2003, July 18th: Presentation by Fr Sean Healy (on behalf of the Community and Voluntary Pillar of Social Partners) to the plenary meeting of Government and Social Partners.

1. Economy

Growth, employment, public finances and inflation

It is very interesting to listen to some speakers arguing about how they can ensure their constituencies will continue to gain substantially into the future to add to the vast amounts they have already gained over the past ten years. We, in the Community and Voluntary Pillar, on the other hand, represent groups and constituencies who have gained very little over the past decade. So we are in a different place.

For decades we were told to wait until the economy grew and then the issues we are concerned with would be addressed. The economy did grow but the redistribution did not happen. The problems persist. The reason for this is that the emphasis for too long has been on developing an economy to the detriment of developing a society. Balance is needed going forward. We acknowledge the achievements and the vulnerabilities in the economy. These are very important for our Pillar. For example, a higher level of inflation has a hugely negative impact on the people we represent. This is even more important when, for example, the increase in the lowest social welfare rates in Budget 2003 barely kept ahead of inflation.

2. Society

It is obvious that the dramatic economic successes of the last decade have changed Ireland. We are a very rich country with per capita income substantially above the EU average. Major progress has been achieved in many areas, particularly employment. However, as a society we have failed to use our economic success to tackle many of our social problems. These include growing levels of poverty, an increasingly more unequal income distribution, high levels of illiteracy including high rates among young early school-leavers, homelessness, growing social exclusion. increasing levels of racism and discrimination and the widest rich/poor gap in the EU. In no way is this list exhaustive; however, it underscores the necessity to look more broadly at our recent development and question our priorities.

3. Establishing Priorities

In any country the list of potential reforms is extensive. Consequently, it is always necessary to rationally decide on a set of worthwhile priorities that should be pursued. Making these choices is difficult; no country can do all it wishes to do. However, at present we believe that the following should be adopted as national priorities.

3.1. Addressing the Infrastructure and Social Provision Deficit

Ireland continues to display serious deficits in its infrastructure and social provision. In a European context our roads, railways, IT broadband and transport systems compare badly. Similarly, our growing poverty rates, unequal income distribution, growing rich/poor gap and under-equipped health and education systems represent the most visible signs of the extensive gaps in our social provision.

The growth of recent years provided a unique opportunity to address these deficits but far too little was done with the resources that were available. Government chose, instead, to ensure two things:

• That Ireland's total tax-take was the lowest in the EU, and
• That Ireland's total expenditure on social protection as a % of GNP or GDP was, by far, the lowest in the EU.

These were conscious Government decisions and they are responsible for the situation in which we now find ourselves. Consequently, it is no surprise that Ireland has such infrastructure and social provision problems.

3.2. Minimising social exclusion

Social exclusion results from a combination of deprivations. In particular, people experience exclusion when they live in poverty, cannot access employment, and do not have a say in the decisions that affect their lives. Poor people are excluded in Ireland 2003. So too are people with disabilities as well as many older people and women. Another excluded group in Irish society comprises refugees and asylum-seekers.

It remains the case that government has the resources to redress current imbalances and minimise social exclusion. It is simply a question of choices - choices that Government makes.

One example will suffice to illustrate this reality. The Government's NAPS target on the lowest social welfare rates was welcomed by all. Yet Government failed to honour that target. The pathetic €6 a week increase in Budget 2003 means these rates are now further away from the Government's own target than they were a year earlier. Government should honour its own commitment on this issue in Budget 2004. In practice this would mean the lowest rates would be increased by €15 a week for a single person and €25 a week for a couple in Budget 2004.

3.3. Paying a fairer level of taxation

Addressing the deficiencies in Ireland’s social provision will require the government to allocate further resources to the implementation of policies in this area. Currently, one argument levelled against this move is that funding is unavailable. However, this argument is false as sufficient resources are available if the government raised Ireland’s total tax take to a fairer level.

Currently Ireland is a low tax economy. Ireland’s total tax take is the lowest in Europe, an outcome that applies irrespective of whether the calculations are done using GDP or GNP. Ireland’s tax take stands at just 27.7 per cent of GDP and 33.9 per cent of GNP. The EU average is 41.4%.

It is an obvious reality that Ireland can never hope to address its deficits in infrastructure and social provision if we continue to collect substantially less tax than that required by other European countries. Small increases in taxation are certainly feasible and there is little evidence to suggest that such increases would have any significant negative impact on the economy. We believe that this increase should not be attained through income taxation, but rather via a broadening of the tax base and an increase in corporation taxation. (This is because the total Government 'take' from income tax and employee's social insurance already is close to the EU average.)

4. Conclusion

In 2003, it is clearer than ever that Ireland is a country of growing socio-economic divides. A society is measured by how it treats its most vulnerable people. By this measurement Ireland is failing dismally. Despite the substantial resources that have been available, Ireland’s poorest people have been effectively excluded from what is required to live life with dignity. Direct and immediate action is required to reverse this situation. Sustaining Progress has a major part to play in ensuring a better future is available for all of Ireland's people. We certainly are prepared to play our part in reversing the present divisions in Irish society. We welcome the Taoiseach's commitment to ensure he and the Government play their part in building a fairer and more inclusive society. We look forward to seeing this commitment being made manifest in action in Budget 2004 and beyond.