Joan Burton (Dublin West, Labour) | Oireachtas source

Deputy Shortall may even know some of the staff involved.

This is the first budget in which we have had scope to make positive but modest progress for welfare recipients. That is evidenced by the €65 million we are spending on the bonus for pensioners as well as the €198 million of new welfare improvements that I announced in the budget, which I mentioned to the Deputy, such as child benefit and improvements in the living alone allowance.

We are using the economic dividend from the recovery so far to invest in sustainable growth for families and communities and in vital public services. It is hoped that with the continuing improvement of economic conditions, further resources will be freed up for future budgets.

Social transfers, which is another issue Deputies spoke about, play a crucial role in redistributing resources to those people most in need. During the years of the economic crisis from 2009 to date, social transfers have reduced the at-risk-of-poverty rate. Deputy Boyd Barrett asked me the measure I referenced. It is called the at-risk-of-poverty rate and is an internationally accepted measure. Social transfers have reduced the at-risk-of-poverty rate by an average of 60%. That is ten percentage points more than in the years preceding the crisis, at the height of the boom from 2005 to 2008. This shows the increased effectiveness of social transfers in protecting the people who are the most vulnerable during the economic crisis, and this has been accepted internationally. Those are not my figures. Those are the figures provided internationally and by national organisations looking at budgetary impacts.

All I ask from the Deputies is to be fair in terms of their analysis, but also to recognise progress in areas such as the number of people returning to work and the significant impact of returning to work when one or two adults in a household go into employment, by and large after a period of time, stop receiving social welfare payments and begin to pay some tax, whether it is the universal social charge, USC, PRSI or income tax. In terms of what has been a payment by the State and everybody in work who contributes their taxes, that individual becomes a contributor, but also becomes financially independent, with all the bonuses that result for the individual and their children.

Social impact assessment is an evidence-based methodology to estimate the likely distributed effects of policy proposals on poverty and social inequality, including the impact on family types, life cycle groups, and gender. The Department undertakes a rigorous and extensive impact assessment of welfare policy changes before the budget. The Department has published integrated social impact assessments of budgets 2013 and 2014 using the ESRI SWITCH model, which included the main welfare and tax measures. To be clear, they are available on the Department's website, and if anyone has any difficulty accessing them we will be delighted to send them hard copies.

The Department is currently preparing a social impact assessment of the main welfare tax and related measures for 2015. This will be finalised to take account of Government decisions relating to the water charges, the water conservation grant, and some other measures, which I will detail shortly while explaining to Deputies what is and is not in the SWITCH analysis.

The Government has committed to carrying out a social impact assessment of the main taxation and welfare measures before the publishing of budgets by a cross-departmental body led by the Departments of Finance, Social Protection, and Public Expenditure and Reform.

Many Deputies spoke about taxation, but they may not have noticed some of the tax changes. Deputies spoke about income tax, but they should take into account the significant changes made to the USC. First, the entry point for USC was raised from €10,000 to €12,000, affecting, as I am sure Deputy Shortall would agree, the people on the lowest levels of income. That has lifted 80,000 people out of the USC net. The Deputy will recall that in the first budget presented by this Government, 310,000 people were lifted out of the USC net, which I remember the Deputy strongly favoured. That has happened again this time. Second, the two lowest rates of USC have decreased by 0.5 of a percentage point each, which is important for people on a very low income.

Most analysts would agree that one of the key issues to be faced in tax reform in Ireland is the point at which people enter the higher rate of tax. For a single person, that is around the average industrial wage, €34,000, and it is a little more for a couple. We have widened the band for an individual by €1,000 and for a couple by €2,000. That is a start. These are modest but important changes.

Third, we have reduced the overall rate of the top level of taxation from 41% to 40%.

Alongside this - I do not know if Deputies caught this during the budget discussions - we raised the rate of USC for those on very high incomes. To only look at income tax measures and not USC is to narrow the analysis in a way that gives a distorted picture. The whole package must be looked at. It is targeted at people in work with families earning somewhere between €30,000 and €70,000. Members are shaking their heads in denial, but as well as helping people who rely on social welfare income, it is an important part of a policy on economic stimuli and recovery to give people in work with families in the low and middle income categories, whether it be €30,000 or €70,000, a benefit in terms of the taxes they have to pay.

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