"Every Billionaire is a Policy Failure" - Oxfam Report highlights rise in inequality

The latest Oxfam Inequality Report, Survival of the Richest, calls for a wealth tax on the super-rich. In an Irish context this would equate to an estimated €8.2bn additional revenue to the Exchequer. Here we look at what that might have achieved in Budget 2023.

Budget 2023 should have been about the cost of living. It was lauded as a cost of living Budget, in fact. But as we saw in our analysis, Budget 2023 increased the gap between those on €100,000 and those dependent on social welfare by €199 per year. This gap now stands at almost €1,000 per week.

In our Budget Choices policy brief, published in June 2022, we made proposals to increase core social welfare rates to keep pace with inflation; to invest in reforms to the Health system and to take particular account of people living with disabilities and carers; to address Educational disadvantage and invest in much-needed funding for third level; to protect children; to invest in housing; to invest in Just Transition; Rural Development and Communities; and to keep our commitments to international protection and human rights. Had all of our proposals been implemented, it would have cost the Exchequer a little over €2 billion in additional funding. One quarter of what Oxfam have calculated could be raised by a wealth tax.

We, and others in the civil society sector, sought a minimum increase of €20/week to core social welfare rates just to keep pace with inflation. We were told that this wasn’t possible. That it was too expensive. Social welfare rates increased by €12 per week, a real-term reduction in spending power of €8. How much would it have cost to deliver on the €20? €878 million for a full year. When pensions were included, the figure was c€1.5 billion before any of the proposals regarding standard-rating tax expenditures were factored in. But this was too expensive.

On housing, having immediately challenged the targets on the publication of the Housing for All Strategy, we sought an increase in social housing targets from 9,000 to 15,000 at an additional cost to the Exchequer of c.€1.4 billion. Again, this was considered implausible, not just because of cost, but certainly cost was a factor.

In the area of Healthcare, we have repeatedly called for the full implementation of Sláintecare and, in particular, the capital allocation of €500 million per year. Notwithstanding cross-party support since 2016, investment in this area has been lacking. In fact, for the last number of years, our post-Budget analysis has pointed out the deficit in the allocation to Health, which does not appear to take account of Existing Levels of Service. For example, the Budget 2023 allocation to Health was €1.15 billion in core funding, with a further €700 million for Covid-19 and €88 million contingency. That seems like a lot of money, however when you factor in the €900 million that the Irish Fiscal Advisory Council estimate is needed just to stand still – to take account of existing levels of service and account for demographic change – it leaves very little in the Budget for much-needed improvements in services.

The Health and Housing systems are under extreme pressure, and have been for years. Core social welfare rates, which have never provided a reasonable standard of living, are not even keeping pace with inflation, leaving people who depend on them further behind. Had our proposals been implemented in full, the cost to the Exchequer would have been just over €2bn.

And that’s before we come to securing our energy supply. Budget 2023 was a missed opportunity to invest in and secure our energy infrastructure, progress the implementation of the Climate Action Plan and ensure a just transition to a green economy.  While there were some welcome measures in Budget 2023, and a number of one-off measures for households and businesses to address increasing energy costs, Government failed to put social investment and just transition at the core of economic policy. 

Energy is one of the key drivers in the increased cost of living.  While Government announced a further three universal, untargeted energy credits as part of a cost of living package and at a total cost of €1.2bn, the budget itself contained limited measures to address the cost of energy in the long-term and energy poverty. 

An extension of the one-off energy credit will not solve the cost of living challenges many face, particularly those in energy poverty. Even if Government continues to give them every few months as is currently the case.  A more appropriate use of this substantial level of resources would have been to implement the OECD recommendation to redesign the fuel allowance, delink it from heating fuels, update and expand the eligibility criteria and provide it to eligible households during the whole year.  This would provide a tool for Government to target and support rural and low income households (those impacted most by rising energy costs) now and in the years ahead as policies to meet the targets set out in the carbon budgets are implemented. 

We need to increase our renewable energy supply and to deliver long-term sustained reductions in energy costs yet, in Budget 2023 Government neglected to divert existing fossil fuel subsidies to renewable energy. Such a move would have front-loaded the renewable sector’s development while supporting the Government’s aim to cut long-term energy costs for homes and businesses.

There is a headline in the Oxfam Report “Every billionaire is a policy failure”. We would argue that it is also a policy choice. A choice to prioritise profit. A choice to collect inadequate taxation to deliver the supports and services the population need. A choice to refer to taxation as taking money out of people’s pockets. And what that choice boils down to is a choice to prioritise higher income earners over the almost 600,000 people struggling to get by.