Article by Sean Healy, entitled Must the Poor Always Wait?, published in The Irish Times 1st December 2003
Ireland’s poorest people have waited far too long. For years successive Governments have promised to eliminate poverty when adequate resources were available. Some progress was made on this commitment in recent years with the substantial increase in jobs and the decrease in the number of people unemployed. But the proportion of the population living in poverty is higher now than it was in 1987. And that poverty line is not high – it is equivalent to €175 a week for a single person in 2003.
The failure of Government strategy in tackling poverty can be found, in part, when we look at the groups that are living in poverty. More than 56% of these live in households headed by a person who is not in the labour force. They are ill or retired or have a disability that keeps them out of the labour force or are in that category called “on home duties”.
As they are not in the labour force in the first place a strategy that suggests a job will solve their poverty is not sufficient. They rely on social welfare payments and that is why the level of social welfare rates is such a crucial issue in tackling poverty in Ireland today.
The current national agreement Sustaining Progress contains a commitment by Government to benchmark the lowest social welfare rates at 30% of average industrial earnings. This was the target set in the Government’s own National Anti-Poverty Strategy and it is to be reached by 2007. If this benchmark is to be honoured in Budget 2004 the lowest social welfare payments must rise by at least €12 a week for a single person and €20 for a couple on Wednesday next.
But that is not the whole explanation for Ireland’s persistent high poverty rates. An analysis of Ireland’s spending on social protection against that of other EU countries is very telling. Social protection expenditure is defined by Eurostat to include spending on: sickness/health care, disability, old age, survivors, family/children, unemployment, housing and social inclusion initiatives not elsewhere classified. Using either GDP or GNP, Ireland’s spending on social expenditure stands out as the lowest in Europe. There remains a considerable gap between Ireland and the next lowest country, Spain.
Side by side with this low social expenditure Ireland’s total tax take is the lowest in the EU. In recent years Ireland has evolved into a low- tax economy. During the last year the OECD published a review which showed that Ireland collected a lower proportion of GDP in tax than any other country across the European Union. A recent CORI Justice Commission analysis has updated these figures following Budget 2003.
Ireland also has one of the worst rich/poor gaps in the EU.. The most recent data on income distribution, from the 2000 HBS, indicates a further shift in the distribution of Ireland’s income towards the well off. In 2000, the top 10% of the population received 25.90% of the total income while the poorest 50% only received 23.29%.
The widening rich/poor gap and the rising numbers living in relative income poverty are not an accident. Rather, they flow directly from Government policy. For example, the gap between an unemployed person and a person on €50,000 a year has widened by €276 a week (€14,350 a year) over the past six years as a result of this Government’s budget decisions.
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, education and social housing systems represent the most visible signs of the extensive gaps in our social provision. In the context of continued economic growth and per capita income well above the European average, the opportunity to address these deficits is available.
Ireland’s total tax-take needs to be raised to be the second lowest in the EU. This increase should not come from income tax or employee PRSI which are close to the EU average. Rather it should be collected through a number of initiatives such as the elimination of tax expenditures that are simply state handouts to the wealthiest in the country. The standard-rating of tax breaks which benefit the better off more than those who are poor would also be a step in the right direction. The CORI Justice Commission’s Policy Briefing on Budget Choices lists a range of options that Government could follow to raise its total tax-take in an equitable and fair way. This is necessary if poverty and social exclusion are ever to be addressed on a sufficient scale in Ireland.
In the years of economic growth and prosperity the gap between rich and poor has further widened. Never before has the distribution of income in Ireland been so unequal. New Government priorities are urgently required.
A society is measured by how it treats its most vulnerable people. By this measurement Ireland is failing dismally. Government can go some way towards rectifying the imbalance in its Budget decisions next Wednesday. Honouring its benchmarking commitments on the lowest social welfare rates should be the Budget’s number one priority.