Budget 2022 is not a time for fiscal retrenchment

Our pre-budget submission ‘Budget Choices 2022’ outlines why expenditure will have to rise if the housing strategy, the climate change strategy and the revised national development plan are to receive the allocations required to achieve their worthy goals.

To this end Budget 2022 must also see Government reform some aspects of the current taxation system in the interest of enhancing fairness and sustainability. It is an opportunity to make some long-overdue changes which will also provide some additional revenue. Tackling tax expenditures is one such area.

At this time the fiscal stance adopted by Ireland should not focus primarily on reducing the debt and deficit.  Such an approach would permanently destroy the economic capacity of the country. Instead fiscal policy must promote an economic and social recovery in this post-Covid world, supporting our long-term economic capacity and improving the well-being of our citizens.

Major investment required to support Ireland’s recovery

Major investment in Budget 2022  is essential for a number of reasons:

1. to secure economic development;
2. to protect communities;
3. to keep unemployment as low as possible (with initiatives such as a substantial state-led childcare programme);
4. to ensure critical infrastructure deficits are addressed; and
5. to tackle climate change at the level required, and ensure that the transition to a low-carbon economy is just and fair. 

Budget 2022 should act on this basis. 

Ireland’s fiscal stance for Budget 2022 must be primarily focused on supporting demand by supporting the incomes of citizens and through Government capital expenditure. Given the scale of disruption caused by the pandemic, it must be recognised that extraordinary Government expenditure will be required to sustain demand and to support incomes as we work our way through the recovery period, and through the return to a new, sustainable, long-term trajectory for the economy. We must not make the mistake of focusing primarily on some arbitrary deficit target.

Delivering on housing and climate commitments

Ireland’s housing crisis continues with the possibility of purchasing a home moving further and further away from the vast majority of the population as costs escalate dramatically.  If ‘Housing for All’ is to deliver all that it promises, Social Justice Ireland has calculated that major additional investment beyond what’s included in the housing plan will be necessary if we’re to really get close to achieving housing for all as set out in the goals of that plan.  Likewise, Budget 2022 must ensure that our investment strategy supports the ambition of the climate action plan, a just transition to a green economy, and the emission reductions that are required in a vibrant society and economy. 

We face other challenges which also require attention.  Most pre-date the pandemic.  These include a persistent child poverty problem, the low pay of many of our essential workers, a two-tier health system and youth unemployment.

Budget 2022 – time for a new approach

In Budget 2022, Government has the opportunity to deliver a fair recovery and build a future that is prosperous, sustainable and fair.  To do so a new approach is required, one built on a new Social Contract that can deliver for everyone.  This requires a vibrant economy, decent services and infrastructure, just taxation, good governance and sustainability. We can start building this new Social Contract in Budget 2022.

Ireland stands at a major moment of change and looks to a future beyond COVID-19.  The pandemic has changed our views on the way we were and on the way we want to be.  Budget 2022 should embrace the need for new approaches to how we as a society prioritise choices. People, well-being, public services and a widespread and fair recovery must come first.  The choices Government makes in Budget 2022 must be focused on building a future that is prosperous, sustainable and fair. They should be socially progressive, promote wellbeing and be focused on building a future where nobody is left behind.    

Our pre-budget submission is available to download here.