Thursday, 25 October 2018
Ceisteanna Eile - Other Questions
7. To ask the Minister for Finance if he has carried out an analysis of #budget 2019's impact on inequality; his views on a study by an organisation (details supplied) that indicated that the recent budget will primarily benefit higher earners; and if he will make a statement on the matter. [44225/18]
Does the Minister agree with the analysis of Social Justice Ireland, SJI, that the budget fails to make a notable impact on Ireland's entrenched inequality and which rightly describes inequality as a disease of society where, for example, child poverty has worsened or where, compared to what little benefit low paid workers will receive, those on higher incomes received ten times that amount?
My Department routinely assesses the impact of budgetary measures on inequality. As part of this distributional analysis, the effect of tax and welfare changes by income band is examined. This is undertaken using the Economic and Social Research Institute's, ESRI’s, SWITCH micro-simulation model.
In the context of budget 2019, this analysis found that the combined tax and welfare measures delivered the largest gains for those in the lowest income group. They experienced a 0.5% increase in their disposable income. This analysis confirms the intent of budget 2019 to protect our most vulnerable in our society.
Of course I am aware of the analysis and critique study published by SJI, which conducted a partial review of budget measures. This analysis excluded the impact of indirect taxes and important non-tax and welfare measures such as raising the minimum wage and changes to prescription charges. The alternative findings in the SJI study underscore the importance of looking at the impact of the full range of budgetary measures in order to reach a comprehensive view of the distributional impact of the budget.
I have taken a number of important steps in the sphere of equality budgeting. I have piloted an equality budgeting initiative across six programmes in 2018, as part of which associated objectives and indicators were published in the 2018 revised estimates volume. The pilot programme predominantly looks at gender and is anchored in the existing performance budgeting framework. However, it is my intention to expand this programme to capture broader dimensions of equality, including poverty, socioeconomic inequality and disability.
Let us get real about what the budget represented. The Government likes to present itself as a non-ideological Government but is the truth not that the Minister's budget is highly ideological? It is a highly ideological, right wing, neo-liberal budget which is about shrinking the State, whereby Ireland now has the lowest public spending to GDP ratio in the entire EU at 25.76%. It is about tackling crises, not through direct State investment, but through funnelling money to private individuals, who are landlords in the case of the housing crisis. That ideological drive to the budget comes at a serious cost, including increasing inequality, deepening crises in our public services, the horrendous figures on child poverty outlined in the SJI report and maintaining a cohort of workers on low pay and, as such, a low-paid economy.
Let us look at the facts. Ireland has the second most progressive tax system in the OECD. The most recent survey on income and living standards conducted by the Central Statistics Office, CSO, found that deprivation in Ireland reduced from 25.5% to 21%. A significant change in levels of inequality and income inequality, in particular, in our country has happened and that is a journey that I want to see continued. Let us also look at the fact that the discretionary measures that were announced in budget 2019, particularly in terms of the delivery of services, will help those who have the least, particularly those who are on lower levels of income. I want to see the level of income change that is happening in our country be concentrated in such a way that will help those who need it the most. It is extraordinary to hear the Deputy talk about an agenda being in place which looks to shrink the State, given that this is a budget that looks to increase capital investment next year by €1.4 billion and invest in key public services to a level that is higher than at any point in our recent past. All of this is about ensuring that we have a State that can make a difference to those who are in great need. Those are the beliefs that underpin this budget.
It is ironic that in the Minister's first response he talked about the need to look at the impact of indirect taxes but he then cited a study that suggests that Ireland has a progressive tax model based purely on direct taxation because when indirect taxation is taken into account, the bottom decile of the population pays effectively the same percentage of their total income in tax as the top 10% does. We do not have a progressive tax system when indirect taxation is taken into account.
On the idea that the Government wants to solve the crises and so on, the Minister cannot answer on the issue of housing. We had a landlord's budget. It was delivered by a Government that acts in the interests of landlords and the main action in terms of the housing crisis was to choose to funnel more money towards landlords in HAP payments, which are a direct subsidy from the State to them, and additional tax allowances. The fact that the Government chose to do that as opposed to allocating any significant extra money to invest in building houses to resolve the crisis precisely proves the point that it is an ideological budget driven by the interests of the 1% in this country.
This is a budget that was driven by my determination and the determination of the Government to make a difference to the lives of citizens, particularly those who need and deserve support in times of difficulty. Let us look at the figures on this. Let us challenge each of the points that the Deputy has put forward and examine what the figures are. Next year, €1.25 billion will deliver 10,000 new social homes. As I did with Deputy Boyd Barrett yesterday, let us contrast that with the figure for HAP over the same period, which is €423 million. If I was not making this funding available to provide accommodation to citizens in times of need when social housing is being built, the Deputy would condemn the Government for not providing accommodation for people at a time homes were being built in the private sector.
In respect of housing output, I acknowledge that we need to build more and deliver more. However, in the second quarter of 2018 we saw an increase of 40% in new home completions. We need more new homes to be delivered but progress in that area is being made this year, with more new homes to be delivered next year than this year.