Budget impact assessment
Stephen S. Donnelly cites a Grant Thornton report showing falling household disposable income and asks for a distributional impact assessment of the forthcoming budget before Members vote. The Tánaiste defends the Government’s record, says welfare rates were protected and low earners were removed from USC, and confirms that budget documentation will outline effects on families at different income levels.
On Tuesday the financial services firm Grant Thornton issued a report which analysed the last five austerity budgets and looked at the impact these budgets had had on Irish families. Among the findings are that Irish families are now paying, on average, double the amount in tax that they paid in 2008; that when Government cuts are taken into account such as, for example, cuts to child benefit, they are down, on average, €6,000 in disposable income. That is before property tax for a full year and before price inflation, for example, the rise of €500 in annual energy costs, an issue we have just been discussing, are taken into account. Not only do Irish families have a lot less money because of increased prices, that money is not going as far.
What is particularly damning is what the report states about the distributional effects, or who is being asked to carry the heaviest burden. What Grant Thornton has found is that a family with an income of €80,000 has seen its tax burden rise by about 50%, but it has also found that a family with an income of half that amount, €40,000, has seen its tax burden rise not by 50% but by 125%. This, Grant Thornton suggests, was due largely to the changes to the universal social charge that were introduced in 2011. A tax partner at Grant Thornton said: "...it’s clear low to middle-income earners have paid a heavier price in terms of the percentage increase in taxes they pay." We have independent expert opinion that the first two budgets of Fine Gael and the Labour Party have, unfortunately, increased the level of inequality in this country.
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This was not inevitable; it was a choice which, as I believe the Tánaiste will agree, was bad for everybody. It hammers those who have the least and slows the full economic recovery of the country.
With the Government's third austerity budget just 12 days away, I ask the Tánaiste the following two questions. Will he commit that he will give Members of Dáil Éireann when the budget is introduced, or, at the very least, before we are asked to vote on it, an impact assessment of the proposals in terms of the socioeconomic indicators and who will be asked to carry the heaviest burden? If that analysis shows that the proposals being put to Dáil Éireann ask those who have the least to bear the heaviest burden, will he withdraw the Labour Party's support for the budget?
Comment on this
Most people in this country do not need a report from Grant Thornton or anybody else to tell them we have had an economic crisis. In 2008 the economy crashed, effectively. The people from whom we inherited the Government put the taxpayer on the hazard for the entire banking system when they introduced a blanket guarantee. The consequence was that the country and its taxpayers were made responsible for the debts of the banks. The property bubble that had been at the centre of the previous Government's economic strategy burst and we ended up in a situation at the end of 2010 where the country's financial position was so bad there was nobody in the international money markets who would lend money to this country.
Families and households do not need a report from Grant Thornton or anybody else to tell them how difficult it has been for families for the past five years. It has been difficult for them. People have lost jobs and businesses; they have seen their incomes shrink and, in some cases, their children having to emigrate. The job of work the Government took on was that we rescue the country from that economic disaster and turn it around. We are succeeding in doing so. The figures now available to us show that, compared to what we had prior to the election of the Government, when 250,000 jobs had been lost in the previous three years, we are now creating 3,000 jobs per month. In the course of this week we have seen the number of unemployed persons on the live register at its lowest rate since 2009. We are beginning to see retail activity improving. We are beginning to see recovery. What we have to do is to stay the course, get the country to recover and ensure additional jobs are created, that we drive on with recovery and that we get the public finances in order in order we will not find ourselves in the kind of situation we were in at the end of 2010.
Deputy Stephen Donnelly knows very well that I am not going to talk to him this morning about a budget that is not going to be announced until 15 October. However, I can tell him this, the budget on 15 October will be part of the Government's strategy to continue the job of recovery we have undertaken. It will contribute to it and be balanced and fair.
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I was told never to expect an answer to any question I put during Leaders' Questions - so far, so good.
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Read on, Deputy. Do not bother asking a question.
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In response to Deputy Michael McGrath, the Tánaiste described last year's budget as being fair.
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These are statements from the Deputy.
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We do not need a report from Grant Thornton to tell us we have had an economic collapse. However, that report directly contradicts what the Tánaiste said to Deputy Michael McGrath about last year's budget being fair. In fact, it states very clearly that those with the least have been asked to contribute the most.
I asked the Tánaiste two questions. First, will the Government, when it brings forward the budget, provide all Members of the Dáil with an analysis examining the distributional effects of the proposals, thus assisting us in deciding how we will vote? Second, if this analysis shows that the distributional effects are such that those who have the least are being asked to contribute the most, will the Tánaiste withhold the Labour Party's support for the budget? I am sometimes described - wrongly, in my opinion - as a right-wing neoliberal-----
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There is a question to consider here. If the crazy right-wing neoliberal is seeking assurances on equality from the leader of the Labour Party and is not getting them, something has gone wrong.
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Deputy Donnelly cited figures he claims point to increases in taxes on families. This Government has not increased income tax since coming to office.
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The Deputy expressed views in regard to those people who are most vulnerable in our society. This Government, perhaps to the surprise of the Deputy and many others, has not reduced the basic rates of social welfare payments. We have taken more than 300,000 of the lowest-paid workers outside the scope of the USC, to which the Deputy referred. In addition, the Government has restored the minimum wage and the joint labour committee system for the determination of pay and conditions for lower-paid employees.
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Of course we will. The Deputy is here long enough to know that at budget time, in addition to the Budget Statement issued by the Minister for Finance and the Minister for Public Expenditure and Reform, Members receive a wad of documentation outlining the impact of budget measures on families at different levels of income.
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There will be scope for Deputy Donnelly to write lots of articles.
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To be fair to Deputy Donnelly, I was of the view when he first came into this House that he was a right-wing neoliberal.
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The longer he is here, however, the more I am coming reluctantly to the conclusion that he is just an opportunist.
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In that case we can expect the Deputy to apply soon to join the Labour Party.