Initial INOU Response to Budget 2003

5 Dec 2002

Income Adequacy
‘€6 increase is extremely disappointing and it is even below inflation, it also falls far short of moving towards benchmarking the lowest social welfare rate at 30% of GAIE,’ says Eric Conroy, General Secretary, Irish National Organisation for the Unemployed.

In its pre budget submission, the INOU called for the social welfare rates to be benchmarked at 30% of Gross Average Industrial Earnings, in line with the majority view of the Working Group on Benchmarking and Indexation of Social Welfare payments set up under the PPF. This is linked to the Government’s commitment to raise the minimum rate of social welfare to €150 in 2002 terms by 2007. This meant increasing the lowest social welfare payment by €11.20pw to be on target for 2007.

The Minister provided for an increase of only €6 and this can only be described as paltry particularly when Mr McCreevy stated from this outset that this budget would ‘protect weaker sectors in society’. This brings the unemployment assistance payment from €118.80 to €124.80 which still falls short of yet another Government commitment – under the life of the PPF the target was to bring the lowest social welfare rate to €127.

Another Government commitment was made in Budget 2000 to increase the QA payment rate to 70% of the adult rate over the following three years. Therefore, this year was the last opportunity for the Government to honour this commitment which they failed to do. There has been a meagre increase of €4 QA payment rate – but the rate still remains at 66% of the adult rate.

The INOU is disgusted to learn that there is to be no increase in the income level for the retention of secondary benefits. This level has not been raised since 1994 and the INOU asked for the amount to be increased from €317 to €412 to take account of rises in inflation and the increases in the cost of living, especially since the Euro changeover in 2002.

These trivial measures question the Government’s commitment to honour any of their promises and do little to improve the lives of those dependant on social welfare.

Child Poverty
Although we welcome the increases in Child Benefit as it can assist the fight against child poverty, we feel that not enough has been done. The Minister talks about creating a fairer society but there has been no increase in Child Dependant Allowance (CDA) since 1996, which is well targeted at tackling children in poverty. The increases in the Child Benefit payment are not large enough to cater for child welfare costs as well as childcare costs.
Also the Child Benefit payment date has still not been changed to January and this unexplained and unnecessary delay to synchronise this payment with other Social Welfare payments further prevents the low-income families from obtaining their full entitlements from January.

The Back to School Clothing and Footwear Allowance
We acknowledge the increase of €30 in the Back to School Clothing and Footwear Allowance for children over 12 years, thereby bringing it to a total of €150. However, we are alarmed that the same increase has not been given to younger children as well. In the interests of social inclusion there is no reason why the younger children should not be given a fair chance in school.

Family Income Supplement
The Budget has failed to meet the INOU demand of increasing the income limits for FIS by 10%. Instead the income limits have increased by a miserly 4.5%. This small increase is totally inadequate to meet the needs most at risk of income poverty and does little to keep pace with rises in average earnings.

Childcare Costs
Although we welcome the moderate increases in Child Benefit, this budget has done nothing to help parents with childcare costs. This issue has yet again been completely disregarded by the Government and the major crisis in childcare provision, standards and costs still continues.

The INOU called for a new Parents Childcare Payment which would have been taxable and paid to all parents in receipt of Child Benefit to help with childcare costs. This payment would be in recognition of the real costs of raising children and be redistributive thereby acknowledging the differing needs of parents.

Taxation
The INOU called for all low-income earners to be taken out of the tax net. The budget delivered a €140 increase to bring the personal tax credit to €800 which in turn means that 90% of minimum wage earners have been lift out which we obviously welcome. However, we are disappointed that this still means some are caught in the tax net.

Medical
We regret that the Minister has lost out yet again on the opportunity to deliver a more social inclusive budget. Yet again medical cards are not to be extended to all children under 18 years. This fear of losing the medical card is well documented as posing a huge barrier for unemployed people to take up work. And although this has been recognised through the temporary retention arrangements which apply to the medical card in relation to participation on Active Labour Market Programmes such as the BTW allowance, the problem is ongoing. And it is very disappointing that this is still not being addressed.