Budget 2011

8 Dec 2010

Budget 2011

Today will see Budget 2011 unveiled in the Dáil. While the pace of current events will leave many feeling that the future we face is one without options, the truth is that Government still has considerable room to manoeuvre in creating a budget that will address the issues we face as a nation. The INOU has consistently argued that the current approach to dealing with our nation's financial situation cannot ultimately work when the unemployment crisis is left out of the equation. The INOU's 2011 Pre-Budget Submission seeks to inform the Government on four key priorities that must be taken in to account in the formulation of a budget that will actually deliver any benefit for our ailing economy. Those four keys priorities are set out below. For further information and to download a copy of the INOU's 2011 Pre Budget Submission please click (HERE)

TAXATION

The INOU along with other community and voluntary sector organisations is challenging the commonly held position that the adjustment the Government will make in Budget 2011 must come from cuts to public expenditure. Such an approach will disproportionately hit the less well-off including the unemployed and further deflate the Irish economy. The bigger challenge facing Ireland is the significant loss of tax revenue and the urgent need to address this issue if Ireland is to have a sustainable and inclusive future.

In the public discourse on the banking crisis it is evident that many people regard Ireland as an unfair society whose past economic growth benefited a select few but for whose mistakes the many are now paying. To that end any changes to the tax system must target the better off and not those struggling on low income. Therefore the INOU is calling on Government to:

Broaden the tax base by taking immediate action on the Commission on Taxation's recommendations on tax expenditures (breaks), with the exception of Child Benefit. As the Commission notes tax expenditures have the potential for unequal distribution of public resources, can facilitate tax avoidance, lack cost restraints, lack visibility and are rarely reviewed. They estimated that these tax expenditures cost Ireland €8bn;

Introduce a Property/Wealth Tax for high earners with assets greater than €1million;

Apply PRSI and Income Levies to all income, regardless of source;

Remove anyone earning less than National Minimum Wage from the tax net. This progressive policy decision was reversed in the Supplementary Budget with the application of the

BUILDING EFFECTIVE SERVICES

Recent Social Welfare Legislation will bring in a range of changes that will have an impact on unemployed people and how services are delivered to them. The Department of Social Protection will now be responsible for social welfare services, employment services, and active labour market programmes including Community Employment, Jobs Initiative, Community Services Programme and the Rural Social Scheme.

Integrating social welfare and employment support services at Departmental level could make little difference to unemployed people's lives unless there is improved integration on the ground as well. In consultations held with unemployed people they have noted that the thinking and culture within the system needs to change, it needs to be geared towards the individual's needs and be more innovative in its responses. Services need to have a goal and be realistic. A part of this is the reality that employment growth for the foreseeable future will be piecemeal, part-time, short-term contract work.

Given this reality and the changes that are on the way, the INOU is demanding that Government ensures that:

Employment and social services start with the person and that participation is by choice and is meaningful; The local Social Welfare Office moves from an authoritative and processing mind-set to that of assisting people. On the first visit to SWO the unemployed person should be advised up front of the total range of entitlements including information on the role of the (Jobs) Facilitator; Timely access to relevant information is improved. It is urgent that communication across all schemes and providers seeks to facilitate positive participation. To that end maximising the use of online facilities is recommended; Employment and related services understand the qualifications unemployed people already have and explores how they progress further; Services do all they can to make work placements and work experience available to the unemployed: given experience is crucial to getting a job. However, work placements must be relevant to the person's needs and must not be used to replace paid jobs. One welcome development that is that the State itself has started to take unemployed people on work placements.

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JOBSEEKERS' OPPORTUNITIES

The lack of jobs is the crux of the issue facing unemployed people. Given where jobs have been lost and where jobs are likely to be created, there is a challenge facing many unemployed people and those in vulnerable employment, that their skill set and experience will not get them a 'smart' economy job. Yet this is where the Government and indeed the European Union are putting their faith in smart and sustainable jobs. A well resourced and well thought out jobs strategy is urgently required to ensure that today's unemployed are tomorrow's employees. Inclusion is the third element of the European strategy and such a focus is crucially important to the development of any coherent Irish response.

The labour market has become increasingly flexible. A return to full-time employment growth is unlikely for the foreseeable future. So it is crucial that the social welfare and employment service systems facilitate people to move between welfare and work, work and welfare. The INOU is conscious that for some types of casual and temporary contract work the system already facilitates this but this is not available across all options. For example, where people get offers of short-term contract work that may not run for the anticipated length of time.

The unemployment crisis we are facing is immense and it is imperative that Government implements with urgency measures that will address this crisis and so the INOU is calling on the Government in Budget 2011 to:

Urgently develop an inclusive and integrated Jobs Strategy. Deliver, as an integral part of this Strategy, a full and appropriate range of education and training options for unemployed people who need to re-educate, re-train and re-skill themselves. Deliver a flexible social welfare system that meets current needs by, for example looking at the total working hours in a week and not working days.

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JOBSEEKERS' PAYMENTS

According to the Department of Social Protection's annual statistical report 75% of people in receipt of a Jobseekers Payment in 2009 were claiming only for themselves. Could you survive on €196 per week? The Vincentian Partnership for Social Justice have undertaken work on a 'minimum essential budget' and noted that an individual unemployed male would be struggling with a shortfall of €68.22. This work was carried out before Jobseekers payments were cut by 4.1% in Budget 2010.

Jobseekers Benefit is an entitlement people build up through their PRSI contributions. Newly unemployed people have been astonished to find that the payment they receive bears no relationship at all to the wage they had earned and most have experienced a significant drop in their income and living standards. Jobseekers Allowance is a means tested payment that not only takes into account a claimant's cash income and assets but that of their families if they are under 25 or if their partner is working. So generally if you are in receipt of a full JA payment you have little to fall back on to deal with life's expensive moments e.g. Christmas.

The INOU is keenly aware that self-employment is how many people found and are seeking to find a job. However, the nature of the PRSI contribution self-employed people make throws up considerable welfare issues for them if their business fails and they become unemployed. Given the Government's policy to encourage unemployed people to create their own job, the welfare issues arising must be addressed.

Therefore the INOU is demanding that the Government maintains social welfare payments and supports. We are also calling on the Government to introduce further measures to improve social welfare systems so that: people who become unemployed have their claims processed and paid as quickly as is possible; when people need to re-sign-on that their claims are dealt with speedily; when people are moving from JB to JA their claims are dealt with promptly; and the significant delays in the Social Welfare Appeals process are dealt with urgently.