Thomas Pringle (Donegal, Independent) | Oireachtas source

The dominating feature of the summer economic statement is the commitment by the Government to phasing out the universal social charge, USC, over the next five years. I support the organisations and other politicians who call for the retention of the USC, at the very least for the higher paid, in order to reinvest the extra spending in public services as a way to address the consequences that have resulted from years of austerity measures, income inequality and persistent poverty levels.

The Government claims that the "fruits of economic recovery will be used to ensure a reduction in inequality and poverty, as well as to ensure greater levels of inclusivity in our society", but the claim does not fit with the measures outlined in the statement. Increasing the minimum wage to €10.50 over the next five years, reinforcing labour activation measures targeting jobless households, using income tax to support employment growth to incentivise and reward work and phasing out the USC will do nothing to address inequality and poverty levels in this country. Only by reform of the tax system to redistribute income, by reinstating income supports, through equality-proofing budgets and investing in public services, schools and hospitals can we tackle those debilitating social problems.

Reform of the tax system could address the long-standing issue of low income households below the poverty line. In 2014 it was calculated that 16% of people in this country were living in poverty. The figure has steadily increased since 2010 due to the effects of budgetary changes to social welfare and taxes driving more low income households into poverty. The largest group of people who are poor are children, accounting for more than 25% of the total. The second largest group are those who are unemployed and stay-at-home parents. Barnardos announced today that it had dealt with more than 13,000 children and families living in poverty. We must remember that children remain the most vulnerable population group. We only need to look at recent figures which show that more than 2,000 children are homeless in Ireland today. We must remember that a person who does not earn enough to claim his or her tax credit cannot avail of any income tax reductions in upcoming budgets, as is proposed by the Government.

Budgets have consistently bypassed low-income earners because they simply do not earn enough to benefit from changes in taxes. According to Social Justice Ireland, making tax credits refundable would incentivise employment over welfare, as it would widen the gap between pay and welfare rates. Almost 113,000 low-income individuals would receive a refund and would see their disposable income increase as a result of the proposal.

I note in the report the focus on labour activation measures targeting certain groups of people. The Government seems fixated on making the individual conform to certain economic behaviours without incentivising employers to change their behaviour and without addressing the inherent inequality in income levels across the board. Plans to increase take-home pay by introducing a working family payment to promote work over welfare is really another name for family income supplement. Currently, 60,000 families receive family income supplement. In effect, the Government is subsidising low wages and exacerbating income inequality.

Income levels have also been driven down in recent years. According to Social Justice Ireland, the median income in Ireland was €19,794 in 2007 and it decreased by 8% to €18,210 by 2014. The trade union, UNITE, published a striking report a few weeks ago which officially labelled Ireland as a low-pay economy with high levels of income inequality compared to other prosperous countries. Pay increases since 2010 have disproportionately benefitted higher earning groups and Ireland was found to have the second highest level of wage inequality in the EU15.

Another aspect of UNITE's report is its finding that poor pay is compounded by low levels of employers' social insurance, which means Irish workers have to pay more to access services such as health care. That dispels the myth that Irish wages are too high and are uncompetitive. According to the report, Ireland suffers from a very low social wage, namely, employers' social insurance, and that explains the high cost of public services and low in-work supports for Irish employees. The social wage would have to more than double to reach the EU15 average. That is a very important point because in my constituency of Donegal, 40% of disposable income is from social welfare transfers and the county is still experiencing persistent deprivation levels in comparison to the rest of the country. Furthermore, vital income supports such as farm assist, jobseeker payments and income disregards were cut in previous budgets which have hurt many families in Donegal that are struggling to keep above the poverty line.

I wish to draw attention to the Irish Human Rights Commission's work on bringing about equality proofing in the budgetary process. The commission's report last year to the UN committee found that many groups already susceptible to poverty or inequality were particularly affected by the recession. It found that the Government fell short of the basic core standards required by international human rights law. The impact of a seven-year austerity drive has been enormous and the burden of the crisis and of the dominant policy responses to it has fallen disproportionately on those least able to bear its impacts. I welcome the Irish Human Rights Commission's push for a process of budget and policy proofing as a means of advancing equality and strengthening economic and social and cultural rights. The only way to do that is to enshrine those rights in the Constitution, as a rights-based way to tackle poverty, income inequality and inequality in all aspects that are still prevalent in society. If the Government is really committed to tackling income inequality and poverty, it will support a Bill for a referendum on having economic, social and cultural rights enshrined in the Constitution when it comes before the House.

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