Tommy Broughan (Dublin North East, Independent) | Oireachtas source

Mr. Nick Webb, a journalist, tells us that the sources for these figures include stock market shares listed in Dublin, London and New York, as well as stakes in private companies and the most recent sets of accounts from Irish, UK and Northern Irish company offices. However, he concludes that financial digging can only uncover so much and that some people were excluded from the list because their finance or the finances of their companies were too opaque for us to accurately assess. We know now, thanks to Swiss leaks and Luxembourg leaks, that the information gathered may not necessarily show us the full, real picture of wealth. HSBC Swiss accounts were held by 353 clients associated with Ireland to the amount of around $3.5 billion; of these 51% has an Irish passport or nationality. The Revenue Commissioners have recovered very little money from those accounts.

Those of us working closely with our constituents and listening to concerned Irish citizens know that inequality in Ireland is real; it is deepening in many areas and it is devastating for the majority of citizens in receipt of social welfare payments, in low-income employment and on zero hour contracts. The information gathered by the high pay and wealth commission I propose would further highlight the realities of wealth distribution in Ireland and allow for the Government to more appropriately address fiscal and economic policies.

The nine-person commission as proposed in the Bill will come within the established structure of the Central Statistics Office, with section 10 of the Statistics Act 1993 amended by inserting a new provision on a high pay and wealth commission. When I first prepared the Bill approximately two years ago, I considered amendments to the Companies Act and corporate governance but I eventually decided to go down the wealth commission route. The CSO has the expertise and skills to complete the specific functions proposed. Under Section 5, the commission will have a core role of regularly informing the public about levels of income and wealth across Irish society. Data collection and compilation of statistics on income and wealth will be the starting point. The commission's research will include best practice models of income distribution and try to determine appropriate structures in which the setting of executive high pay and other remuneration will be reformed. It will also have a role in developing more equitable fiscal and national economic policies.

In a very small way, this work has already begun, whereby the CSO is a member of the Household Finance and Consumption Network and carries out the household finance and consumption survey, which was published last month. However, this survey is limited to only 5,419 households out of 2 million and the usual problems persist with obtaining frank disclosure of income and assets by the very rich, whose instinct seems to be often to hide this income and wealth. There are 10,522 households that are contacted by the CSO. The Think-tank for Action on Social Change, TASC, released its research paper, Cherishing All Equally: Economic lnequality in Ireland, on 16 February this year and it highlights the growing inequalities in our country. We are at risk of reaching US levels of income inequality, with TASC's research indicating that Ireland is currently the "most unequal country in the EU ... before taxes and social welfare payments are included". Some commentators took much consolation in the fact that we are in the middle band of unequal countries, but these include many countries from the "accession of ten", where there is gross inequality.

The TASC report cogently notes that "the two poles of economic inequality are the concentration of income and wealth on the one hand and the number of people unable to meet their material needs on the other". TASC notes that "data on income distribution in Ireland is incomplete" but estimates that the top 1% of Irish income earners have 9% of gross income and the top 10% have 34% of gross income and, crucially, 42% to 58% of Ireland's wealth. That indicates a need for the proposed commission. TASC concludes that gross income inequality in Ireland is the highest in the EU, while net income inequality in Ireland is close to the EU 28 average. It confirms the importance of progressive taxation and social protection. TASC also notes that while Revenue Commissioners data on income is an important source, it tends to act on "tax units" rather than individuals.

Many Deputies will be familiar also with the Pobal HP, or Haase and Pratschke, deprivation index, which clearly shows the geographical location of disadvantaged households in urban and rural Ireland. A recent Nevin Economic Research Institute, NERI, seminar analysed the changes in the composition of this index over time, including how some areas are very badly disadvantaged. Several OECD and World Bank reports also draw attention to a growing trend of income inequality across developed countries, including that entitled Trends in Income lnequality and its Impact in Economic Growth 2014, and many leading economists believe this growth in inequality undermines economic performance. Professor Joe Stiglitz, for example, argues that "ensuring those at the top pay their fair share of taxes - ending the special privileges of speculators, corporations and the rich - is both pragmatic and fair". The economist, Professor Paul Krugman, refers to the Luxembourg Income Study, which shows that primary income and assets are very unequally distributed in nearly all countries. Various IMF studies have shown that reducing income inequality through redistributive methods does not hurt economic growth and actually helps it.

Just after this Bill was drafted I became aware of the work of Professor Thomas Piketty, entitled Capital in the Twenty-First Century, and I subsequently heard him outline its thesis at a TASC conference in Croke Park. I read the book last summer. Piketty builds on the research methodology of Simon Kuznets, an important economist in his field, to put the income distribution question back at the heart of economic analysis. Piketty uses a wide range of income tax, estate tax and national income and wealth data from the US, France, Sweden, Britain, Germany and other countries to produce capital to income ratios for each economy over the past 300 years. That demonstrates the sharp rise in wealth and income inequality since the 1970s, and it parallels what happened in the 19th century somewhat. He attributes ownership of 40% to 50% of national wealth by the top decile in the US after 2000 to the unprecedented rise in top managerial "compensation" - we remember how that was Dr. Tony O'Reilly's favourite word - and to what he calls the "fundamental inequality formula of "r > g", where "r" is the average annual rate of return on capital expressed as a percentage of its total value and "g" is the growth rate of the economy. If "r > g" for a period, there will be wealth accumulation, and people on the lower end of the income scale will find it really hard to survive. For Piketty, the solution to "the central contradiction of capitalism, r > g" is "a progressive annual tax on capital" or wealth.

The American labour movement journalist and professor, Sam Pizzigati, has long advocated the concept of a maximum wage. In the UK, the High Pay Centre, an independent think tank, has made important recommendations on how problems associated with high pay could be tackled. It was called the High Pay Commission and it is now funded by the non-governmental organisation sector. Australia had a public inquiry which we could have emulated into some of the outrageous pay levels it saw, and that reported in 2009.

This Bill refers to "anonymised information" in Section 6(1) but the most transparent societies in terms of income and wealth are clearly Sweden, Finland and Norway, the latter of which publishes every citizen's income and tax details. Norway began this process in 1863 and its skatteliste, or tax list, includes everyone's personal income, tax burden and where each citizen ranks on a list of national averages. Would it not be wonderful to have that in this country. As Jan Omdahl of the Dagbladetnewspaper wrote in 2007, is this not how a social democracy ought to work?

Section 1 of the High Pay and Wealth Commission Bill cites the Title of the Act and states that it will come into operation six months after the Bill's passing. Section 2 provides for the interpretations while section 3 refers to the regulations which the Minister for Finance may infer and lay before each House of the Oireachtas. Section 4 states that the Minister shall instruct the director of the Central Statistics Office, within six months of commencement of the Act, to establish the commission as an executive office of the CSO. Section 5 outlines the three main functions of the commission and section 6 outlines the specific research project known as the "Executive Pay Project". Section 7 allows the Minister to confer additional functions on the commission after the order is passed by the Houses of the Oireachtas. Sections 8, 9 and 10 in Part 3 of Act refer to the composition, staffing arid reporting of commission, while section 11 in Part 4 is the final section of the Act and provides for the amendment of section 10 of the Statistics Act, 1993 by way of adding a new subsection (4).

I am proposing in Section 6 that the High Pay and Wealth Commission will have a key role in beginning to address the problems associated with high pay, including very high levels of executive pay. Of particular importance is section 6(e) which deals with policy and legislative proposals in respect of bonuses payable to executives and the introduction of caps, timeframes and targets for such bonuses. I note that recently the chief executive of Bank of Ireland deferred some €150,000 of his €950,000 basic income, which was an interesting gesture. A crucial proposal is the development of pay ratios between persons receiving the highest and lowest levels of remuneration and other benefits across the economy, as provided for in section 6(f). The highest paid Irish executive, Owen Killian of Aryzta earned €15.5 million in 2013 alone through remuneration and stock options.

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