Budget debates

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The budget

The Dail and Seanad both approved the 2013 budget and the associated financial resolutions and Social welfare Bill (Dail Eireann, Debates, 5th December 2012, 449-end; 6th December,  692-756; 11th December, 114 – 166; 12th December, 76-113, 140-end; 13th December, 705-738; Seanad Eireann, Debates, 5th December, 397-430; 18th December 950-990; 19th December, 53-102; 20th December,  165-186).



Dail debate

The main provisions of the budget are well known and readers are recommended to the analysis presented by The Wheel (www.wheel.ie), EAPN (www.eapn.ie) and by Social Justice Ireland (www.socialjustice.ie).  Introducing the budget in the Dail, the Minister for Finance Michael Noonan informed the Dail of the public consultation that he had launched on amendments to the tax relief on donations to charities.  From 2013, donations would have a new, simplified tax relief regime of a blended rate of 31%.  He was aware that there might be significant numbers of philanthropists worldwide, many of them with an Irish background, who might wish to make significant donations to aid Ireland’s economic recovery and he had decided to ask the Oireachtas Committee on Finance, Public Expenditure and Reform to examine the matter.


Sean Fleming (FF, Laois Offaly) asked: was the budget poverty-proofed?  He thought it unlikely, granted that ministers had seen it only a few days ago.  Nor was it gender-proofed, nor equality-proofed, instead being rushed to the printers without a detailed discussion.  Mick Wallace (ind, Wexford) described as breathtaking the injustice of the pain inflicted.  A new poor had emerged from the ranks of the middle class, with 50% of people struggling to pay household bills, with only the best-off spared.  Only massive emigration kept unemployment below the 500,000 mark.  Austerity had failed to spur growth or tackle unemployment.  What had happened in the past few years was nothing short of a re-writing of the social contract that had existed since the second world war, one which guaranteed minimum provision.  Nations could choose to be high tax, with good social services, like the Nordic countries.  He quoted the Divided we stand report of the Organization for Economic Cooperation and Development  of how inequality had grown and reinforced the vicious cycle of poverty.  In Ireland, progress had been made in taking children out of poverty, but that was undermined by austerity budgets.  It was not possible to reduce child poverty by cutting child benefit.  It was a false economy that failed the economy, society and people.


Finian McGrath (ind, Dublin NC) described the budget as a grave attack on children, families, the disabled and senior citizens, steeped in unfairness and full of broken promises.  It was a budget that pushed people over the edge and when people were hurting, the budget put the boot in even harder to carers and the unemployed.  He spoke of the waiting list for St Michael’s House residential care, 317, which was not a large number which could be resolved in the morning with the political will.  But it had lost €11.2m in cuts, reduced staff by 160 and administrative staff by 34% – but the government would cut again, contrasted with the billions of euros being pumped into the banks.  There would be intermittent closures in day services, residential services, respite services, transport services, support services and clinical services.  


‘Food poverty’ – or hunger?

Seamus Healy (ind, Tipperary S) spoke of how 200,000 children lived in poverty and 500 were homeless – but the government had cut child benefit again.  Gerry Adams (SF, Louth), warned that the number of children at risk of poverty and deprivation would rise as a result of the budget.  10% of households suffered from food poverty, a new buzzword that meant hunger.  Mothers and grandmothers had been taken to hospital with malnutrition.  Food, clothing and shelter would become unaffordable for thousands of families.  Did the Taoiseach know what it was like to clothe three or four children going back to school when one is earning the minimum wage? he asked.  The Tanaiste, Eamon Gilmore, described the government commitment to an area-based child poverty strategy, which would built on the highly successful pilot projects jointly resourced by the state and Atlantic Philanthropies (see OB43 – ed).  He paid tribute to it and the vision it had shown and the results achieved, expressing his hope that the partnership would continue.

John Halligan (ind, Waterford) described a meeting in Waterford attended by 500 people, addressed by the Society of St Vincent de Paul and the stories they told were horrendous.  The people there were from all walks of life, were all stressed and in a state of turmoil.  What was offensive was that the government refused to meet the Society and read its pre-budget submission.  It was at the coalface but we were not talking about a few hundred or thousands of people.  There were 700,000 people on or below the poverty line, with 250,000 children going to school hungry or without proper clothing.  The Society had used the term ‘malnutrition’ for the first time in its history.  ‘When it will not listen to the Society of St Vincent de Paul or Social Justice Ireland, it will listen to nobody’.  A swathe of people had been buried in bad debt or lost their jobs through not fault of their own.  All of them were on social welfare and brought arrears with them.  They needed compassion and people to help them, not to leave them hungry and send children to school without proper footwear, sit in a house with no heating and wonder on Thursday if they would have money to buy food at the weekend.  This was when government were supposed to step up to the plate and look after them.


State sending people to charity

To say that we have kept social welfare rates and not driven people further into poverty was a hollow boast, argued Willie O’Dea (FF, Limerick City).  Last year’s budget was, according to the Economic and Social Research Institute (ESRI), Social Justice Ireland and other organizations – which had no political axe to grind, no party affiliation and simply told it as it is – stated unequivocally that it was the first of eight austerity budgets to be regressive.  All the indicators were that this budget continued the trend.  The cumulative effect of the 2013 budget, for a family that was already vulnerable and in poverty, would be devastating for those in already precarious situations.  He drew attention to the cut in exceptional needs payments of €6m.  Already the community welfare officers who distributed them were writing to charities such as the Society of St Vincent de Paul to ask it to help out some of their clients because they did not have enough money in fund to pay them.  He knew of other charities in his own city to whom people had been sent by community welfare officers working for the state.  The people involved were deserving cases, but the welfare officers had no money to help them.  They were asking charities to give hampers to people.  What was the government’s reaction?  Cut the exceptional needs fund by a further €6m.


We had reached the stage, he said, that there were two countries in Ireland: a wealthy and protected élite, with intact and protected privileges and on the other side 700,000 people living below the international defined poverty line and standard of dignity and decency.  The poor of Ireland were living in abject poverty without the hope or belief that they would ever escape the conditions with which they were shackled.  These were the people most targeted by this budget and the last two had taken an enormous step toward a cruder, meaner, harsher and more pitiless society.  


Barry Cowen (FF, Laois Offaly) had met with a carers’ association in his constituency, whose members had explained to him how the respite care grant paid for the day-to-day expenses of carers and in addition they had been affected by the other changes in the budget.  Aengus O Snodaigh (SF, Dublin SC) said that no social welfare recipient had been unaffected by this budget.  Within weeks of the referendum for children, the government had cut child benefit, back to school clothing and footwear allowance and funding the VECs.  Joan Collins (PBP, Dublin SC) quoted the ESRI report which showed that the number of households with no working member had doubled, over 2004 to 2007, to 15% and in 2010 had reached 22%.  Nobody in these communities went mad, went on spending sprees or bought second properties, but they were now bearing the brunt of the reductions in social welfare provision.  The children of these households were entirely dependent on social protection.  She cited companies contributing little tax,  yet the government chose to go after those who could ill afford cuts in the home.  


New people they had never seen before

Maureen O’Sullivan (ind, Dublin C) recounted how organizations like the Society of St Vincent de Paul and the Capuchins were now seeing people who before had never availed of their services.  In a truly civilized and humane society, the state would look after the poor and marginalized in a meaningful and adequate way, but instead the government was introducing measures that would only increase the demand for their services.  She argued that there should be a social impact analysis of each spending measure and reduction.  At the same time, €55m had been found for the bloodstock industry.  She would not mind if the allocation included a social responsibility levy for people with a gambling addiction, but no such additionality was attached.


John Halligan (ind, Waterford) said that there was no one to defend the 700,000 people on the verge of poverty, nor the 200,000 children under the poverty line.  If one spoke to the frontline organizations like the Society of St Vincent de Paul and Social Justice Ireland, everyone there was absolutely shocked by what the government was doing. He cited constituents distressed that so much money was being taken away and that they had nothing left to give.


Concluding the debate, the Minister for Social Protection Joan Burton drew attention to the role of social welfare transfers in reducing poverty, Ireland being twice the European average.  It was a tribute to successive governments, verified by Eurostat, that our poverty rate was among the lowest in Europe.  In this budget, some of the savings achieved would go to providing additional spending in job and child care supports.  In her view, we must rebalance the social welfare system to provide more opportunities and services as well as direct cash payments.  


Seanad debate

On the budget, Katherine Zappone (ind, Taoiseach nominee) spoke of how one parent families experienced the highest degree of deprivation and poverty, but that 60% were working and 20% were in education or training – demonstrating their fierce desire for economic independence, not dependance.  The Minister for Social Protection had promised that reforms would only proceed with a safe, accessible and affordable child care system, but there was now a €10 reduction in child benefit for every child.  This was not a progressive measure, but one that disproportionately affected lone parents, blocking the healthy development and well-being of their children.  It was regressive and did not bode well for the most vulnerable families.


David Norris (ind, Dublin University) said that he had with him several folders full of submissions from charities and he suggested that there be a working group to examine them to determine if they would be exchequer neutral.  As for the budget, he said, ‘I give up’.  The budget was taking €3.1bn out of the economy so as to give it away in March.  The back to school clothing and footwear allowance was being reduced by €50 when we knew that 1.8m people had a disposable income of less than €100 a month.  As people are already unable to pay for fuel, how will vast swathes of the 1.8bn cope?  We are travelling backward rather than forward.


Investors back Irish recovery and its social cohesion 

Introducing the Social welfare Bill, 2012, the Minister for Social Protection, Joan Burton spoke of how social welfare transfers had reduced the poverty rate by 31% and contributed to social cohesion, in contrast to other countries where the consequences of increased poverty had sometimes played out violently on the streets.  Social cohesion was a reason why some investors in sovereign bonds had backed the Irish economic recovery.   She told of how the Pathways to work programme was transforming a mismanaged and neglected passive welfare system to an active one, with 10,000 new places on employment schemes next year and 6,000 additional childcare places for people transferring from welfare to work.  She quoted research by the ESRI on what she called the ‘damning and alarming’ levels of jobless households.  Over 2004-7 Ireland was one of the few countries to experience an increase in the proportion of jobless households.  We had an extraordinary level, 22%, of jobless households and 16% of our working age adult population on some kind of illness or disability benefit, a figure matched by no other European country, which raised profound questions about the way our social welfare system worked to help unemployed people back to work.  


While the social welfare system had been highly effective in preserving a threshold of decency for those most in need of support, it had largely failed to get them into work or training or improve their prospects for the future.  Instead of introducing the kind of reforms introduced in other countries, the minister said, the former government had little ambition for the unemployed and its only solution was to write a cheque.  Until very recently, the state was prepared to tolerate a large minority of our citizens consigned to a life on the margins, with inter-generational disadvantage underwritten by welfare payments.  The government was now challenging the way things had been done.  From everything she knew, people were delighted to be offered an opportunity to intern through Job Bridge or participate in helping their community in Community Employment in Tús.  They viewed it as patriotic duty to transform the system to help people into a stream of work, education, training and financial independence.  Other countries had moved on, like the Netherlands, which went from being the ‘sick men of Europe’ to the ‘Dutch miracle’.  We had never had that debate here.  The government would not tolerate this any more and that was why there would be 10,000 new places in employment schemes next year.  Social welfare offices were being transformed from payment offices into places that helped people into education and training and to find work.  She wished that the private sector was able to provide more jobs, but there was a time lag between economic recovery and the private sector being able to provide more opportunities.  The minister said she recognized that some aspects of the budget gave rise for concern, but we had to reflect on the very difficult situation in which the state found itself.


Jillian van Turnhout (ind, Taoiseach nominee), speaking of behalf of all the independent nominees, spoke of how they had hoped for and would have supported reform of the social welfare system, but were faced instead with a proposal to make cuts.  They had difficulty with and had tabled amendments to the proposals for respite care cuts, the reduction in child benefit and recoupments.  The cut in respite care grant was inequitable and went to the heart of our values.  


‘We are freezing’

David Norris (ind, Dublin University) quoted ESRI figures which showed that the last budget was regressive, with reductions of -2% to -2.5% for those on lowest incomes compared to about -0.75% for those on the highest, showing that we were crucifying the most vulnerable.  He quoted e-mails he had received, including one which said: ‘we are freezing, have no oil, the kids are wearing two layers and gloves’, saying that he could not stand there and vote for these sections.  Nobody should dare to say that there were people using their money to go on holidays abroad or the person who had the audacity to say that respite carers should take their holidays in Ireland: what planet were they living on, for they were not taking holidays at all.  Yet we were giving €4bn to the Central Bank to burn.  He said he would vomit if he ever again heard about how well behaved we were.  We were too passive: we should surround the Central Bank and demonstrate by the tens and hundreds of thousands to show to our masters in Europe that we were being bled dry by measures like this (applause).


Feargal Quinn (ind, National Universirty) spoke of how we needed tough love.  €8.5bn had been invested in this country last year because investors had confidence in us and social cohesion allowed us to build that confidence.  Social welfare reform was regarded as essential across Europe and even Germany, Europe’s strongest economy, could not afford paying many forms of welfare.  He quoted the Sunday Times which said that any country which spent €20bn on social welfare at a time when its tax take was only €36bn was dysfunctional.  We had to take tough decisions and the government was taking them: how could we sustain a social welfare payment of €188, more than twice the amount paid in Germany or Britain?  Foreigners did not believe him when he told them about the amount of social welfare we pay.  In Italy and some other countries, people did not receive unemployment benefit if they had not worked: the principle should be that one gets benefits if one has worked.  He quoted the Irish Independent as getting it right when it said that benefits have to be cut and fraud eliminated.  Ireland currently paid the fourth highest rate of child benefit: we must run the country as a business and we could not afford to pay this any more.