Mr. John McGeady:

Gabhaim buíochas leis an gcoiste as ucht an chuiridh. Social Justice Ireland has consistently called for core social welfare rates to be benchmarked. We believe that average weekly earnings is the best anchor for indexation, beginning with a benchmark of 27.5% of average weekly earnings and then setting out a pathway to move towards 30%. As noted in the committee's 2022 report, indexation would provide certainty to households as it would make incomes more reliable and protected. Mindful that inequality between earnings and social welfare rates increases risk of poverty and damages social cohesion, linking social welfare rates to average earnings would also prevent the gap between the two from widening excessively. The estimated cost of bridging the gap between core social welfare rates for disability allowance, job seeker's allowance and carer's allowance and the benchmark of 27.5% would be €296 million. We believe this is eminently achievable in terms of the overall budget.

Based on the survey on income and living conditions, SILC, data from the CSO, we know almost 560,000 people are living in poverty in Ireland. Of this number, approximately 177,000 are children and 65,000 are aged over 65. The rate of child poverty is deeply troubling, with one in seven children in households below the poverty line and more than 260,000 children living in households experiencing deprivation. Fundamentally, child poverty cannot be separated from the poverty experienced by the families to which those children belong. Additionally, there is a substantial number of individuals living near the poverty line in Ireland. In 2022, a €10 increase in the weekly value of the equivalised poverty line would have corresponded to an increase in the poverty count of 109,000 individuals. This shows how small changes in income could lift people out of or shift people into poverty.

Trends in the poverty rate before and after welfare transfers from 2001 to 2022 highlight the importance of adequate social welfare rates to prevent people falling below the poverty line. Without the social welfare supports, just over one third, or 34.1%, of the population would have been below the poverty line in 2023. Overall, social welfare transfers reduced poverty by 23.5 percentage points. Without the additional cost-of-living measures provided last year, the poverty rate would have been 13% in 2023, instead of the actual 10.6%. The significant reduction in poverty achieved through social transfers demonstrates the importance of social welfare rates in lifting people out of poverty. The short-term cost-of-living transfers, which had such a significant effect on low-income households, will not persist into late 2024 and beyond. In their place, it is essential to provide adequate core social welfare rates.

As per the Department of Social Protection's annual statistics report 2022, more than 2.3 million people are in receipt of some form of social welfare payment. More than 85% of the recipients are those who are not in a position to seek employment, namely, children, old age pensioners and those in receipt of illness, disability or carer's payments. These statistics underscore a crucial reality. The majority of social welfare payments are for individuals unable to pursue employment opportunities. Given this, we must not fall into the trap of believing that adequate social welfare rates might somehow disincentivise work, something that should in any case be self-evidently false in an economy at near full employment.

Fundamentally, core social welfare rates must be maintained at a level that provides for a socially acceptable standard of living that provides for all basic needs. A report from the Parliamentary Budget Office from 2021 analysed changes in social welfare rates from 2011 to 2021. One of the key findings of that report is that a failure to index core social welfare rates to either wages or inflation has resulted in a significant fall in the real value of these payments. Importantly, as highlighted in this committee's 2022 report, flat-rate increases, typically of approximately €5 per week, may not address the needs of recipients. Failure to adjust social welfare rates in line with rising wages may exacerbate the plight of lower income households, widening the gap between their incomes and the broader economy. A benchmark against earnings would address this problem.

Social Justice Ireland proposes a minimum benchmark of 27.5% of average earnings and that the Government should then outline a pathway to 30%. We propose that this process should be overseen by an independent body which would independently outline the indexation pathway, base any recommendations on independently verified data and calculations such as those delivered by the living wage technical group, for example, and outline the annual changes to social welfare payments this may entail.

Based on average weekly earnings of €916, the value of 27.5% equals €252. This implies a shortfall of €20 between the current social welfare rate of €232 and the benchmark threshold of €252. The estimated cost of bridging this gap for disability allowance, jobseeker's allowance and carer's allowance, and increasing payments to meet the benchmark, is €296 million. We urge the Government to recommit to this benchmark in budget 2025 and bridge this gap. Indexation would provide certainty for the Government in terms of resourcing and revenue generation, but it also would provide certainty for those on fixed incomes who must make ends meet on limited resources on an ongoing basis.

The Government has a clear anti-poverty commitment, as outlined in the roadmap for social inclusion and the sustainable development goals. Given that those most at risk of poverty are often the most reliant on the social protection system, if they are not to fall behind the rest of society at times of economic growth, the benchmarking of welfare rates to wages is essential and must be the priority for budget 2025.