Poor people likely to lose out if the challenges facing the welfare state are not addressed comprehensively. The Welfare State in the years ahead may support only middle-class and better off people.
Poor people and others who are vulnerable are likely to lose out ifthe challenges facing the welfare state are not addressed comprehensively.”
This was the claim made by Fr Seán Healy, S.M.A. and Sr Brigid Reynolds, S.M., Directors of Social Justice Ireland in a paper presented to a conference on The Future of the Welfare State today (Tuesday Sept. 21, 2010). These concerns were mirrored in other papers presented to this conference.
The papers presented at the conference and the full book containing these papers can all be accessed here.
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Professor Tony Fahey, Professor of Social Policy at UCD, argued that while the welfare state would continue in the future it could well be regressive rather than progressive. For example “’tax breaks for a social purpose’ are of benefit only to those earning taxable income and usually the more taxable income they earn, the greater the benefit they can derive from these measures.” Professor Fahey went on to point out that those who benefit from public support for “private health care, private pensions and owner-occupied housing, typically strive to maintain public subsidisation of those services through the tax system and resist attempts to reform such subsidies in a more progressive direction.” Professor Fahey went on to argue that “the appeal of market solutions has been dented by the financial crisis and consequently the ground for a stronger public role in welfare distribution is more fertile than it has been for many decades.”
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Dr Willem Adema, Senior economist in the OECD Social Policy Division, analysed the impact of adding private expenditure, in areas such as education, health, pensions, unemployment and social housing to public expenditure in these areas. He found that countries such as the UK and the USA closed the gap on countries with a high public expenditure such as Sweden and Denmark, France and Germany. All of these spent more than the OECD average on the welfare state once private and public expenditure is included. Ireland, however, if far below the OECD average no matter how it is counted. Dr Adema also found that public expenditure is effective in reducing poverty and inequality, while private social expenditure has the opposite effect.
Fr Healy and Sr Reynolds went on to argue that the issue of financing and the issue of responsibility for the welfare state are two key issues needing to be addressed if the welfare state is to develop and be progressive in the 21st century.
On Financing Fr Healy and Sr Reynolds argued that:
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The market economy does not want healthcare, education, social housing or social welfare to make too many demands on it.
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Middle classes may be reluctant to support redistribution even though they themselves benefit hugely from the welfare state.
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The fact that people are living longer is putting pressure on funding the welfare state.
Consequently, they argued that if financing is to be sufficient to provide the basics of the welfare state in the future then:
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An increased percentage of GDP must be spent on these services
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Alternatives to raising taxes must be found to ensure the welfare state is developed in a way that is appropriate for the 21st century.
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Disincentives to employment must be removed.
On the issue of responsibility Fr Healy and Sr Reynolds argued that:
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Responsibility for delivering ‘well-being for all’, which should be the focus of the welfare state in the 21st century, must be shared by individuals, institutions, society at large and governments.
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The economy must be seen as serving people not the other way around.
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Poor and/or vulnerable people suffered most in the current crisis. They had least responsibility for what happened. They must not be the ones to suffer most in the period ahead.
