The Human Cost Of Recession: Hardship And Budget 2014 by Annette J Dunlea
Around 450,000 people in Ireland cannot afford to eat properly and families with children are much more likely to suffer, a new study has found.Almost two-thirds reported that the recession has been financially crippling, according to a major study of 11,000 three-year-olds and their parents.The new report published by Safefood shows 10 per cent of the population experienced food poverty in 2010, an increase of 3 per cent since the previous year.Single parent families were twice as likely to experience food poverty as purely adult households.And families with two adults and three or more children were three times as likely to face difficulties buying food.”The experience of food poverty is very real and damaging to the health of children and adults and impacts on their future prospects,” said Dr Buttimer.Report author Caroline Carney said food poverty had fallen between 2005 and 2007 but the most recent data showed it rising again after 2009.Meanwhile, a separate survey carried out for Kelloggs Ireland found that 69 per cent of teachers said pupils were coming to school hungry in the mornings and 59pc said the problem had got worse in the last year.Hard-up families have suffered devastating changes to their lives during the downturn – with young people hit the hardest, a report has revealed.
A study from the National Economic and Social Council (NESC) found that the number of people falling into poverty has doubled since 2007.According to the report, 23% of all households were in arrears with at least one bill or loan, with more than half of households in consistent debt.The NESC said mortgage arrears of more than 90 days are up from practically zero in 2004 to 12% in 2012.It confirms a soar in the demand for housing with just under 100,000 people on local authority housing waiting lists and nearly 4,000 homeless people.The report also outlines the other ways in which people have been impacted in terms of their physical health, family relationships and mental health.It reads: “All these impacts of the economic crisis and subsequent fiscal adjustments have been shown to affect some people’s psychological and physical health.”Unemployment, debt and other financial difficulties have been shown to negatively impact on family relationships and mental health.”Financial stress can also affect people’s physical health when there is less money to spend on nutritional food and on heating.”
Fatcat politicians are not representing the people and are living in their own bubble, said Joe Higgins.He also said taxpayers need to come out and fight for their rights or expect to be rolled over by the Government.He said: “The people are the victims here when they are told by politicians who then go into Government and do the exact opposite.”What is needed is the direct input of people power themselves in this situation. Otherwise we are stuck with another three years of this disastrous austerity.”Taxpayers here have been forced to bear the brunt of six austerity budgets with very limited say on the issues that hit them in the pocket.Mr Higgins said because of the massive Fine Gael/Labour majority there is very little scrutiny of the crippling cuts and tax hikes.He said: “The biggest issue of our day is the hardship of our people as a result of bailing out a bank and bondholder system.”One of the biggest issues is the property tax; there is a massive people’s movement against that.”I believe it is bringing the people power back to the fore and forcing them directly back to these issues – that is more people power and direct democracy and that is what we need.”The Government promised Dail reform when it first took office two and a half years ago to give people a stronger say in the running of the country.Mr Higgins said the people want and need a different kind of democracy and shouldn’t have to wait until an election to have their say.He said the people should have an input in the running of the economic institutions which are calling all the shots and running our lives. TDs shouldn’t be allowed to be elected more than three times and should have limits placed on how long they can stay in office.Politicians need to be held “accountable” for their election promises.He said: “If they promise to introduce legislation for a certain issue and they don’t, they should be either docked wages or not allowed run for re-election.”Mr Foley also demands TDs not to be allowed to get involved in planning permissions, medical card or local authority issues.Power to the people. In other countries politicians and bankers were jailed over the banking and economic crisis.In Ireland we have tribunals and say don’t blame anyone and don’t investigate Anglo Irish Bank.One wonders why?No criminal convictions over the banking crisis and failed political promises again and again.We desperatley need Dail reform and prosecutions over white collar crime.
The Growing Up in Ireland report published recently provides a snapshot of struggling families who are being hit hard by the economic downturn.It also reveals that by the time children are three, a significant health gap has opened up which is linked to family wealth. This comes as families face the threat of more cuts to social welfare and higher taxes in next month’s Budget. The number of families experiencing difficulties rose from 44 per cent in 2008, when the children were nine months old, to 61 per cent just over two years later, when their children were three.A third of these young families had to cut back on basics as a result, one in six was behind on utility bills and one in 11 was in arrears with the rent or mortgage.The report found that children from poorer families are almost twice as likely to be obese and less likely to enjoy perfect health than their better-off peers.Toddlers from disadvantaged homes are already less likely to be considered “very healthy” compared with children from wealthier households.The research for Growing Up in Ireland matches international trends and marks the earliest age at which poverty and privilege manifest in a child’s wellbeing.It shows that diet is having an impact on three-year-olds, with children from poorer families more likely to be obese and those with less-educated mothers more likely to eat burgers and crisps than fresh fruit and vegetables.”What this report highlights is that even by three, there is evidence of an emerging gap in child outcomes relating to levels of social advantage,” said Children’s Minister Fitzgerald.
The seniors have not escaped hardship either.”Taxes, charges and costs have escalated since these statistics were gathered, leaving many older people seriously struggling to make ends meet,” said Age Action’s Eamon Timmins.Two organisations representing older people have rejected a contention that elderly people in Ireland have fared better during the recession.Responding to the CSO’s survey on income and living conditions suggesting older people have suffered less financially than other groups in the downturn, Age Action said a 5 per cent drop in income from 2009-2011 for over-65s combined with the rise in poverty “only shows part of the difficulties which many older people are currently facing”.”On the other side of the equation, there are new charges and rising prices which have to be met from these declining incomes,” said the organisation’s head of communications, Eamon Timmins.
CSO figures show one in 10 over-65s were living on breadline in 2011.New figures from the CSO show that the elderly have suffered financially less than other age groups during the recession.The average incomes of those aged 65 years and older decreased by 5 per cent between 2009 and 2011, less than the rest of the adult population. Older people’s finances are not regarded as a problem, but look deeper and genuine hardship is there”Re-analysis of available national data shows that measured deprivation depends in large part on the choice of indicators used. Some indicators used in official measures are less relevant to older people than other population groups. This was reinforced in focus groups and interviews with a diverse sample of older people. As a result, older people are less likely to be identified as deprived.In launching the report, Professor Scharf said: “Older people’s finances are not regarded as a problem, but look deeper and genuine hardship is there. Our research suggests that older people respond differently to standard deprivation measures than other population groups. This means that reported levels of deprivation may under-estimate the actual experience of poverty and deprivation amongst older people.” Professor Scharf feels that a new, stand-alone deprivation index for older people is needed for use in official statistics.Many research participants held a relatively narrow view of poverty, linking this to an inability to afford basic household items. Participants were generally more likely to identify as necessities items relating to housing and accommodation, food and food quality, household bills and clothing. By contrast, taking a holiday away from home or being able to afford to replace worn-out furniture were less likely to be regarded as essential.The research shows that poverty and deprivation continue to affect the lives of many older people in Ireland. While the value of state pensions has been maintained, a number of people who took part in the research were struggling to cope with the loss of other forms of support at a time when additional demands were being placed on their finances. In particular, providing financial support to adult children and grandchildren during the recession featured in several participants’ accounts.Welcoming the research, Robin Webster, CEO of Age Action Ireland, congratulated the Irish Centre for Social Gerontology on producing this timely report that gives a greater insight into the nature of deprivation as experienced by many older people in maintaining their quality of life in the face of rising costs and reduced support services. He also welcomed the proposal to have a new deprivation index for older people.
In 2011, as in other years, elderly people living alone had the lowest average weekly income when compared with those living in a household with another elderly person and those living in ‘other household compositions’ – €355.50, €430.73 and €429.98 respectively.In 2011, just over one third of the elderly were widowed, divorced or separated. The majority of the elderly were retired or on home duties – 52 per cent and 35 per cent respectively – with just over 7 per cent at work.More than 87 per cent were living in owner-occupied accommodation.Even though only 7 per cent of the elderly described their health status as ‘bad or very bad’, more than 56 per cent said that they suffered from a chronic illness or a health problem. Almost 44 per cent were covered by private medical insurance. Age Action said it is not surprised at the rises in poverty among older people and warned the situation has worsened since the data was compiled. “There are new charges and rising prices which have to be met from these declining incomes. These increased taxes, charges and costs have escalated since these statistics were gathered, leaving many older people seriously struggling to make ends meet,” said spokesman Eamon Timmins. “Property tax, a trebling of the prescription charge and soaring energy prices are just some of the increased costs which have been introduced since 2011, with older people having to pay them from a declining income. The increased costs are on unavoidable elements of their cost of living – a roof over their head, essential medication and heat.”
“Taxes, charges and costs have escalated since these statistics were gathered, leaving many older people seriously struggling to make ends meet.”, said “older people have had their share of cuts”. “My concern is that poorer older people are getting done and their voices are not loud enough,” he said. Age Action noted that consistent poverty levels rose from 1.1 per cent in 2009 to 1.9 per cent in 2011 while the deprivation rate went from 9.5 per cent to 11.3 per cent. Mr Timmins said older people with declining incomes have to pay for “unavoidable elements of their cost of living” such as the property tax and “soaring” energy prices. Age Action noted a number of older people told them they had had to choose between food and fuel throughout last spring and winter, adding the Government must address these issues in October’s budget. Ictu’s Mr O’Halloran said while income for over-65s decreased less than for the rest of the adult population, the reduction had a much higher detrimental effect because their incomes are lower. “People who are on higher incomes in percentage terms may have lost more but they had the margin to lose it,” he said. “It [lower income] has a disproportionate effect on older people because they have so little anyway.” Mr O’Halloran said the Government needs to take all these factors into account in the upcoming budget.A St Vincent De Paul (SVP) survey published in September 2011 found that having enough money to live on was a major issue for older people. Those who received the State pension told the charity it did not permit for saving and that they were “just able to manage”.The Christmas bonus had previously been saved by many for emergencies and appliances repairs. SVP noted it’s abolition was “still bitterly resented”.
Strong bonds between young and old helping families to withstand recession.Research finds no sign of tension between older and younger generations over debt burden. Families are supporting each other through the economic doldrums by providing loans, childminding or other forms of assistance to each other, new research indicates.Against a backdrop of recession, emigration and financial hardship, a new report finds little evidence of tension between young and old generations over who is bearing the brunt of the downturn.Instead, the “Changing Generations” research project says family networks and strong bonds between young and old are keeping many people afloat during the recession. Any anger tends to be directed at politicians or “pampered” public sector workers, or those perceived not to be pulling their weight such as recipients of some welfare benefits.
“Solidarity between family generations is perhaps the most important reason why Ireland is managing to maintain a reasonable degree of social cohesion under massive economic pressure,” she said.Strong views of solidarity between the generations are expressed by all age groups involved in the research. The general view among younger interviewees is that older people’s welfare entitlements are deserved and should not be cut. Older people, who want improved age-related benefits, tended to call for improved supports for younger age groups. Prof Scharf of NUI Galway’s Irish centre for social geronotology said the strong bonds between young and old provided a hopeful marker for the future. “These bonds are not only helping people to cope with the current recession,” he said. “They also provide a solid foundation for the future welfare State, which will increasingly depend on the give and take between the generations.”The report’s authors said commentators and policymakers should think twice before making a case for actual or impending conflict between the generations.The report demonstrates how family members are providing high levels of support to one another through periods of unemployment, emigration and financial difficulty.Help and support flowing between generations tended to take the form of care, material goods or money, time and labour helping out with chores, as well as space in the form of housing. Many younger people, for example, have moved back in with their parents to save money.
Budget 2014 is due to be delivered on Tuesday 15 October 2013.Austerity is not working for Ireland. Social Justice Ireland states that the government has cut spending, raised taxes, increased unem-ployment, lowered wages, decimated services and allowed infrastructure to deteriorate on the under-standing that austerity would lead to recovery. Austerity, however, has been exposed as having an unsound academic basis, as being a failure in prac-tice and as morally unethical because poor and middle-income people have borne an unfair share of its consequences.What it has produced in practice is structural un-employment, rising pov-erty levels, a sustained child poverty problem, on-going adult literacy chal-lenges, high emigration, lengthening social housing waiting lists and declining physical and social infra-structure. A new approach is need-ed. In this Briefing setting out fully-costed proposals for Budget 2014, Social Justice Ireland is proposing: No more cuts in ex-penditure (except where they flow from reforms and don’t damage the social in-frastructure). A maximum effective income tax rate of 45% (i.e. nobody would pay more than 45% of their earnings in income tax + social insurance + USC). A minimum effective corporation tax rate of 6% (i.e. no corporation would pay less than 6% of their profits in corporation tax). A reduction in borrow-ing of €3.1bn in 2014 as agreed with the ‘troika’. A Financial Transactions Tax of 0.01%. A universal state pension. An increase of €5 a week in the PAYE tax credit and in the basic social welfare rates. A capital programme focused on developing physical and social infrastructure. Elimination of the fuel dyeing process for agricultural and indus-trial diesel. 20 further initiatives covering a wide range of policy areas. Social Justice Ireland says that Budget 2014 will see the ninth fiscal adjustment to the Irish economy since the current eco-nomic crisis began in 2008. It will bring the total cuts and tax increases to date to almost €31 billion – equivalent to 17.75% of GDP which has been di-rectly removed by government from the economy. This huge adjustment to domestic demand has been central to the failure to create jobs and emerge from the crisis.
Fianna Fail has said the adjustment in next week’s budget should be €2.4 billion and that a 50/50 mix of spending cuts and tax hikes should be pursued to reach the target.The overall adjustment will still be €3.1bn, with the remainder of the funding coming from a variety of once-off sources other than taxes and cuts.The government will take alot of revenue from the residential property tax.The state has already generated about €200 million from it.The average family has already lost €300 a month over the austerity budgets of the past five years. More pain will come in the form of new taxes, like the universal social charge and local property tax, alongside the reduction in child benefit. Families with so-called “unearned income”, such as dividends, savings or rental income, may be required to pay PRSI on top of any relevant taxes, such as DIRT or income tax. This would rise the rate of DIRT up to 37 per cent, which would mean that almost four out of every ten euro you earn in interest will be taken by the tax man. Tax rates on capital gains and inheritance /gift tax are also tipped to rise again, to 35 per cent from 33 per cent, even if there are currently fewer gains and less to pass on to family members. The threshold for capital acquisitions tax (governing inheritance and gifts) may also drop again towards €200,000.Child benefit and the old-age pension are safe from cuts in the coming Budget, but a raft of smaller allowances will be hit to make up €300m in social welfare cuts.The dole and core social welfare rates will also be maintained in Budget 2014.The pension is protected but this doesn’t mean additional allowances won’t be touched.
SJI’s proposals are:
1. Reduce borrowing by €3.1bn.
2. Do this mainly (over 90%) through tax adjustments.
3. Introduce a minimum effective corporate tax rate that would ensure that all corporations in Ireland pay at least 6% tax on their profits here.
4. Make tax credits refundable in Budget 2014. At a cost of €140m this proposal would directly benefit 113,000 low income indi-viduals and begin to address the ‘working poor’ issue. P.11
5. Extend the USC levy of 3% to all income in excess of €100,000 irrespective of its source. This would increase revenue by €71m.
6. Implement a maximum effective income tax rate of 45% . This would ensure that nobody would ever pay more than 45% of their total income in tax no matter how high their income was.
7. Increase Social Welfare rates by €5 in 2014.
8. Increase the PAYE Credit by €5 per person in 2014.
9. Introduce a Financial Transactions Tax of 0.01% which would yield €500m in 2014.
10. Introduce a universal basic pension payment for all people over the age of 65 from July 2014. This would be set at €230.30, the current level of the Contributory Old Age Pension. Standard rating the tax break for all pension contributions to 20% would increase the tax-take by €700m in 2014 and would help fund the universal basic pension payment. This would be a fairer and more equitable way of organising the pension system in Ireland.
11. Remove the dyeing process for agricultural and industrial diesel. Eliminating the fuel dyeing process would save €750m and would have a significant impact on reducing fuel laundering and criminal activity.
12. Introduce a rebate system for farmers, road hauliers and bus and coach operators whereby they can claim the price differen-tial for agricultural diesel. This proposal would cost €122m to implement.
13. Introduce a tax of one third of one cent on each text sent by SMS through mobile phones or any other devices. This would provide an additional €35m in taxation revenue in 2014.
14. Introduce a ‘bad nutrition’ tax on the main components of junk food, fast food and soft drinks to yield €15m in 2014.
15. Invest €65m to enable 12-15 community nursing facilities with approximately 50 beds each to be replaced or refurbished in 2013.
16. Invest €50m for the infrastructural development of Primary Care Teams in 2013.
17. Invest €50m for the infrastructural development of Children and Family Services.
18. Invest €35m to support the development of Community Mental Health teams.
19. Introduce an income contingent student loan facility to allow students to borrow to pay for third level fees and living costs. This would save the exchequer €445m in 2013.
20. Invest €150m in quality facilities and training for Early Childhood Education and Care.
21. Invest €20m in Adult Literacy programmes.
22. Increase the provision for Social Housing by €50m.
23. Increase the tax take on online gambling to 5% to yield €100m.
24. Remove tax expenditures of €150m in Budget 2014.
25. Increase the ODA Budget by €47m to reach the UN Target of 0.7% GDP in 2015.
26. Reduce expenditure on procurement of goods by public bodies by €41m.
27. Implement savings in the public procurement process to yield €75m in 2014.
28. Reduce public expenditure through measures identified in the Comprehensive Expenditure Report 2012-2014 and the Haddington Road agreement.
29. Use promissory note savings of €500m to invest in social infrastructure and boost domestic demand.
30. Reverse planned Capital Expenditure Consolidation of €205m in Budget 2014.
IBEC lists 5 points for consideration by the government for Budget 2014.
1.There should be no further additional tax increases and the scale of planned fiscal adjustment should be reduced from 3.1 billion to 2.6 billionin 2014: a fiscal adjustment of 2.6 billion in 2014 would enable Government to comfortably meet its budget deficit target. A lessening of the scale of adjustment and the abandonment of new tax increases would provide a significant fillip to the domestic economy, deliver greater certainty to households and would unlock consumer spending. Government also delivered more than planned tax increases in Budget 2013 and it should redress this in 2014.2.Existing supports for the hospitality and related sectors introduced in the Jobs Initiative should be retained post 2013: the reduction in the VAT rate from 13.5% to 9% for hospitality and related items and the introduction of a lower employer PRSI rate for low wage workers have been very successful measures. Our analysis demonstrates significant gains in employment, activity and Exchequer benefit from these measures and they should be retained. Budget 2014 should also support the domestic economy through the introduction of a home improvement tax credit or grant incentive scheme.3. No increases in employment costs: although Ireland has regained much labour costcompetitiveness in recent years, average wages here remain higher than in many of our competitor locations. It is essential that Government does not introduce any further measures to increase labour costs. In particular, it should not introduce statutory sick pay proposals or make further adjustments to the pricing of private beds in public hospitals as this measure has already resulted in sharp increases in health insurance costs paid by employers.4.The R&D tax credit scheme should be improved in order to underpin Ireland ‘sattractiveness for mobile investment: IBECssubmission earlier thisyear to the Department of Finance review of the scheme has shown strong economic rationale for its continuation.The scheme should be enhanced by reducing the current uncertainty regarding the existing claim process and also by allowing a greater use of outsourcing and contract specialist staff.The need to enhance this scheme is increasingly relevant in light of the improvement in the business tax offering in the UK in particular, through a reduction in its corporation tax rate and enhancements to its intellectual property regime.5.Enhance the investment environment: changes to the capital gains tax regime are needed in order to support entrepreneurship in the employment generating enterprise sector of the economy. Measures are also needed to support business financing through increased statebacked investment funds and a revamped Employment and Investment Incentive Scheme (EIIS).
Budget 2014 comes at another crucial time for the Irish economy. Despite recent positive news, such as the deal on the promissory notes, Ireland continues to borrow over €1 billion every month. Chamber Ireland notes that while the Government has improved conditions for investment capital availability, many firms continue to struggle as they simply do not have adequate cash flow to remain sustainable or to grow their activities. Government could help by extending prompt payment requirements, already applied to Government Departments, to all branches of Government, including the HSE and Local Authorities. A focus on rapid payment from these sectors in particular could significantly help with speeding the velocity of money and further improving business confidence.
Chamber Ireland proposes:1. Taxation: Continue to defend our 12.5% Corporation Tax. This is a vital draw for FDI which generates more jobs per head of population in Ireland than in any other country. We believe that there should be no more increases in taxes, other than those already scheduled, on either business or consumers. Economic activity must be encouraged through a system that is sensitive to, and recognises the benefit of, investment, access to working capital, growth and employment. In this context, sick pay costs and Employer’s PRSI contributions should remain as they are. 2. Supporting micro, small and medium-sized enterprises: Recent research from the Central Bank shows that it is younger and newer businesses which are responsible for the greatest job creation.2 We call on the Government to fully implement the proposals set out in this submission aimed at supporting micro, small and medium-sized enterprises. 3. Spending: Readjustments to the national finances remain essential to get Ireland back onto a sustainable footing. The goals mapped out in the Croke Park 2/Haddington Road process must be achieved. However, targeted spending in a number of areas, such as labour market activation, can be used to stimulate the economy and support job creating businesses.
What do we expect in the budget?1) The 9% VAT rate that was implemented to boost the tourism industry is due to expire on the 31st of December 2013. It might be retained – or Budget 2014 may just confirm it is returning to 13%.2) Income Tax : The government has promised not to increase income tax rates – but there is always scope for a widening of PRSI and USC so that more people pay it on more types of income. A hike in PRSI payments for self emplyed in return for welfare protection for long-term injuries or sickness has been mentioned.3) VRT is another tax where a rise is expected. 4) Motor Tax is another candidate for a rise.5) An increase of DIRT to 35% might also be announced.6) The rates for CAT (Capital Acquisitions Tax) and CGT (Capital Gains Tax) both now stand at 33% – and an increase to 35% is looking likely .Another option for Minister Noonan might be to raise inheritance tax to 40% whilst maintaining the rate of 33% for gifts bestowed whilst alive .7) CAT Business Relief currently stands at 90% but Budget 2014 could see a reduction of this relief to 75%.8) Pensions Tax Relief : There is a possibility of lowering the maximum tax free pension lump sum available at retirement (currently €200,000).There may also be a new pension levy to meet the costs of supporting insolvent pension schemes.9) Alcohol duty was increased in Budget 2013 – after several years of no change. Another increase in Budget 2014 would not come as a surprise. An increase in tobacco duty is also likely.10) Welfare:There are definitely going to be cuts in overall welfare payments in Budget 2014. The “core” weekly rates may not go down but savings will be made by changing eligibility rules or by cutting the length of payment periods.There may well be reductions in benefits for long term unemployed.The two tier system of Child Benefit might still be an option . Where everyone gets a basic (lower) rate but less well off households can apply for a “top up”.No Changes are expected to the 12.5% corporation tax rate.Property Tax rates will not be changed in Budget 2014.