Oireachtas Joint and Select Committees

Wednesday, 26 January 2022

Committee on Budgetary Oversight

Indexation of Taxation and Social Protection System: Discussion

Dr. Seán Healy:

On why we should link to wages rather than benchmark to inflation, the issue is quite clear. If we benchmark to inflation, people on social welfare will fall behind the rest of society. It is as simple as that. The reason for this is because wages outperform inflation. One of the things we are trying to do with the most vulnerable is not let them fall further behind. That is why the benchmark should be tied to wages.

We must then make the point that having chosen a benchmark, we need to then decide where the index is and what percentage of it we will use. That is why we were presenting what we think are achievable goals, like 27.5% and 30% of the wages situation, in the short to medium term. Another thing we would say in that context is that it would apply to all social welfare payments. I do not think it is a good idea to benchmark some social welfare payments while other payments in effect fall behind, which is what will always happen to them in reality. I would not benchmark the free television licence. There is a separate set of calculations that go into that. I will check with Ms Murphy about whether there are other pieces of that she would like to highlight.