does Government continue to hide numbers in the budget documentation? The Government documentation produced on budget day this year contains less essential information than was available in pre-digital days, 20 years ago. We can speak with authority on this because we did budget analysis every year for close to 20 years before the digital world arrived. For example, the key table setting out the impact of all budget changes has been completely removed, which is quite interesting from our perspective. Why? Furthermore, the numbers supplied for the health budget - it is not the only one but we will take it as an example - will simply not deliver the existing level of service together with the new initiatives announced by the Minister for Health. It is impossible to deliver both yet the budget numbers presented suggest it is. We are simply saying that it is not and that there is something wrong with the numbers.

Irish people are very worried about the rising cost of living. As a consequence, they are spending less. This means the economy will slow down in the months ahead. It is widely accepted that low-income households spend heavily within the local economy, supporting indigenous businesses and jobs. Meanwhile, financial top-ups for the rich tend to be spent abroad and on luxury imports.

The Government’s decisions in budget 2023 will see the rich-poor gap grow and the real value of core social welfare rates fall. This is a disgraceful outcome. Cabinet Ministers had huge resources available but chose to use them in a way that exposes their lack of a credible anti-poverty strategy. There is no such strategy in the Government's approach. Gambling with the lives of Ireland’s poorest and most vulnerable is totally unacceptable. The Government should reverse its decision on core social welfare rates and increase these by €20 a week in the forthcoming social welfare Bill. Anything less would mean that budget 2023 confirms that the Government has abandoned those most in need of support.

As a republic smarting under Russia’s use of energy as a weapon of war, our leaders must move to unite the people in the face of continuing and magnifying hardship. By not prioritising the poor, this budget has sent the wrong message to the governed, at the worst possible time.