CORI Justice Commission: Analysis & Critique of the Irish Governements Budget for 2002. Download pdf here

FIVE IN A ROW! PROSPERITY WITHOUT FAIRNESS

For the fifth year in a row this Government has failed to give priority to the deprivation being experienced by Ireland's poorest people. While the country has been experiencing its most prosperous period ever, the Government's Budgetary choices have produced a situation where Ireland's poorest people are expected to live on £93.56 a week. Its choices have also widened the rich/poor gap by £191 a week. This is unjust, unfair and unacceptable.

As a direct result of the choices contained in Budget 2002 :

• The number of people living in relative income poverty will continue to rise
• The rich/poor gap will continue to widen.
• Many people in low-paid jobs will gain nothing.
• Families on very low incomes will not have a right to a medical card.
• Large numbers of people will continue to wait for appropriate accommodation.

Despite the unprecedented prosperity of recent years, poverty and social exclusion have not been tackled on anything like the scale that was possible, given the available resources.

However, the most important requirement in tackling poverty is the provision of sufficient income to people to enable them to live life with dignity. This Government has failed dismally during its term of office to address this issue despite having the best opportunity to do since the foundation of the State.

After five Budgets this Government has produced a situation where:

• Ireland's poorest people are expected to live on £93.56 a week.
• Large numbers of poor people don't have enough income to provide for basic necessities.
• The average disposable income of the poorest 10 per cent of households was less than £84 a week in the year 2000 compared to £1,125 a week for the 10 per cent of highest-income households. This gap has been widened further by Government's Budget decisions over the past two years.
• A growing number of poor people are on housing waiting lists and have to wait for years before accessing appropriate accommodation.
• The two-tier healthcare system ensures Ireland's poorest people must wait at the back of the queue until the better off have been provided for first. This situation will continue even if the recently published healthcare strategy is implemented.
• Many people with jobs are living in poverty because their incomes are so low.
• Educational disadvantage persists for large numbers of poor people, both young and old.

IT IS NOT POSSIBLE TO LIVE LIFE WITH DIGNITY ON £93.56 A WEEK

This is the present Government's legacy on poverty and social exclusion after five years in office. Yet the Minister for Finance claimed in his Budget speech that this was a Government that was tackling social exclusion. It's a claim that does not stand up to close scrutiny. We address this issue in detail in the following pages.

In this Budget £500 million was transferred from the social insurance fund to the Exchequer. This was almost identical to the £502 million that the Exchequer contributed to fund the social welfare increases for 2002. In this context the failure to increase the lowest social welfare rates by £14 a week for a single person and £24 a week for a couple is pathetic.

The Minister also claimed that this Budget "must safeguard the vulnerable in society". An allocation of £93.56 a week to Ireland's poorest, belies this claim.

Who is Poor?

- National Anti-Poverty Strategy (1997)

The overall conclusion as we review this Government's five Budgets is that the prosperity of recent years has
been accompanied by great unfairness. Ireland's poorest have benefited little from the Celtic Tiger economy.

A Government of Social Inclusion?

The Minister for Finance claimed in Budget speech that "this Government has done more than any other in the history of the State to promote social inclusion". He describes this budget as making progress in "protecting the vulnerable in society". How well does this claim stand up to scrutiny?

Social exclusion arises from a number of factors which make equal participation in society impossible. These include income poverty, lack of housing, lack of education and lack of the opportunity to contribute to society through meaningful work. How do the budgetary measures introduced over the past five years attain these objectives?

In terms of income, those on the higher end of the income scale have benefited by up to eight times as much as those on the lower end of the scale. In addition, the income of social welfare recipients still remains below the level required to ensure a reasonable quality of life is possible.

Housing is in a crisis situation, with 50,000 households on waiting lists and about 5,500 homeless people in Ireland today.

Poor people are more likely to be early school leavers and are under represented at third level. Adult illiteracy rates continue at very high levels.

Despite the record increases in employment, there remains a hard core of unemployed people who are excluded from participation in society through work.

These as well as the many similar facts outlined on page 2 illustrate a society where social exclusion is widespread. They do not present a picture of a society where vulnerable people are protected.

One major illustration of this Government's failure to give social inclusion the priority it demands can be seen in its treatment of the review of the National Anti-Poverty Strategy (NAPS). Promised in the Programme for Prosperity and Fairness, this review has been ongoing for almost a year. Seven working groups completed their work several months ago yet the Government has still not published the long-awaited review.

If this Government wishes to be seen as a Government of Social Inclusion then it should publish this review and include a Global Target to benchmark the lowest social welfare payments at 30% of Gross Average Industrial Earnings by 2007.

A Budget that presents people with choices?

One in every five people has an income below the generally-accepted poverty line. This did not happen by accident but followed from decisions made by Government over the past five years. These decisions chose to give the abundant, available resources to those who were already better off. This approach to policy-making is totally unacceptable.

The Minister for Finance claimed this Budget "presents people with choices". The reality is that some people, many people in fact, do have choices. However those on £93.56 a week have very few choices.

They do not have the income required to enjoy a standard of living that is regarded as acceptable by Irish society generally. In fact they do not have sufficient income to provide for even the most frugal standard of living.

As a result of inadequate income and resources they are excluded and marginalised from participating in activities that are considered the norm for other people in society.

A core policy objective for any budget should be to provide all with sufficient income to live life with dignity. On that measure Budget 2002 was an abject failure.

"When a family's energy is concentrated on struggling to survive, there is less
opportunity o give time, commitment or money to areas such as education-children
may eave school early o avoid further financial burden on their parents."

- One Long Struggle

Government's Expenditure for 2002

Note that figures may not add due to rounding.

(a) Of the 2485 million cost of servicing the National Debt in 2002, 1984m will be met from the Exchequer and 500m will be met by reducing the assets of the Capital Services Redemption Account.

Government's Revenue for 2002

How much better off are people under this Government?

In seeking to discover how much better off people are under this Government it is essential that wage increases be included as well as tax cuts and social welfare increases. Unemployed people gain nothing from the tax reductions or wage increases. Consequently, when assessing their position it is essential that pay increases be included in the calculations.

We have included the wage increases contained in the national agreements (Partnership 2000 and The Programme for Prosperity and Fairness) for the relevant years so that legitimate comparisons can be made. The numbers on the chart are the gains over the full five years.

Chart 2 illustrates how much people's take-home incomes have increased since this Government came to power. It covers the last five Budgets and includes both pay increases and tax reductions as well as social welfare increases.

The outcome shows a dramatic widening of the rich/poor gap as each of the five Budgets gave substantially more to those who were better off than to those who were the poorest in Irish society.

Single people who are long-term unemployed are £26 a week better off, those with £15,000 a year are £96 a week better off while those on £40,000 are £206 a week better off.

After five Budgets couples who are long-term unemployed are ££48 a week better. Couples with one income earning £15,000 are ££97 a week better off while those on £40,000 are £190 a week better off.

Over the same period couples with two incomes earning a total of £15,000 a year are £107 a year better off while those with two incomes totalling £40,000 are £263 a week better off.

This income distribution reflects the choices Government has made over the past five years. These choices were totally skewed in favour of those with higher incomes. No amount of rhetoric or assertion can change this fact.

How much better off are people in 2002?

In calculating how much better off people will be in 2002 we have followed the same procedure as outlined above. Single people who are long-term unemployed are £8 a week better off, those with £15,000 a year are £15 a week better off while those on £40,000 are £33 a week better off.

Couples who are long-term unemployed are £16 a week better. Couples with one income earning £15,000 are £17 a week better off while those on £40,000 are £27 a week better off.

Over the same period couples with two incomes earning a total of £15,000 a year are £14 a year better off while those with two incomes totalling £40,000 are £37 a week better off.

This income distribution is a big improvement on the previous four years. We welcome this trend and trust that it will be continued. However, as seen above, there is a long way to go before the damage of the last four years is undone.

During this Government's period in office a long-term unemployed couple are £48 a week better off while a couple with two incomes totalling £40,000 are £263 a week better off.

This distribution of resources is neither fair nor just.

This Government has widened the rich/poor gap by £191 a week over the past five years

This Government has now widened the rich/poor gap by £191 a week. In making these calculations we have included both pay increases and tax reductions as well as social welfare increases. We have also included the impact of the new savings scheme which better off people can access but which is beyond the reach of Ireland's poorest people.

Chart 2 shows that the disposable income of single people who are long-term unemployed and those on £40,000 a year has widened by £180 a week. The latter can also gain £11 a week from the new Government Savings Scheme, bringing their total gain up to £191 a week.

The impact of Government decisions on the take-home income of couples has been almost as striking. After five Budgets couples who are long-term unemployed are £48 a week better off while a couple on £40,000 are £190 a week better off. The latter also benefit from the Savings Scheme so the gap between them has widened by £153 a week.

Widening the gap between the better off and the poor is unfair, unjust and bad for social cohesion. In making its decisions Government has failed to honour the aims and objectives of the Programme for Prosperity and Fairness. These committed Government to building a fairer and more inclusive society.

SOCIAL WELFARE: Social Insurance increases January 2002

Increases in Maximum Weekly Rates of Health Allowances from January 2002

Social Welfare: Social Assistance increases January 2002

Increases in Monthly Rates of Child Benefit from April 2002

Taxation

Our Budget Submission Asked that the Budget

• Tax credits be made refundable.
• Tax credits be increased substantially.
• Family Income Supplement (FIS) be made part of the tax system
• Individualisation in the tax system be pursued in a fair and equitable manner.
• Changes in the income tax system benefit those on low to middle income as much as they benefit the better off in cash terms.
• The windfall tax gains accruing to the corporate sector arising from the reduction of the corporation tax rate to 12.5% be recouped.
• The distribution of all changes in indirect taxes discriminate positively in favour of those with lower incomes
• All discretionary tax expenditures be standard rated.
• The budget move towards developing sustainability taxes, land rent tax, and Tobin type tax.
• The goal of having Ireland's total tax take set at the EU average tax take level be accepted.

The Budget

Income Tax

Exemption Limits

Notes:
1 The tax band of €56,000 available to married couples with two incomes is transferable between spouses up to a maximum of €37,000 for any one spouse.
2 The Marginal Relief tax rate remains at 40% (It continues to apply until such time as it is more beneficial for the taxpayer to be assessed under the normal taxation system).

PRSI and LEVIES

Notes
1 The (non-cumulative) allowance for employees' PRSI (excluding levies) was £100 per week in 2000-2001.
2 A lower rate for employers of 8.5% applies below £280 per week.

PRSI and levies are chargeable on income from all sources excluding benefit in kind. No deductions from income are allowed, except contributions to approved employee pension schemes and capital allowances.

OTHER INCOME TAX CHANGES

• Ceiling on amount claimed, at marginal tax rate, for cost of employing a carer was increased from €12,700 to €30,000. [€0.15m full year cost]
• Tax exemption for Unemployment Benefit for systemic short-time workers is extended to 31 December 2002.
• The specified rate in respect of home loans is being reduced from 6% to 5%. [€0.4m full year cost]
• Income tax charge on the refund of contributions to an occupational pension scheme reduced from 25% to 20%. [€1.25m full year cost]
• Business Expansion and Seed Capital Schemes renewed until 31 December 2003 with an increased limit of €750,000. [€5.43m full year cost]
• Interest on monies on loans for the improvement of rented residential property will be allowed as a deduction against rental income. [€50m full year cost]
• Introduction of tax relief on both individual and corporate donations to sports organisations for capital projects. [€7.00m full year cost]
• Increase in the single item threshold to €100,000 and the annual limit to €6m in respect of the tax deduction on heritage items donated. [€2.2m full year cost]

BUSINESS AND CORPORATION TAX

• Top rate Employer's PRSI reduced from 12% to 10.75% from 1 March 2002. [€347m full year cost]
• Standard rate of Corporation Tax reduced from 20% to 16%. [€329m full year cost]
• Preliminary tax payment date, to be phased in over five years, brought forward by seven months to one month before the end of the accounting period.
• Qualified shipping activities will be subject to a special tonnage tax, on the basis of profit per day, instead of normal corporation tax. [€0.3m full year cost]
• Introduction of relief against other income where trading losses remain unused following the application of the restriction imposed on the offset of trading losses. [€10m full year cost]

CAPITAL ALLOWANCES AND TAX INCENTIVES

• Threshold for new and second-hand cars used in the course of trade, employment, etc increased from €21,586 to €22,000. [€2m full year cost]
• Removal of requirement of charitable status for tax purposes to qualify for capital allowance in respect of construction or refurbishment of private hospitals and the reduction of the minimum requirement of in-patient beds from 100 to 70. [€2.5m full year cost]
• Introduction of capital allowance in respect of construction or refurbishment of independent sports-injury treatment clinics providing 20 in-patient beds and subject to certain conditions. [€0.75m full year cost]
• Qualifying period for 'Park and Ride' capital allowance scheme extended to 30 June 2004.
• Deadline for the Urban and Rural Renewal Schemes extended to 31 December 2004.
• Deadline for the relief for expenditure on multi-storey car parks extended to 31 December 2004.
• Extension of the special 'section 23 type' relief on the provision of residential accommodation for third level students to 30 September 2005.

STAMP DUTY AND CAPITAL ACQUISITIONS TAX (CAT)

• The stamp duty rates which apply to non-first time owner occupiers purchasing second-hand property will now apply to investors in both new and second-hand residential property. [€20m full year cost]
• The base date for aggregation in respect of gifts or inheritances under CAT brought forward to 5 December 1991. [€1.5m full year cost]

As Ireland reaches an EU standard of living, people expect to have EU levels of infrastructure nd social provision. However,
we pay a substantially lower percentage of national income n tax and social contributions. Do people really believe we
can attain U levels of services nd infrastructure without an average EU level of tax and social contributions?

FARMER TAXATION

• The profit deferral and stock relief in respect of the compulsory disposal of livestock under a disease eradication scheme is extended from two years to four years.

VAT AND EXCISES

• The 20% standard rate of VAT increased to 21% from 1 March 2002. [€290 full year yield]
• Excise duty on cigarettes increased by €0.13 (inc VAT) on a packet of 20 from midnight. [€37.10 full year yield]
• Excise duty on cider and perry increased by €0.21 (inc VAT) from midnight. [€33.60 full year yield]
• Excise duty on petrol and auto diesel increased by €0.06 (inc VAT) per litre from midnight, while that on auto diesel with a sulphur content above 50ppm will be increased by a further €0.06 per litre from 1 March 2002. [€214.00 full year yield]
• Betting tax rate reduced from 5% to 2% from 1 May 2002. [€45.7 full year yield]

Our Response

• Once more the cash benefits of the tax changes introduced favour the better off more than those on low to middle income!
• We are disappointed that no commitment was made to make tax credits refundable. Making tax credits refundable is the only way that those in very low-paid jobs can benefit from Budget day tax changes.
• Notwithstanding the increase in basic personal tax credit, low paid employees are still caught within the tax net.
• The individualisation in the tax system continues to be pursued in a flawed and unfair manner.
• The proportion of tax take from income tax compared to social security taxes (PRSI) has moved further from the EU average levels.
• Other income tax changes are little more than tinkering and involve only a small cost to the exchequer.
• We welcome the fact that the corporate sector payments will be made on a current year basis.
• We regret, however, the reduction in the standard rate of corporation tax and that the opportunity was not availed of to review this continued reduction. This is particularly significant in light of the fact that Ireland now has a per capita income above the EU average but its infrastructure and social provision are far below the EU level.
• The increase in VAT and Excise Duty will be felt more acutely by those least able to afford them.

Ireland is a low-tax country. However, if we insist on reducing corporation tax to 12.5% the balance required must be made up from other sectors such as PAYE payers.

CORI Justice Commission believes that the objective of tax policy should be to collect sufficient taxes to ensure full participation in society for all, through a fair tax system in which those who have more, pay more, while those who have less, pay less.

There is some way to go before this objective is met.

CORI Justice Commission believes that everyone should have sufficient income to live life with dignity. The Commission also believes that Ireland should have the levels of infrastructure and social provision required so that everyone can live life with dignity. The level of taxation required to finance this should be collected. The Commission also believes that we need a fairer tax system.

Discretionary tax expenditures are neither efficient nor fair

It has been held for a long time that discretionary tax expenditures (eg Business Expansion Scheme, pension contributions, medical expenses) are an inappropriate means of achieving policy objectives. In general, discretionary tax expenditures are neither efficient nor fair. They are not fair because they give relief to taxpayers while withholding relief from those whose incomes are too low to pay tax.

In addition, most discretionary tax expenditures give more relief to taxpayers on the top rate of tax than those on the standard rate. The following example illustrates the latter point.

Example

There are two friends, sixteen years old, named Louise and Ciara. They both require orthodontic treatment costing £3,000, which their parents pay for. Louise's parents pay tax at the rate of 22%. At the end of the tax year Louise's parents receive a refund from the Revenue Commissioners of £638 ((£3000-100)x0.22). Ciara's parents are better off than Louise's; they have some income taxed at 44%. At the end of the tax year Ciara's parents receive a refund from the Revenue Commissioners of £1,276 ((£3000-£100)x0.44) in respect of the orthodontic expenditure. In this way the better off family receives twice the tax refund of the less well off family.

Changes Required

There has been some recognition that this kind of inequity is indefensible. Thus, two particular tax expenditures, mortgage interest relief and medical health insurance (VHI, BUPA), are only available at the standard tax rate. The reasoning which led to the standard-rating of these two items applies equally to all of the remaining discretionary tax expenditures. Accordingly, relief on all discretionary tax expenditures should be available at the standard rate only.

Income Distribution

Our Submission Asked That The Budget

• Redress the imbalances of the last four Budgets where the major beneficiaries were the better off.
• Provide a fair income distribution between people on different incomes. To achieve this the combined impact of the tax and social welfare packages should favour those on low incomes whether they depend on social welfare or are in low-paid employment.
• To achieve these objectives the Budget should:
• Increase the lowest social welfare rates by £14 a week for a single person and by £24 a week for a couple.
• Commit Government to benchmarking the lowest social welfare payments for single people at 30% of gross average industrial earnings (GAIE) by 2007.
• Increase child benefit substantially and do not tax it.
• Move towards individualisation of social welfare payments.
• Introduce a cost of disability allowance.
• Double the fuel allowance.
• Increase the weekly allowance for asylum seekers in 'direct provision' from £15 to £35 a week. (This system of 'direct provision' should be terminated. The above recommendation is an interim one).
• Abolish claw-back rules so that social welfare recipients will get the full value of the Budget.

The Budget

• Increased the net current spending by the Department of Social Community and Family Affairs by £502 million.
• Provided an income of £10.03 per week for non contributory pensioners aged 66 and over; provided an increase of £8.06 for qualified adults under 66 years and £9 for qualified adults aged 66 years and over.
• Provided an increase of £8.06 per week for most other personal rates.
• Increased child benefit by £25 for the first and second child and £30 for each subsequent child -payable from April 2002.
• Increased Carers Allowance by £10.03 for those aged 66 and over; £8.06 for those under 66 years.
• Increased Respite Care Grant from £400 to £500.
• Gave an increase in the income thresholds for Family Income Supplement to bring the average payments to recipients up to around £59 per week.
• Gave a 20 percent increase in the number of free units of electricity under the Free Electricity Allowance.
• Extended the Free Travel Companion Pass to invalidity pensioners.
  Increased the earnings disregard for recipients of Disability Allowance.
• Increased Back to School Clothing and Footwear Allowance in respect of children aged 12 years and over by £16.51 from £78 to £94.51.
• Granted an additional income disregard for Back to School Clothing and Footwear Allowance-an increase from £5 to £39.38.
• Almost doubled the Widowed Parent Grant from £1,000 to £1,969.
• Increased Fuel Allowance by £2 from January 2002.
• Increased maternity benefits.
• Increased funding for Family Support Services (£500,000) and for Family Resource Centres (£830,000).
• Increased funding for Voluntary and Community Services [Community Development Programme (£2.7m), Money Advice and Budgeting Service (£0.5m), Comhairle (£1.2m) and Carmichael Centre (£120,000)].

Our Response

• In the area of social welfare we welcome the increase in Old Age Pensions and Child Benefit, also the increases in the Back to School Clothing and Footwear Allowance, the Widowed Parent Grant and the Family Income Supplement.
• We deplore the shamefully inadequate increase of £8 in the social welfare rates which apply to people in receipt of the following:
  • one parent family payment (under 66 yrs)
  • invalidity pension (under 66)
  • blind person's pension (under 66)
  • carer's allowance (under 66)
  • carer's benefit
  • disability/unemployment benefit/injury benefit/health and safety
  • unemployment assistance (long term)/pre-retirement allowance/Farm Assist
  • widow/widower's non-contributory pension (under 66)
• We deeply regret that the foregoing rates were not increased by a minimum of £14 per week and that the opportunity to reverse the inequality manifested in the last four budgets was ignored.
• We also regret that the meagre increase of £2 in the Fuel Allowance is totally inadequate to provide low-income elderly pensioners with the financial resources to heat their homes properly. (According to a UCD study-September 2001-as many as 2000 elderly people die prematurely each winter in Ireland from cold-related illnesses, because of "fuel poverty").
• This budget failed to demonstrate a commitment to begin the process of bench marking social welfare rates to Gross Average Industrial Earnings. It also failed to improve the financial circumstances of asylum seekers and to introduce the cost of Disability Allowance.

Examples of Income Distribution Under this Government

Work/Unemployment/Job Creation

Our Submission Asked That The Budget

• Place an ongoing emphasis on preparing and enabling unemployed people to access jobs. This would involve providing additional resources to support:
• Increased numbers of places providing quality education and training, retraining and up-skilling.
• Expanded opportunities for unemployed people to gain work-place experience
• Adequate numbers of places on programmes such as Community Employment
• Substantially increase the resources of the Local Employment Service (LES) so that every unemployed person can access its services.
• Maintain the number of active labour market programme (ALMP) places available to those who are long-term unemployed.
• Substantially increase the resources available for the Social Economy programme and ensure that it maintains its social economy focus.
• Increase the education/training grants for participants in active labour market programmes.
• Resource life long learning.
• Recognise the right to work of asylum seekers.
• Provide resources to conduct a survey to discover the value of all unpaid work in the country (including community and voluntary work and work in the home).

The Budget

• Community Employment was reduced by 4% to €38.2m.
• Training for the unemployed increased by 38% to €102,807.
• Training for the employed has been decreased to just over €6m.
• The Social Economy Programme decreased to €20.550m.
• Adjusted other administration grants as follows:
• Forfas has been decreased by 31% to almost €20m
• IDA Ireland increase 19% to just over €31m
• Enterprise Ireland increased by 1% to €84.1
• Expenditure on the science and technology development programme down to €58m while the Technology Foresight programme is up to €35m.
• Increased the allocation for employment rights and industrial relations to €3.9m.
• Increased the budget for the Office of the Director of Consumer Affairs to just over €4.6m.
• Grant for employment opportunities for people with disabilities has been increased by 6% to just over €8.4m.
• The disregard for Disability Allowance in respect of earnings from rehabilitative employment will be increased to €120 per week from April 2002.
• The Seed Capital Scheme is being renewed for a 2 year period.
• The Business Expansion Scheme is being renewed for a 2 year period.
• €0.5m support for a range of Social Inclusion projects is being provided via the Department of Enterprise in 2002.
• €0.1m will be provided in 2002 for the establishment of Special Centres of Best Practice in Information, eWork and Enterprise Development.

Our Response

• We welcome the increase in special needs assistants in national schools.
• While welcoming the increased expenditure at national level we argue that greater investment is needed to redress the regressive nature of educational expenditure to this sector over the years.
• We welcome the provision for additional teaching posts at First and Second Level. It is hoped that the majority of these posts will target improved educational opportunities and outcomes for the most disadvantaged students.
• We welcome the increase in the Back to School Allowance in respect of Second Level students.
• To date there is no evidence to suggest that the recommendations of the Steering Group on the Funding of Second Level Schools are being addressed at this time. However , it is hoped that the additional funding at Second Level will especially target this Group's recommendations relating to disadvantage and the equalizing of funding of different types of Second Level schools.
• In the seeming absence of an increase in funding for Adult and Community Education, no further progress can be made in this sector. The failure to institute the National Adult Learning Council is regrettable.
• Similarly the failure to revise the format of the public expenditure estimate and budget statement to include separate 'head' with detailed subheads for this sector is regrettable.
• We look forward to the ongoing implementation and co-ordination of measures to redress educational disadvantage particularly initiatives to counter disadvantage at Pre-school and Primary Level together with the prevention of Early School Leaving.
• We welcome the introduction of some elements of poverty proofing in the Budget documentation. We trust that a similar approach will be extended to educational policy and delivery, and that it will include the identification of those systemic factors, which contribute to educational disadvantage.
• Complete the establishment of the Committee on Educational Disadvantage without further delay and provide it with resources necessary to fulfill its brief especially in relation to
• The integration, co-ordination and mainstreaming of existing programmes and schemes within the Department of Education and Science which aim to address educational disadvantage.
• Disadvantage proofing of policies and identification of systemic factors which contribute to educational disadvantage.

Families, Children and Childcare

Our Budget Submission Asked That

• Take all families out of income poverty.
• Introduce a system whereby tax credits are refundable, and increase tax credits substantially to take those on the minimum wage out of the tax net.
• Integrate Family Income Supplement (FIS) with the tax system.
• Increase child benefit substantially and do not tax it.
• Provide the child care services with additional resources necessary to complete the implementation of the Child Care Act.
• Provide adequate resources to commence the implementation of the Children's Act.

The Budget

• The Budget included the following measures to support parents and their children:
• Gave Child Benefit increases of £25 per month for the first and second child and £30 for subsequent children.
• Increased Back to School Clothing and Footwear Allowance rate payable for children aged 12 years or over by £16.51 from £78 to £94.51 per month.
• Introduced an additional income disregard for Back to School Clothing and Footwear Allowance from £5 to £39.38.
• Increased weekly income thresholds of Family Income Supplement (FIS) by between £26.95 and £27.66 per family to benefit all families on FIS.
• Increased Widowed Parent Grant by £968.91 to £1,969 from budget day.
• Raised ceiling of Qualified Adult Allowance and retention of full Child Dependant Allowance from £145 to £155.
• Paid Child Dependent Allowance to recipients of Disability/ Unemployment Benefit, Health and Safety Benefit, Injury Benefit and Unemployment Assistance up to end of the academic year where the child reaches 18 in that year.
• Increased minimum rate of maternity benefit from £98.70 to £106.79.
• Implemented the Youth Homeless Strategy and developed the care and protection initiatives provided for in the Children Act 2001.

Our Response

• We welcome the increases in Child Benefit rates and other payments.
• We deplore the fact that this Budget has not removed all families and children from income poverty.
• With the economic downturn and increasing unemployment, individualisation as introduced in Budget 2000 will militate against families where one partner loses his/her job. Before individualisation was introduced, the standard rate income tax band was £28,000 for all couples. After that they would start paying the higher rate of tax. Now the standard rate income tax band for single income couples is £29,140 while the band for dual income couples is £44,104. If one spouse (of a couple previously earning two salaries) leaves a job voluntarily or through redundancy, the couple lose the value of the second tax band.
• We regret that the Minister did not avail of the opportunity to mover towards a position where tax credits would be refundable.
• We regret that those on minimum income were not taken out of the tax system
• We welcome the commitment to implementation of the Youth Homeless Strategy and the commitment to develop initiatives under the Children Act 2001. We believe that this act should be implemented in full and that its implementation should be fully resourced so that adequate protection and developmental opportunities can be made available to all children.
• We strongly believe that a Basic Income system would be a much fairer system for individuals and families.

"Children in disadvantaged circumstances have additional needs"

Rural Development

Our Submission Asked That The Budget

• Decouple all direct payments from production and introduce a direct payment in the form of a basic income for each person.
• Ensure the provision of basic infrastructure and services based more on equity and social justice, rather than on cost effectiveness. In this context, the Budget should take particular account of rural disadvantage.
• Provide support for rural housing.
• Provide additional resources for the development of rural public transport strategies and initiatives tailored to meet the needs of people in local communities.
• Support additional special outreach education programmes in rural areas, particularly those where no major third level colleges are located.
• Support policies that encourage alternative farm enterprises through the promotion of quality (including organic) food production and processing.
• Reverse the trend of centralising services away from local communities in areas such as healthcare, education, post offices, etc.
• Support programmes to create employment for part-time farmers with a view to effectively targeting the needs of smaller farmers.

The Budget

• Allocated almost €1.4 billion to Agriculture, Food and Rural Development. This is an increase of 26% over the two year period 2000-2002.
• €471.7m of this budget is funded from other sources including the EU
• Increased the allocation to
  • Rural Environmental Protection Scheme by 8% to €233.7m.
  • Development of organic farming by 32% to €100,000.
  • Western Development Commission by 38% to €1.3m.
  • Western Investment Fund by 3% to €6.5m.
  • LEADER, INTERREG and Peace Programme by 286% to €16.4m.
  • Rural Development Technical Assistance by 2% to €650,000.
  • NDP Rural development by 42% to €20.1m.
  • World food programme by 19% to €4.4m.
  • Early retirement by 8% to €89.6m.
• Reduced the allocation to
  • Installation aid to young farmers by 63% to €1.4m
  • Grants to Farm and Rural Development organisations by 2% to €100,000.
  • Allocation of €0.1m for a new organisation to establish a network of Neighbourhood Watch organisations.
  • €0.1m to establish special centres for best practice in Information, eWork and Enterprise Development in small rural communities in the BMW area.
  • €3.8m in 2002, €1m in 2003 and €1m in 2004 towards the Rural Transport Initiative.

Our Response

• We welcome the increase in the allocation to REPS and the increased support, though small to organic farming.
• We also welcome the increase in support to the Western Development Commission and Fund.
• The increased funding to encourage early retirement is welcome. However we are disappointed that the installation aid to young farmers is cut back. In a situation where the numbers in full time farming is declining it is important to provide incentives and supports to young farmers.
• We note the new Horse and Greyhound fund that was introduced after last year's budget. In 2001 this fund received €58.9m. This is being increased by 3% to €60.9m for 2002.

CORI Justice Commission has proposed that rural development policy should be guided by the ollowing national objective: to secure
the existence of substantial numbers of viable communities n all parts of rural Ireland where every personwould have meaningful work,
adequate income and ocial services, and where the infrastructure needed for sustainable development would be in place.

• Farm income is increasingly dependent on subsidies. According to figures published this month by the Department, Irish farmers received a total of €1.3 billion in subsidies in 2000. Very fundamental questions arise since a very large proportion of this money goes to a relatively small number of people. A fairer and more effective distribution system which would ensure the development of vibrant, sustainable, local communities could and should be devised. The present model is supporting a constant decline of rural Ireland. Growing exclusion is the lived experience of many in rural Ireland today.
• The recent Household Budget Survey shows that only 40.6% of farm household income came from farming.
• The National Farm Survey estimates that the average family farm income (excluding off-farm income) in 2000 was €14,605 (£11,502). There were great variations depending on the size of the farm. Full time farmers had an average farm income of €27,506 (£21,663) and part time farmers €6,241 (£4,915)

The National Farm Survey estimates that on 45% of farms, the holder and /or spouse had an off-farm job. This shows the importance of off-farm jobs for the maintenance and development of rural Ireland. This Budget does not show any creativity around what is needed for the revitalisation of rural communities.

Environment

Our Submission Asked That The Budget

• Allocate the necessary resources to achieve waste reduction targets by implementing the relevant sections of the Waste Management Act.
• Allocate substantial additional resources to develop and reward recycling.
• Provide additional resources to ensure that water pollution is reduced.
• Undertake to review the water pollution acts so as to increase the penalties associated with water pollution.
• Introduce a coherent series of initiatives aimed at reducing dependence on oil, gas, coal and other fossil fuels.
• Resource the development of 'satellite' national accounts that include the costs of items such as environmental damage and resource consumption, and the value of a range of traditionally 'uncounted' items such as unpaid work.
• Introduce public purchasing policies that encourage contractors to adopt sustainable practices.
• Target funding strategies in the transport area to ensure far greater priority is given to public transport initiatives.
• Provide substantial additional resources for the development of library services throughout the country.

The Budget

• Increased the overall allocation to the Department of Environment and Local Government by €228.5m to €3.14bn (8%).
• Increased :
  • Dublin transport by 19% to €40.88m
  • Environmental Protection Agency by 5% to €18.9m
  • Urban regeneration by 106% to €53.3m
  • Programme for Peace & Reconciliation by 59% to €5m.
  • Vehicle & Driver Licensing expenses by 34% to 12.5m.
  • Fire and Emergency services by 2% to €19.96m.
  • National Safety Council by 27% to €2.57m
• Reduced the allocation to the Library and Archive Service by 3% to €10.56m.
• €100m for national road improvements.
• €38m for water and sewerage services.
• €16m for waste management.
• €31.6m in 2002; €32.6m in 2003 and €34.1m in 2004 for improvements to rail infrastructure in Kildare, the suburban rail line and Dublin suburban and DART services.
• €3.6m in 2002; €5.3m in 2003 and €5.4m in 2004 to develop integrated ticketing and real time passenger information.
• €3.8m in 2002; €1m in 2003 and €1m in 2004 for the Rural Transport Initiative.
• €19m for telecommunications infrastructure.
• Increased excise duty by 5p per litre (including VAT) on unleaded superunleaded and leaded petrol.
• Increased excise duty on Auto Diesel by 5p per litre (including VAT) with further increase of 5p per litre post March 2002 on auto diesel with a sulphur content over 50ppm.
• Extended capital allowances relief on building of 'Park and Ride' facilities for a further two years.
• Extended deadline of the urban and rural renewal schemes for tax relief to 2004.

Our Response

• We note allocations for Waste Management and water/ sewerage services. However in environmental terms it is not clear what kind of projects these allocations will be spent on.
• We welcome taxes on petrol and auto diesel.
• We also welcome increased spending on rail infrastructure, telecommunications infrastructure and the Rural Transport Initiative.
• However we are disappointed that there is no real evidence of a commitment to environmental sustainablility, or to the alocation of resources to support the goal of sustainability. This is particularly evidenced by the fact that the spending on roads development is twice the spending on the development on public transport. In economic as well as environmental terms this makes no sense.
• We are particularly disappointed that there is no commitment to the development of 'satellite' national accounts which measure sustainability in financial terms.
• Justice is a harmony which comes from fidelity to right relationships with God, people, institutions and the environment.

Housing & Accommodation

Our Budget Submission Asked That The Budget

• Acknowledge that everyone has a right to appropriate accommodation and develop policy from this perspective.
• Acknowledge that a housing crisis exists.
• Set a target of reducing the time spent on waiting lists to a maximum of 6 months by 2007.
• Provide the resources to local authorities and to the voluntary/non-profit housing sector to make substantial progress towards reaching this target.
• Resource the active implementation and enforcement of the 1992 legislation with respect to the private rented sector of housing.
• Provide sufficient resources to eliminate homelessness in the coming year.
• Provide new resources for the security and management of local authority housing.
• Give a special focus to tackling issues concerning accommodation for refugees and asylum seekers.
• Provide the resources required to ensure implementation of the Travellers Accommodation programme.
• Resource the establishment of a National Housing Authority as proposed in the National Economic and Social Forum's report on social and affordable housing and accommodation.

The Budget

• Allocated just over €1.1 billion for various housing programmes in 2002.
• Within this allocation provided €989m for local authority and social housing.
• An additional €104m (income from Local Authority capital receipts) is committed to social housing.
• €10m allocated in 2002 to implement the Youth Homeless Strategy and develop care and protection initiatives.
• As a measure to encourage investment in the private rented sector
• reintroduced interest relief on borrowings for rented residential properties
• Extended section 23 'type relief' for investment in student accommodation from March 2003 to September 2005.
• Provided €1.7m or 8% increase for communal facilities in voluntary housing schemes.
• ·Increased the allocation for the Grant-In-Aid Fund for the Task Force on Special Housing Aid for the Elderly by 8% to almost €12m (Both this and the previous item are National Lottery funded).
• Provided €415m for house purchase and improvement loans (including HFA), an increase of 17.6%.
• Introduced a new single stamp duty structure for investors in new and second-hand residential property.
• The additional income disregard for recipients of Rent Supplement will be increased from €31.74 to €50 per week, from January 2002.

Our Response

• We welcome the prioritising and increased funding for local authority and social housing but it is still far from adequate in addressing the scale of the housing and accommodation crisis:
• 50,000 households or 130,000 people on the waiting list
• 5,500 people are homeless
• Of the 49,812 dwellings completed in year 2000, only 3,155 were local authority housing
• The specific allocation of €10 to Youth Homelessness is a welcome preventative measure.
• The new incentives for investment in the private rented sector is a welcomed reversal of last year's budget policy.
• However, the budget is short on detail when it comes to addressing measures such as accommodation for asylum seekers/refugees and Travellers.
• It fails to set targets regarding housing waiting lists and new housing starts.
• Local authority waiting lists are growing.
• Rents in the private sector are increasing.
• Finally the budget failed to resource the establishment of a National Housing Authority as proposed by the NESF.
• The Government should acknowledge that everyone has a right to appropriate accommodation and develop policy from this perspective.

Education

Our Submission Asked That The Budget

• Complete the establishment of the Committee on Educational Disadvantage without further delay and provide it with resources necessary to fulfill its brief especially in relation to
• The integration, co-ordination and mainstreaming of existing programmes and schemes within the Department of Education and Science which aim to address educational disadvantage.
• Disadvantage proofing of policies and identification of systemic factors which contribute to educational disadvantag
• Make an explicit commitment to eliminate early school leaving (without qualification) within a specific timeframe.
• Increase the proportion of educational expenditure that is allocated to the primary sector and to pre-primary education as a way of partially addressing the regressive nature of educational funding.
• Begin to implement the main recommendations of the Steering Committee Group on the funding of Second Level Schools especially those relating to disadvantage and equalising of funding of different types of schools.
• Radically increase the funding of Adult and Community Education to facilitate the implementation of priorities identified in the White Paper.
• Establish a right to lifelong education and training for people with physical and mental disabilities.

The Budget

• Increases the allocation to Education by €540m.
• Increases the overall current expenditure on First Level by 11.6% ( it was 13% in 2001/2), Second Level by 8.5% and Third Level by 9%.
• Increases the capitation grant to national schools by 71% to €59m.
• Increases special needs assistants in national schools by 69% to €50.4m.
• Increases grants to secondary schools by 32% to €70.8m
• Fails to provide information on proposed increases in expenditure in the Adult and Community Education sectors.
• Makes provision for improved services for special educational sector over three years with an initial investment of
  €10m. in the current budget year.
• Provides for 350 extra teachers at First Level and 200 at Second Level from September 2002.
• Provides for improved Back to School Allowance at Second Level.
• Continues to ensure that approximately 90% of current educational expenditure goes on pay elements of educational provision at First and Second Level.

Our Response

• We welcome the increase in special needs assistants in national schools.
• While welcoming the increased expenditure at national level we argue that greater investment is needed to redress the regressive nature of educational expenditure to this sector over the years.
• We welcome the provision for additional teaching posts at First and Second Level. It is hoped that the majority of these posts will target improved educational opportunities and outcomes for the most disadvantaged students.
• We welcome the increase in the Back to School Allowance in respect of Second Level students.
• To date there is no evidence to suggest that the recommendations of the Steering Group on the Funding of Second Level Schools are being addressed at this time. However , it is hoped that the additional funding at Second Level will especially target this Group's recommendations relating to disadvantage and the equalizing of funding of different types of Second Level schools.
• In the seeming absence of an increase in funding for Adult and Community Education, no further progress can be made in this sector. The failure to institute the National Adult Learning Council is regrettable. Similarly the failure to revise the format of the public expenditure estimate and budget statement to include separate 'head' with detailed subheads for this sector is regrettable.
• We look forward to the ongoing implementation and co-ordination of measures to redress educational disadvantage particularly initiatives to counter disadvantage at Pre-school and Primary Level together with the prevention of Early School Leaving.
• We welcome the introduction of some elements of poverty proofing in the Budget documentation. We trust that a similar approach will be extended to educational policy and delivery, and that it will include the identification of those systemic factors, which contribute to educational disadvantage.

Healthcare

Our Submission Asked That The Budget

• Give far greater priority to community care and restructure the healthcare budget accordingly.
• Increase the resources for core community care services for older people with priority to be given to home care.
• Provide the resources to fund the PPF commitment to pilot community-based, primary healthcare centres on a seven day, 24 hour basis.
• Resource the development of local community centres to suit both urban and rural needs.
• Increase the proportion of the healthcare budget allocated to the health promotion/prevention area.
• Provide the child care services with the additional resources necessary to complete the implementation of the Child Care Act and provide adequate resources to commence the implementation of the Children's Act.
• Resource implementation of the National Health Strategy for Travellers.
• Commit to review the Nursing Home Act 1990, particularly the area relating to subvention, to maximise flexibility in addressing individual needs.
• Resource the development of nursing care of older people in their own community on the model of the hospice care programme.

The Budget

• The gross allocation to healthcare is €8.2 billion in 2002. The represents 22.6% of the total gross National expenditure.
• Acute Services:
  • Additional 650 beds - 450 from the public sector and 200 from the private sector. Allocation €40 m.
  • Treatment Purchase Fund (to purchase care from the private sector, public sector or abroad.
  • Allocation €30 m.
• Cardiac Services. Allocation €5m.
• Cancer Services. Allocation € 5m.
• Care Programs:
  • Intellectual disability & Autism.Allocation €25m.
  • Physical disabilities: Allocation €25m.
  • Mental Health: Allocation €5m.
• Older People:
  • Emphasis on support care in the community through Home Help, Respite care and Day Centres
  • Nursing Home subvention scheme and palliative care services to receive increased funding.
  • Total allocation: €49m.
  • Community Nursing Units: Allocation €3m.
• Primary Care:
  • GP Cooperatives.
  • Development of Primary Care Team Model.
  • Total allocation: €15m.
• Allocations:
  • €3m IT in Health sector.
  • €75,000 Open Heart House for the care of HIV patients.
  • €0.32m Irish Cancer Society, to support study in prostate cancer.
  • €0.5m KARE.
  • €2.5m (2003) Capital Allowance for Private Hospitals.

Our Response

• We welcome the addition of 650 acute beds into the public sector. The question that must be asked is WHY did it take 5 budgets to decide to buy 200 of these beds from the private sector as waiting lists in the public sector have been a concern to everybody for a long time.
• The continued development of the intellectual and physical disabilities services is a welcomed aspect. There is need to involve the users of these services in a more holistic way.
• The emphasis of support care for older people in the community and commitment to respite and day centres is very welcomed particularly in the light of the Health Strategy Primary Care-A New Direction.
• Increased funding of the Nursing Home subvention scheme and Palliative Care services is important. One would hope that part of this might be used for the introduction of a Home Subvention scheme ( Action 40 National Health Strategy) .
• The development in the Primary Care area is in keeping with the Health Strategy. Concern would have to be expressed at the meagre amount of investment in this area since this is supposed to be one of the key elements in the Health Strategy.
• There is no provision made in this Budget for the PPF commitment to pilot 4 Community based Primary Health centres on a 7 day, 24 hour basis.
• There is no financial commitment to the development of Local Communities to enable them to take responsibility for their health.
• There is no mention of a National Health Strategy for Travellers or any other Ethnic or Minority group or the resource implications of this.
• Concern needs to be expressed over the development of the Mental Health Services and the lack of recognition of core funding needed in this area.
• We greatly regret that the eligibility level for medical cards was not raised at all.
• This budget, like the new Health Strategy supports the concept of a two tiered health system. This is highlighted by the capital allowance for the renovation /building of private hospitals.
• We welcome the recognition of the need for organisational reform in the Health Strategy and the establishment of an Independent Commission on Financial Management and Control Systems, but last year we were promised "a comprehensive value for money audit". Where is it?

Official Development Assistance (ODA)

Our Submission Asked That The Budget

• Take substantial steps to implement the Government's commitment to increase Ireland's Official Development Assistance for poor countries to the UN target of 0.7% of GNP by 2007.
• Resource the development of Ireland's policies in the WTO to ensure they support a fair deal for developing countries.
• Ensure that Ireland's policies on the whole range of Budget issues are consistent with its policies on Official Development Assistance.
• Support the international campaign for the liberation of the poorest nations from the burden of unpayable debt.
  The Budget
  Increased Official Development Assistance by 55% to €372m (£293m) for the coming year.
• This increases the ODA Budget to 0.45% of GNP.
• The total allocation is equivalent to 0.45% of GNP in 2002, an increase from an estimated 0.35% in 2001.
• Within the ODA Budget the biggest increase is in the area of 'bilateral and other aid' which is set to rise by 61% to €278m in 2002.
• Contributions to the UN and other development agencies will rise by 54% to €38m and emergency humanitarian assistance by 38% to €23m.
• €3.2 million has been allocated for Eastern Europe. This is the first time such an allocation has been made.

Our Response

• We welcome the increase in ODA and the Government's commitment to achieving the United Nations target of 0.7% of GNP by 2007.
• We welcome the fact that the interim target of 0.45% by 2002 has been achieved.
• Reaching the UN target by 2007 will, however, demand further increases in the years immediately ahead. We strongly urge the next Government to adhere to this target and to make the necessary increases each year to ensure the target is reached by 2007.
• We also welcome the commitment to allocate at lease €34m next year to HIV/Aids programmes in the poorest countries of the world.

Sustainability Social, Economic and Environmental

The search for a humane, sustainable model of development has gained momentum in recent times. After years of belief that markets and market forces would produce a better life for everyone, major problems and unintended side effects have raised questions and doubts. There is a growing awareness that sustainability must be a constant factor in all development whether social, economic or environmental.

If social exclusion is to be eliminated then policies must be sustainable. Consequently, CORI Justice Commission has proposed the following objective in the area of sustainability: To ensure that all development is socially, economically and environmentally sustainable.

Central to any model of development which has sustainability at its core must be a realisation of the need to move away from money-measured growth, as the principal economic target and measure of success, towards sustainability in terms of real-life social, environmental and economic variables.

Already, within mainstream decision making this realisation has begun to have some impact. This can be seen, for example, in the growing realisation that environmental taxation should be recognised as a key policy instrument in dealing with environmental concerns. Recent voicing of public concern in the area of genetically modified food is another example.

In the context of income and social welfare policy, the recent work on basic income undertaken under Partnership 2000 is a further example of the same search for policies that will be sustainable into the future. The growing demand for the recognition of unpaid work being done in the society is yet another example. As can be seen from these examples, however, there is a long way to go before Ireland or the EU can claim to have placed sustainability at the centre of their development models.

CORI Justice Commission has proposed that Government take the following policy initiatives, among others, to promote social, economic and environmental sustainability:

• Develop 'satellite' national accounts that include the costs of all environmental damage and resource consumption and all unpaid work.
• Sustainability-proof all public policy initiatives and provision.
• Restructure the tax system in favour of environmentally benign development.
• Terminate subsidies and other public expenditure programmes that encourage unsustainable development.
• Introduce public purchasing policies that encourage contractors to adopt sustainable practices.
• Resource the development of indicators to measure economic, social and environmental performance and progress.
• Encourage demand reduction policies in areas such as transport and energy and tackle the implications of such reductions.

The expansion of markets tends to penalise altruism and care. Both individuals and institutions have een free-riding on the caring labour that mainly
women provide. Whether women will continue to rovide such labour without fair remuneration is another matter" Human Development Report 1999 page 79

Everyone has a Right to the Minimum Required to Live Life with Dignity

CORI Justice Commission has constantly argued that every man, woman and child in Ireland has a right to

• Sufficient income to provide for basic necessities
• Meaningful work
• Appropriate accommodation
• Basic healthcare
• Relevant education
• Cultural respect, and
• Real participation.

These are the minimum requirements if a person is to live life with dignity.

When a country has the required resources, it stands indicted if it chooses to allocate its resources in a way that does not ensure that every person has this minimum. That is what Ireland's Government has chosen to do in the past five Budgets.

Ireland today has much that is positive and of which we can be justly proud. However, it also has a scandalous side of which we should be ashamed. In particular, a great many people do not have enough income to provide for basic necessities and the numbers living in relative income poverty are growing. And we as a society make political choices which allow that situation to continue.

The issue of income is a case in point. A recent study conducted by the Vincentian Partnership for Social Justice demonstrates that current social welfare rates and minimum wage rates are grossly inadequate. The study was conducted in 2001 with 118 people in 12 community centres in 7 parts of Dublin city. The key findings of the study were:

The lowest social welfare rates do not reflect the current cost of even the most frugal standard of living

• Housekeeping and food are the most costly items of expenditure for the majority of households regardless of income.
• An inadequate income made it impossible to provide a reasonably healthy diet.
• The shortfall experienced by people dependent on social welfare payment is not due to bad management but to a totally inadequate income.
• When the family's income is concentrated on struggling to survive, there is less opportunity to give time, commitment or money to areas such as education.
• This study recommended that the weekly rate for a single adult should be £145. and that child benefit should be increased to £100 per child per month.

This government after five years in office at a time of unprecedented prosperity has failed to increase payments to these levels, which are the minimum necessary to cover the basic necessities of rent, food and clothing, and to allow people to live with dignity