Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute to his debate. I welcome the fact that Deputy Boyd Barrett and the Technical Group have put down the motion to trigger a debate on a number of important issues relating to income inequality, poverty, the public finances and the future economic development of this country. I regret that I cannot support the motion, although it is well-intentioned and submitted in good faith.

I can explain the reasons I cannot support it in its entirety and there are a number of reasons. It seems to be fixated on a level of income at €35,000; those earning below that would be entitled to a range of exemptions but people even marginally above that level would not be entitled to such exemptions. The way out of our economic difficulties is not to tax to death people who create wealth in this country. They are invariably employers and the self-employed, or those who generate economic activity. Although it is not explicit, the motion provides for an increase in corporation tax. Although I know Deputy Boyd Barrett firmly believes in that, Fianna Fáil fundamentally disagrees with it.

The motion cites a series of sources of data relating to poverty and deprivation, and none of us can dispute the fact that the amount of spending cutbacks and taxation increases in the past six or seven years has brought a very heavy burden on the Irish people. Very few, if any, people have escaped the impact. Deputy Boyd Barrett's motion cites the Central Statistics Office, CSO, survey on income and living conditions, Barnardo's data and information from UNICEF, Age Action Ireland, the OECD, Social Justice Ireland, the Irish League of Credit Unions etc. These absolutely confirm a trend which we see in our daily lives and our experience as practising politicians. People have found it tough and are still finding it hard. There has been an adjustment in living standards and an attack on incomes. Many people have lost their jobs and those who are still in employment are paying far higher taxes than before. This has inevitably had a very negative impact on people's daily lives. I would be the first to acknowledge that, and the data confirms an increase in poverty rates and deprivation. The most startling statistic concerns the impact on children, as one in eight is virtually living in consistent poverty. We should debate such issues far more in this House than we have done up to now.

The issue of housing and homelessness is quite rightly highlighted in the motion. There is an article in the online version of the Evening Echowhich brings home the stark nature of the crisis we are facing, as it indicates there is one property currently available in Cork city that is suitable for a family on rent allowance.

It has an advertised rent rate for a family of two adults and three children that falls within the rent band in Cork. The property is in Knocknaheeny. According to the online article today, no other properties are available in Cork.

This confirms the experience I have as a public representative. People are facing an immediate housing crisis. They might have to vacate their existing property because the rent has increased to a level that is well outside the rent thresholds set out by the Department of Social Protection. I welcome the fact that the tenant protection scheme is being extended to Cork city, whereby Threshold and the Department can work together and in individual cases can sanction a level of rent supplement support in excess of the national guidelines. That is welcome. However, stories such as the one I mentioned show the reality of the crisis that thousands of people are facing throughout the country. It is affecting not just Cork city but also the suburbs, which will not benefit from the extension of the tenant protection scheme. I ask the Government to reconsider that, because the situation in places such as Douglas, Carrigaline and Passage West is equally acute, but people do not have the opportunity to avail of the scheme.

Today, Fianna Fáil formally launched a new Bill to deal with the mortgage crisis. I hope the Government will take it on board. There is a surge in home repossessions, which will add to the crisis in the rental sector and result in more homelessness. The issue we seek to tackle in the Bill is the veto the banks hold in the Insolvency Service of Ireland in respect of the restructuring of family home mortgages. I can offer a statistic. In the year and a quarter, up to the end of last December, that the Insolvency Service of Ireland has been accepting applications, just 199 personal insolvency arrangements have been approved by that service. The personal insolvency arrangements deal with situations in which people are over-indebted, including with secured debt. There is no breakdown of the 199, but it is suspected that the vast majority of them relate to buy-to-let mortgages, where there has been a restructuring or perhaps a write-down of the mortgage balance.

The stated position of Bank of Ireland and Ulster Bank, which was given at the Oireachtas finance committee, is that they will not support any restructuring proposal in the insolvency service relating to a mortgage where there is a write-down of any element of the principal of that mortgage. That figure of 199 should be seen in the context of the fact that 118,000 family home mortgage accounts are in arrears, of which almost half, 60,000, are in arrears of one year or more. That conveys the scale of the crisis we face in terms of family home repossessions. It is no exaggeration to say that, potentially, tens of thousands of repossessions are coming down the track. In Cork alone, more than 400 cases for repossession were brought before Cork Circuit Court from 1 January to the middle of February. That fact is replicated throughout the country and we are seeing the figures coming through in media reports. It is a real crisis. The main Government response to the mortgage crisis was the setting up of the Insolvency Service of Ireland to deal with people who were over-indebted and to provide for more sustainable solutions to their mortgages. It is simply not working; it is failing abysmally. One of the reasons, although it is not the only reason, is that the banks have the power to say "No" to a proposal put forward by an insolvency practitioner. This must be dealt with.

The motion states that there is significant evidence to suggest that a very wealthy minority at the top of Irish society has been fully insulated from deprivation and hardship. There might be some, but I believe they are few and far between. Most assets that people hold have taken a hammering as share values, pension fund values and property values have fallen over the last six or seven years. They are recovering to an extent now and regaining some value, but the vast majority of people who held wealth in this country have taken a hit. That is simply a statement of fact.

The motion refers to the issue of income inequality. I accept, and it is clear to everybody, that we are living in a society that is more divided than ever. There is no doubt about that. I accept Deputy Barry's comments about the primacy of jobs and that employment is the way out of poverty and deprivation. However, the nature of employment is changing. Much of it is transitory and short-term. There are zero-hour contracts. People are being taken on for three months, let go for a week and taken on again for another number of months, so they do not accrue employment rights. All of these trends are emerging. Many of the jobs are low-paid. The nature of employment is changing, and that is creating issues as well. We are seeing the emergence of a growing number of so-called independent self-employed contractors. Companies will not hire people but will allow them to be self-employed. The Revenue Commissioners are now focusing on that issue because of the taxation treatment of expenses that people are incurring going to and from work and so forth. These are the patterns in employment and we must be very conscious of them. They are changing the landscape of employment in this country.

In the past there was far greater potential for mobility for people who were brought up in areas of disadvantage, had deprived backgrounds and lived in poverty. That was through the medium of education. Other Deputies have spoken about this. Education was the means of advancement, in the sense that it is the great leveller in Irish society. If people can get an equal education, they have the opportunity to progress. However, my observation is that there is far less potential for mobility in Irish society now. We are becoming more divided. Those at the top are getting wealthier, but many people are firmly stuck at the bottom of the ladder and are not in a position to climb it. The Government and all politicians must be conscious of that. It is a massive societal challenge. Society, certainly in my view, is far more divided than it ever was previously.

The motion refers to early child care. That is one of the barriers for people who wish to progress in society. A simple measure to take in that regard would be to extend the community child care subvention programme. At present, it is only available in community child care facilities. Fianna Fáil recently tabled a motion which dealt with that and other issues. If that scheme could be extended to private child care facilities it would provide far more opportunity for people who wish to join the workforce and require access to subsidised child care. Undoubtedly there would be cost implications, but the Minister could structure it in a way that would support people in that situation. At present, it is a case of Russian roulette. It depends on where one lives, whether there is a community child care facility available and, if there is, whether there is a space available for one's child in that facility. If one is surrounded by private child care facilities and one is in a low-income household, one is locked out of that system. It is simply unfair and it is a barrier to dealing with poverty in a sustainable way.

Fianna Fáil has set out its critique of the Government's budgetary strategy over the last number of years and I will not play politics with it. Suffice to say that the ESRI has independently confirmed that the Government's approach to budgetary policy has been regressive in nature. I will give one example. When money was being taken out of people's pockets and their income, the same amount was taken from everybody who was in employment with the abolition of the PRSI exemption threshold. Over €260 was taken from everybody, whether they earned €20,000 a year or €200,000 a year. However, when it was time to give something back, as it was in the last budget, far more money was given to people on higher incomes. It was up to €750 for people earning over €70,000 a year, but just a fraction of that, a fifth, for people on the minimum wage. That is a good example of this Government's approach. When it needs to take money from people it will take the same amount from everybody, or proportionately more from people on low and middle incomes, but when it is giving money back it gives a great deal more money to the higher paid. It is indisputable that this is what happened.

If we are genuine about tackling poverty, there is still an issue with the social welfare trap. It is primarily related to the matter of secondary benefits and the loss of certain benefits, such as rent supplement and medical cards, which are highly valued, by people who are trying to migrate from dependency on welfare to employment. That is becoming a very serious problem which must be tackled.

In our view, the consolidation in the public finances had to be done. I welcome the fact that the current analysis of budgetary policy will be beefed up. We have long made the point that the analysis on budget day is selective. For example, in the budget booklet presented by the Department of Finance, there is an analysis of the tax changes but the totality of the impact on a family is not properly measured or analysed. We will, therefore, wait to see the detail of the social impact assessment the Government has committed to carrying out.

We all agree with protecting the vulnerable, who include people who depend on social welfare and many people earning less than €35,000 a year. However, many people earning well in excess of that amount have very large mortgages and financial commitments and, to my mind, they are also vulnerable. They have to pay every tax and charge which is levied in this country yet they do not qualify for medical cards, rental support and so forth. Many of the supports available in the State are assessed on the basis of gross income. This needs to be addressed.

See this speech in context