Choices in Budget 2022 leave those on low incomes behind

Budget 2022 shows that Government policy is not yet focused on achieving the objectives of reducing poverty and promoting social inclusion.

Low incomes

• Firstly, as a result of this Government’s failure to focus on low to middle income households with jobs, a couple with one earner at €30,000 has received an additional €0.39 cents per week from these two budgets combined.  Even more devastating is the outcome for a household of four, two adults and two children, one income at €30,000 who also have benefitted by only €0.39 cent over this Government’s two Budgets.
• Secondly, the failure to raise core social welfare rates by €10 a week means that many of the people who depend on these payments will fall further behind the rest of society.
• Thirdly, the adjustments in tax bands  will benefit middle and higher income people but many on low incomes will see little or no gain.  A much fairer way of using the money available for income tax reductions would have been to make tax credits refundable which would have ensured the benefits went to the low paid and the working poor

 Income gains from Budget 2022

• As a result of Budget 2022 single people depending on social welfare will see their incomes increase by €5.00 a week while a similar person with an income of €50,000 a year will take home an additional €7.96 a week. Couples with the same incomes will receive an increase of €8.30 and €8.92 a week.  While many of those with jobs will also receive a welcome pay increase in the coming year, that will mean that many of those depending on social welfare payments will fall further behind the rest of society .
• Budget 2022 is the second budget produced by this Government and demonstrates a disappointing and worrying trajectory, revealing a Government that is not focused on protecting Ireland’s most vulnerable.   Those on the lowest incomes (welfare and low pay) are being let fall further behind.
• While there are some benefits for people who are poor and vulnerable, these are not of sufficient scale to even allow the weakest to stand still.  Instead, Ireland’s 630,000 people living in poverty, more than a quarter of whom are children, will be worse off in real terms. 
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No real strategy to tackle poverty and exclusion

• Government’s initiatives to begin addressing the climate crisis, the housing shortage and reverse a decade of under-investment in our capital stock are welcome.   However, there is no clear, comprehensive strategy to tackle poverty, social exclusion and vulnerability.  While Government can itemise which individual national roads are to be built or upgraded, it has not even tried to outline a real and effective pathway towards reducing poverty and social exclusion.  Its actions clearly show Government has failed, to date, to commit to leaving nobody behind. This is most regrettable.
• Government’s claim that an increase of €5 in the fuel allowance makes up for the low increase in welfare rates ignores the fact that large numbers of poor people do not have access to the fuel allowance. 
• Pretending that, by addressing a little of the needs of these groups they are addressing poverty, is patently untrue.  Benchmarking core welfare rates to average earnings is the key to reducing poverty and ultimately, income inequality.  Failing to do this is an insult to Ireland’s most vulnerable people.
• Social Justice Ireland recognises that poverty is never just about income.  But it is always about income. Failure to increase core social welfare rates by at least €10 a week will have profoundly negative impacts on some of Ireland’s most vulnerable people. As a result of Budget 2022 inequality will increase in Ireland, the rich/poor gap will widen and Ireland will continue its journey towards becoming a deeply divided, two-tier society.  

Plans but not Priorities

• The allocations set out in Budget 2022 reflect Government commitments including those presented in the recent National Development Plan 2021-2030. This new plan includes some welcome aspects, such as increased investment for public transport, the prioritisation of energy efficiency measures and an overdue investment in water infrastructure. However, Social Justice Ireland regrets that it, and the recent Housing for All plan, have not adequately confronted the scale and severity of current housing needs. While there are new targets (for new builds and social housing), these seem divorced from the severity of current needs and pent-up demand (see p5).
• Ireland now has many plans to achieve progress: the NDP, Housing for All, Sláintecare and shortly the new Climate Action Plan. Plans while welcome need to be better aligned to the challenges our society faces and adequately resourced to resolve these.

Housing response is inadequate

• While the allocation for housing is rising, Government’s decision to renew the help-to-buy scheme is regressive, expensive and helping to maintain high house prices for newly constructed homes (cf. page 5).

Limited progress on climate

• There are some welcome initiatives in the area of sustainability, environment and climate.  However, there was no progress on tackling environmentally damaging subsidies highlighted by the CSO (see p.9)

Regressive choices on tax

• Budget 2022 failed to expand the tax base or the total revenue from all sources on the scale required. On income tax the choices made were very regressive as low income workers were again ignored.

Wellbeing not prioritised

• The Government’s paper on wellbeing indicators was published last year, yet there is no evidence of the transformational change required to how Government makes policy. Failure on this front is consistent with leaving the weak behind.

Conclusion

Drafting a Budget involves Government in major decision-making about the direction of society and of how the available resources can best be used to address the challenges currently being faced by society while moving towards a desirable and just future. Budget 2022 included a number of welcome initiatives. However, its choices leave those on lower incomes behind which is most disappointing.

Download our response to Budget 2022