Government should do no harm to low income households in Budget 2023
Government should ensure they do no harm to low-income households in Budget 2023 was the key message from Social Justice Ireland at the National Economic Dialogue 2022. Uncertainty once again dominates Ireland’s social and economic outlook and frames the context for Budget 2023, but this must not be used as an excuse to, again, leave Ireland’s poorest behind. There is a real danger that the cost of living crisis will be combined with extensive inflation and, possibly, recession so if Government gets its choices wrong, a great many low-income, poor people in Ireland could find their already precarious situation worsened substantially.
Budget 2023
In practice, doing no harm to low income households means that, no matter what scenario faces Government as it makes its final choices for Budget 2023, it should:
(i) increase core social welfare rates by €20 a week,
(ii) replace the minimum wage with a living wage rate of €12.90 an hour and
(iii) further address the working poor issue by making tax credits refundable.
National Debt
Even if the economic situation worsens in the coming months, Social Justice Ireland believes that Budget 2023 should pursue a targeted economic stimulus where the state commits to borrowing additional resources and uses these to invest in long-term infrastructural projects focused on social housing provision and measures to accelerate Ireland achieving our committed climate change targets.
While Ireland has an already high national debt and borrowing costs are currently increasing, the cost of borrowing remains historically low and well below the return that these projects will provide to the state across their lifetime. State borrowing for prudent investment makes sense at the best of times, but even more so should there be a sudden economic contraction.
Cost of Living
The standard of living that social welfare payments can provide is dramatically reduced when the cost of living rises. The impact of inflation is greatest for those households in the bottom twenty percent of the income distribution. A recent study from Social Justice Ireland highlights how significantly housing costs impact on the living standards of renters and in particular low income families who live in accommodation provided by local authorities or receive social housing supports. Post housing costs, one in every two of these low income households has an income below the poverty line; this compares to one in five for the whole population and one in twelve for households who are owner occupiers.
Budget 2023 must protect those in low-income households who are most seriously impacted by the current crisis. It is vital that the fiscal stance adopted by Ireland at this challenging moment protects those on low and middle incomes, addresses the other major challenges we are currently facing and provides the resources necessary to reduce division and improve wellbeing in Irish society.
Additional resourcing
Additional resources will be required on other fronts - to provide more social housing, to tackle the climate crisis, to cover the cost of rising public sector pay, to develop comprehensive public transport and really effective childcare and to promote the just transition that is essential if Ireland is to avoid serious divisions in the coming decade. Each of these is focused on addressing challenges that existed prior to Covid’s arrival. They will require additional resources, perhaps even more than currently proposed, if these required initiatives are to achieve their goals. The choices Government makes must be focused on building a future that is prosperous, sustainable and fair. A new Social Contract is needed, focused on building a sustainable and resilient economy that delivers for everyone. Budget 2023 needs to have this new Social Contract at its core. All five Pillars of Social Dialogue (employers, trade unions, farmers, community/voluntary and environmental) should be involved in its development and implementation.