�

A Reforming Budget for All Citizens

CongRess pRe-Budget suBmission / october 2007

� executive summary 3

section 1 the economy, tax and public spending 5

introduction 6

Chapter 1 the economic Background 7

Inflation 7

Chapter 2 priorities for investment 8

Upskilling&Training 9

Schools �0

SocialHousing �0

Chapter 3 taxation 11

i) IncomeTax ��

ii) PRSIReform&theSocialInsuranceFund ��

iii) ProposedReviewofTaxation �3

iv)IsGovernmentFacilitatingTaxAvoidance? �4

v) CorporationTaxCompetition �5

vi) TheBankLevy �5

vii) IndirectTaxation&Inflation �6

viii)TaxAdvantagesforPrivateEquityFirms �6

ix)AddressingClimateChange �7

x) Taxes&RoyaltiesonOilandGas �8

xi)SecurityofOil&GasSupply �8

xii)CapitalTaxes–RewardingWork �9

xiii)Evasion,Avoidance&OtherTaxes �0

section 2 Better services for All 21

Chapter 4 Health 22

Chapter 5 Adequate Resources for a Just society 24

Chapter 6 supporting Working Families 25

Chapter 7 increasing incomes for those on social Welfare 30

Chapter 8 migration & social integration 36

Chapter 9 Additional issues 37

3Executive Summary

The early years of the 21st Century provide an appropriate juncture at which we as a society can begin to imagine and envision what form a new Ireland might take. Doubtless, previous generations engaged in similar exercises. But, unlike any previous generation, we are in the wholly unique position of having all the necessary resources – both financial and human – at our disposal.

While economic growth has slowed of late, from the heady levels of the recent past, it is important to put this into perspective: the Irish economy has doubled in size in the last decade and growth rates into the future are still predicted to be stronger than many of our neighbours. The last decade has seen a country and society transformed.

We are at once burdened with enormous fortune and enormous responsibility. For the first time in our history, we have a real opportunity to substantially shape the future of this island and sink the deep foundations on which the generous, inclusive and dynamic Ireland of tomorrow will be built.

In this context, Budget 2008 assumes a greater significance, insofar as its provisions will offer a clear indication of the direction in which we are travelling. This is particularly true in relation to the National Development Plan (NDP). Congress believes it is imperative that Budget 2008 allocates resources in a manner which clearly signals that all aspects of this crucial programme of investment will be realised in full.

Congress strongly believes that investment now in people and the services that assist and support them will reap rich dividends in the future; it will enhance social cohesion, augment national skill levels, facilitate

greater choices and opportunities for working families and, ultimately, generate increased productivity and stronger national competitiveness.

Thus, we must invest not just in hard infrastructure such as roads and public transport – vital though that is – but also in the key supports that help working families and lessen their burdens; in the systems that provide care and education for our youngest; in the structures that will ensure our workforce is afforded every opportunity to upskill and train and in making proper provision for those in need.

No longer tasked with the imperative to create jobs above all else, this is an opportune time to start improving the quality of our jobs and strategically put in place the quality public services that ensure public well-being and, without which, a modern economy cannot survive. In the context of a growing population and increased pressure on existing services, must become the priority.

It is a challenge that must be met, as a failure to strategically tackle the many deficits evident in both our society and economy at this time would prove disastrous in the longer-term.

Thus, to take but one example, Congress is proposing that Budget 2008 begins a process of radical reform that will see strong, coherent supports put in place for working families, the very lifeblood of our society.

Ireland has a poor record in this regard. On every key issue – childcare, parental leave, flexible working, ensuring work pays, equality for same sex and cohabiting couples – we fall well behind the majority of EU countries and are often on a par with poorer accession states. This must change.

4 There are other examples. In theory – and at the level of official reports – Ireland has warmly embraced the knowledge economy and the necessity to upskill. In practice, workers face enormous obstacles in accessing education and training, from simply getting time off to actually financing training courses.

This is unsustainable. Competitive advantage in future years will be based on workforce skill levels, not low taxes.

And if we are to maximise our capacity to gain from the global economy we must ensure the workforce and, consequently the economy, is less exposed to the shocks of the global market and the threat of outsourcing.

In this regard, Congress believes we need to examine initiatives such as Flexicurity, which originated in Denmark. What marks this initiative out from others is that, unlike the conventional approach to retraining or getting people back to work, flexicurity focuses on the person, not the job and guarantees income replacement. Thus, while particular jobs and tasks may become obsolete or be moved to low pay locations, a skilled worker will always be in demand.

It is alarming to note, as this submission reveals, that our expenditure on education as a percentage of GDP has fallen below the OECD average. This must be remedied immediately. Short-term considerations must not be allowed to outweigh the absolute centrality of education in building a better society for all.

Equally, Budget 2008 must mark a shift in direction, in terms of the health service. Current policies are a hopeless muddle of earlier failed initiatives, illogical ideological

obsessions or short-term thinking. New thinking is required.

For example, the current debacle over budgets and cutbacks in service could easily be avoided if funding for current spending was changed from annual, to multi-annual, thereby allowing greater scope for planning. This operates in other health systems internationally.

In terms of social welfare, it is imperative that Budget 2008 meets the targets and commitments laid out in Towards 2016. It must also be borne in mind that the last decade, while generating unprecedented levels of wealth, has also seen a worrying rise in levels of indebtedness. Problems such as this can prove very difficult to eradicate unless tackled promptly. This submission contains a number of proposals on how this can be done.

As we note elsewhere in this document, agreed targets have not been met in regard to social and affordable housing. To prevent further erosion of the initiative it is imperative that the necessary measures be taken to ensure it gets back on track for 2008.

Ireland now enjoys opportunities undreamt of by our predecessors, many of whom were forced from these shores to seek work elsewhere. The island as a whole is on the cusp of a better, bigger and more dynamic future. The choices we make today will shape the society of tomorrow. Those choices must be informed by a spirit of generosity, inclusivity and ambition for all, or else they are bound to fail.

irish Congress of trade unions, october 2007

Competitiveadvantageinfutureyearswillbebasedonworkforceskilllevels,notlowtaxes.

5

section one the economy, tax and public spending

6 Introduction

Thisyear’sPre-BudgetSubmissioniswritteninthecontextoftheproposaltoreviewthetaxationsystem,undertheauspicesofanewCommissiononTaxation.Congresswelcomesthisproposal,whichwebelieveshouldleadtoamoreequitable,rationalandevidence-basedsystemwithequaltaxationtreatmentofincomefromallsources.Toomanyinequitiesandanomaliesexistinthecurrentsystem.

Indeed,Congresshascampaignedstronglyforequitabletaxreformformanyyears.Wehavelongsoughttheterminationoftheplethoraofproperty tax breaks toinvestorsinurbanandrural‘renewal’,formulti-storeycarparks,clinicsandhospitalsetc.Thesewerewasawasteoftaxpayers’moneyinthemidstofaprolongedpropertyboom.Congresswasshockedatthetotalcosttothetaxpayerofthearea-basedschemes,whichamountedtoastaggering€�,933mbytheendofJuly�007.�Thissumwillcontinuetogrowasnotallschemeshavebeenclosed.Theyshouldhavebeenclosedyearsago.

CongresswasthefirsttosuggestthetaxationoftheBloodstock industry,wheremanymulti-millionairesstillpaylesstaxthanlowpaidworkers.In�003,wesuggestedthattheindustryshouldbetaxedasanormalbusiness.TheGovernmentwillfinallybeginthetaxationoftheBloodstockindustryandstudfeestowardstheendofnextyear.Thisreformislongoverdue.WealsosuggestedthatArtists’ Reliefbere-orientatedtowardsstrugglingartistsandnotsuccessful,wealthymillionaires.Aceilingwassubsequentlyintroducedonthisrelief.InourBudget�005submission(October�004)wesuggestednationalisingtheWestlink

� ForecastgivenintheGoodbodyReviewofAreaBasedTaxIncentives,page�45.Feb�006.DeptFinance.

toll Bridgeandabolishingthetolls.Thebridgeisnowbeingboughtoutbythetaxpayer.However,thereportedpriceseemstobeextraordinarilyhigh,twicewhatwebelieveditcouldbeacquiredfor.Thefinalbillforthissaga-Ireland’sfirstjointpublic/privateventure-willnowbepaidbyPAYEworkers,whowillfundthepurchaseofthebridgeandthencontinuetopaytollsonwhatwasintendedasIreland’smajorurbanbypass.

CongresshasalsosuggestedthatsuVsandgasguzzlersbetaxedwitha€5,000additiononVRT.Governmentisnowexaminingthisissue.Wealsosuggestedamajorchangeinemphasisincapitalexpenditurefrom roads to public transportunderthenewNationalDevelopmentPlan(NDP),achangewhichwastakenonboardinthenewplan.CongressalsowelcomesthedecisionbyGovernmenttoincrease the tax rate on oil and gas finds.Congresshassoughtataxonoilandgasproductionformanyyearsandwhilethisisnotataxonproduction,beinganadditionaltaxonprofits,itiswelcome.

7Chapter 1 - The Economic Background

Congressbelievesthatavailableresourcesshouldbedirectedatexpandingthetaxcreditorrateband.InflationremainsaseriousconcernandCongressisparticularlyworriedbyrecentincreasesinfoodprices.Theseissueswillstronglyinformourpositionaheadofanynewpaydeal.

TheIrisheconomyisfinallyslowingaftermanyyearsofstronggrowth.Yetthelevelsofgrowthpredictedbythemainforecasters-theESRIandCentralBank-aregood.Thustheeconomicbackgroundforthe�008Budgetisfairlygood.Apartfromtheconstructionindustry,theIrisheconomycontinuestogrowandtheeconomicandbudgetarypositionisextremelygood,comparedtomostothercountries.Irelandcontinuestobeoneofthebestperformingeconomies.Internationally,theglobaleconomicsituationisalsogood,withmostmajorregionsenjoyinggrowth,withtheexceptionoftheUS.Itisunusualthatmosteconomiesoftheglobearedoingwellsimultaneously.

ThegeneralGovernmentbalancecanbeexpectedtoremainpositive,althoughitseemsitwillcomeinbelowtheDepartment’sprojectionofasurplusof�.�percentofGDPforthisyear.ThedownturninconstructioninflowsfromVAT,capitalgainsandstampdutieshavebeenandwillcontinuetobereduced,perhapssignificantly.

inflationCongressisveryconcernedbyboththehighlevelofconsumerpricesinIrelandandthecontinuinghighlevelofpricesrises.Price

levelssubstantiallyexceedthoseofmostothercountries,beingthesecondhighestinEurope,behindDenmarkandthehighestlevelsofconsumerpricesintheEurozone.Secondly,thecontinuinghighlevelofpricesrises,measuredbytheCPI,hasbeenundermininggainsinlivingstandardsmadeunderTowards 2016.

Mosteconomicforecasters,includingtheofficialforecasters,ESRI,GovernmentandCentralBank,wereseriouslywrongoninflationforecastsforboth�006and�007.MosthadforecastariseintheCPIofaround3percentfor�006andjustover�percentfor�007�.Theoutturnwas4percentandtheforecastfor�007hasbeenrevisedupwardsagainto5percent.

Itiscleartherefore,thatwiththecontinuinghighconsumerpricerises,CongressmaybeforcedtoseekadditionalcompensatingrisesunderthenexttrancheofTowards 2016.WorkershavenotsharedinthegainsgeneratedbyeconomicgrowthinthelatterhalfoftheperiodoftheAgreement.Thegrowthinthepriceoffoodisparticularlyworrying.Policyshouldnotallowfortheprovisionofsubsidiestoproducersofbiofuels,whichwillpushupthepriceoffoodfurther.

Finally,CongresstotallyrejectsthetransparentattemptsbyemployereconomiststoshiftthemeasuresofinflationfromtheConsumerPriceIndex(CPI)totheHarmonisedIndexofConsumerPrices(HICP),atatimewheninflationishighandwhentheCPIexceedstheHICPinIreland.TheydidnotseektheabandonmentoftheCPIastheacceptedmeasureofinflationwheninterestrateswerefalling.

� ESRIandCentralBankforecasttheCPItoriseby�.8%and3%respectivelyfor�006,and�.6%and�.5%respectively.for�007,withAIBat3.8%and3%respectively.(June�006).Thestockbrokereconomistswereallwrongtoo.Congresswassubstantiallymoreaccurateforbothyears(ina Note for the Talks andagaininabriefingnote,dated�0thJuly�006).Allforecasterswerealongwayoffthe5percentaverageforthisyear,�007.

8 Chapter 2 - Priorities for Investment

Thedeliveryofanintegratedandefficientpublictransportsystemwillresultinimmensesocial,economicandenvironmentalbenefits.Asamajortransportfunder,Governmentmustmakethisapriority.Equally,adeterminedfocusonupskillingandretrainingcanensurewemaximisethegainstobehadfromtheglobalisedeconomy,whilesimultaneouslyprotectingandassistingthosewithlowereducationalattainment.Housingaffordabilityremainsaseriousproblemfortoomanyofourcitizensand,atcurrentlevelsofprovision,targetsagreedunderTowards�0�6willnotberealised.Itisclearthatboththeplanningprocessandschoolbuildingprogrammeareseriouslydeficient.Thebuildingoflarge-scaledevelopmentsminusanyfacilitiesmustbecomeathingofthepast.

CongresswarmlywelcomesthedecisiontoproceedwithwhatisundoubtedlyanambitiousNationalDevelopmentPlanandonewhichwebelievewillserveIrelandwell.TheGovernmentcouldhavedecidedtorestonitlaurelsafterthepreviousNDPandproceededmoreslowlywithareducedplan,butwisely,itdecidedtopressaheadwithahighlevelofpublicinvestmentforourfuture.Congressrecognisesthattherewereriskswith“constructioninflation”,butwehavepassedthepeak.ThereforetheNDPcanachievevaluefortaxpayers’moneyanditcanalsoberatchetedup,ifthereisaseveredownturnintheconstructionsector.

InoursubmissionontheNDP,Congresssetoutthreemajorpriorities3:

• Switchinvestmentinphysicalinfrastructurefromroadstopublictransport,withtheemphasisonintegrated,well-fundedurbantransport;

• Investinupskillingtheexistingworkforce,withtheemphasisonthosewhohavehadleasteducationalandtrainingopportunitiesandthosewithskilldeficits;

• Investinthecreationofan‘infrastructureofcare’

InourBudgetsubmissionlastyear,wearguedforanimmediateinvestmentinpublictransport,giventhewidespreadcongestioninourtownsandcities,sustainedhighoilpricesandgrowingpublicawarenessofthevitalimportanceofprotectingtheenvironment.TherehasbeenasubstantialshifttowardspublictransportundertheNDP,butwithcontinuinghighoilpricesandenvironmentalconcerns,Congressbelievesthatitisstillnotsufficient.

ThecapitalinvestmentinpublictransportinfrastructureannouncedinTransport 21andconfirmedaspartofthenewNDP,hasbeenwelcomedbyCongress.Thecompletionofprojectsenvisagedaspartoftheseplanswillgreatlyenhancethequalityofpublictransportandwillmakethepublictransportalternativemuchmoreattractivetoconsumers.Othermeasuresaroundtheorganisationofpublictransportalsoneedtobeaddressed.Forexample,itisremarkablethatwestilldonothaveanintegratedticketingsystemthatwouldfacilitateseamlesstravelacrossallpublictransportmodes.Ensuringthatthemodesofpublictransportandtheticketingsystems

3 ICTU,�006, Investing for All, March.

9areintegratedwillbevitaltoensuringthattheenhancedsystemwillbecapableofdrawingpeopleoutoftheirprivatecars.

Governmentmustuseitspositionasafunderofmanyofthetransportbodies/agenciestoforcethemworktogether-tointroduceintegratedticketingandbuildacoordinatednetworkofpublictransport.Clearly,iftherehasbeenanyattemptbycentralGovernmenttoencourageintegration,ithasfailed,atsomecosttocommuters.WhileCongressisopentodebateoncongestioncharging,itsimplycannotbeintroducedintheabsenceofaviable,efficientpublictransportnetworkinandbetweenallmajorurbanareas.WhiletheDublinTransportOfficehasaplantodevelopandintegratepublictransportinDublin,theexecutionofanintegratedvisionforthecityissomedistanceaway.AhallmarkofDublinforforeignvisitors(andourmembersascommuters)isitspoorpublictransportsystemandcongestion.Irelandhasapoorhistoryofpublicsectortransportplanning,constructionandoperation.Anefficient,integratedpublictransportsystemwilldeliverenormousbenefitsintermsofcompetitiveness,socialcohesionandtheenvironment.ItistimeforGovernment,asamajorfunder,tosystematicallyaddressthisdeficiency

Therearealsomajoreconomicandenvironmentalgainstobemadefromintegratedtrafficmanagement,alongwithplanning;highdensitydevelopments;restrictionson‘outoftown’retailcentres;theenhancementoftownandcitycentres;betterbuildingstandards;improvedfuelefficiency;morewindpowerandgreateruseofrenewableenergy.

upskilling & trainingIrelandhasgainedfromtheglobalisedeconomy,butforsometheprocesshasbeenpainful,withjobsbeinglosttolower-skilledeconomies.Upskillingandtrainingprovideanopportunityto

assistthoseworstaffectedand,simultaneously,maximisethegainsfromtheglobaleconomybyaugmentingthenationalskillbase.

Thebestwaytoassistbothvulnerableandaffectedworkersisbyupskillingthem,withastrongemphasisonthosewithskillsdeficitsandthosewhohavehadleasteducationalandtrainingopportunities.Ireland’sfuturecompetitiveadvantagewillnotbebasedonlowtaxesforbusinessesbutawell-educatedworkforce,atalllevels.

Asaresultofthedownturnintheconstructionindustry,manyapprenticeshavefoundthemselvesunabletocompletetheirtraining.InthecontextofthefocusonupskillingandLifelongLearning,Congressbelievesitisveryimportantthatameansbedevisedwherebytheseyoungpeoplecancompletethetrainingtheybeganingoodfaith.Itbenefitsnobodytohavesuchskillsandtalentswasted.

Towards 2016containsanextensivesectiononeducationandLifelongLearningtowhichtheGovernment,Congressandtheemployerssubscribe.Itcoversatargetedguidance,learningandtrainingprogramme,thepromotionandtakeupofapprenticeshipsbyolderworkers;theeliminationofThirdLevelcoursefeesforworkerswhohavenotpreviouslysecuredqualificationsatthatlevel.

Congressbelievesthefollowingmeasuresmustalsobeintroducedinordertoencourageandassistpeopleinaccessingtrainingandeducation:

• TheintroductionofPaidEducationalLeave,whichistobetargetedatprioritycategoriesofworker,fundedthroughthesocialinsurancefundandabroadenedNationalTrainingFund;

Thebestwaytoassistbothvulnerableandaffectedworkersisbyupskillingthem.

�0 • IncreasedstatefundingforWorkplaceLearningandUpskillingProgrammes,especiallyfortheFÁSOne Step Up initiative;

• Morefocusondevelopingtheskillsofthepopulation,includingconsiderationofaonce-offgranttothosewhoneverhadtheopportunitytoattendThirdLevel,toattendapprovedlearningcourses.ThiswouldbeequivalenttotheaveragecosttothestateofthreeyearsatThirdLevel-around€��,000-tobegrantedonceinalifetimetoalladults,whohavenotattainedprimarydegreelevel.

schoolsGiventhatexpenditureoneducationinIreland,asapercentageofGDP,issignificantlybelowtheOECDaverage,thereshouldbeincrementalincreasesineducationexpenditurebeginninginBudget�008,tobringitatleastuptotheaverageofOECDcountries.

Therecentdifficultiesexperiencedbychildrentryingtogainaccesstoschoolsisanindicationofseriousdeficienciesinbothplanningandtheschoolbuildingprogramme.Plannersshouldnotallowlargescalehousingdevelopmentstoproceedwithoutsocial,cultural,sportingandeducationalamenitiesbeinginplacesimultaneously.Theschoolbuildingprogrammeshouldbesteppeduptomeetdemandandtheplanningoftheschoolbuildingprogrammerequiresreview.

social HousingGiventhatwehavealreadyseenashortfalloncommitmentscontainedinTowards 2016,itisimperativethatBudget�008providetheresourcesnecessarytoaddressthatdeficitandgetusbackontracktomeet�008commitments.

Itremainsdifficultformanyyoungfamiliestoowntheirownhomeandthesubstantialneedforsocialandaffordablehousingisnotbeingmet.TheextensionoftheremitoftheAffordableHomesPartnershipiswelcomeandthiswillhopefullyincreasetheoutputtothelevelof�0percentenvisagedinthelegislation.

• CongresssupportstheincrementalpurchaseschemeoflocalauthorityhomesputforwardbytheGovernment.Thereneedstobebettersupportsforlowincomehouseholdstopurchasetheirownhome;

• Governmentmustreplacelocalauthority

homeswhichhavebeensoldsothatthereisabasiclevelofsuchhousingavailabletothosewhoneedaccesstoit.

Ifthelowlevelofprovisionismaintaineduntil�009,agreedtargetswouldnotbemet.IntheareaofAffordableHousing,inthefirstsixmonthsof�007just�,�9�ofthisyear’stargetof5,000wereproduced.Itisthereforeimperativethatproductionofallformsofsocialandaffordablehousinginincreased.

��Chapter 3 - Taxation

i) Income Tax Congress believes the following measures should be implemented:

Tax CreditsIfincreasesintaxcreditsandtheintroductionofanewtaxcreditaretobenefitallworkers,thisBudgetmustimplementonecrucialchange.Whatisrequiredisachangeinrevenuerulestoallowworkers’totransformanyunusedamountoftheircreditsintocash,whichcouldbeclaimedbackattheendoftheyear.Refundabletaxcreditsareafeatureofmanyothertaxsystemsandareconsideredtoprovidethebestmeanstoensureallworkersbenefitfromtaxchanges.Budget�007increasedtheindividual’spersonaltaxcreditby€�30andtheemployee’staxcreditby€�70–atotalof€400pa.Budget 2008 should increase the individual’s personal tax credit by €100 and the employee’s tax credit by €350 – a total of €450 pa.

Tax BandsBudget�007reducedthetoprateoftaxfrom4�percentto4�percentandincreasedtheindividual’sstandardratetaxbandby€�,000.Greaterequity,atlesscost,couldhavebeenachievedbyfreezingthetoprate,whileincreasingthestandardratebandby€3,000.Budget 2008 should increase the individual’s standard rate tax band by €4,000.

The Health Levy Earnings Exemption ThresholdTorestoreitsratiotoaverageindustrialearningstothatlevelwhichobtainedundertheamendedBudget�000, this should be increased from €480 pw to €548 pw.

PRSI Earnings Exemption ThresholdtorestoreitsratiotoaverageindustrialearningstothatwhichobtainedunderBudget�000,this should

be increased from €287 pw to €442 pw.PRSI Tax Free AllowanceThisshouldbeincreased from €127 pw to €217 pw,inordertorestoreitsratiotoaverageindustrialearningstothatwhichobtainedunderBudget�998,theverylasttimeitwasadjusted,withcorrespondingadjustmentofthelowersocialinsurancerates.

Pension ContributionsThecurrenthighceilingonpensioncontributionsshouldbesubstantiallyreducedto€�30,000forreasonsofequityandtoreducetaxavoidancebyhighincomeearners.

Mortgage Interest Relief TheProgrammeforGovernmentpromised‘major’reliefforhomebuyers,bywayofadditionalmortgageinterestrelief.CongresssoughttheadvancementofthesemeasureswhenitmetgovernmentinJuly�007,aspartofatargetedmeansofassistingthosehitbyrecentECBinteresthikes.Congress believes any new measures should go beyond what is contained in the Programme for Government.

Minimum WageTheminimumwagemustremainoutsidethetaxnet.

Cohabiting and Same Sex CouplesBudget�008mustendtheunfairpractices,inrespectoftaxandsocialwelfare,whichdiscriminateagainstsamesexandcohabitingcouples.

Gainsharing Congresshaslongsoughttheadoptionofmeasureswiththepotentialtoexpandemployeefinancialparticipationintheeconomy.Itiswidelyrecognisedthatemployeefinancialparticipationhasthepotentialtocontributetothedeepeningofworkplacepartnershipandenhancethecompetitivenessofindividualenterprises.Existingmeasureshavethepotentialtobenefiteveryemployee,butourexperienceisthattheyhaveonlybeentakenup

�� incompaniesthathavebeenorarepublic.Congressisthereforeseekingameasurethatwouldprovidefavourabletaxtreatmentofearningsfromapprovedgainsharingschemes.Themeasurewouldprovideanannualtaxcreditofaspecifiedamountthatcouldbeoffsetagainstearningsfromapprovedgainsharingschemes.Toqualifyforthetaxcreditrevenueapprovalfortheschemewouldberequired.Revenueapprovalwouldonlybegrantedwhenitwasclearthattheschemehadsatisfiedparticularconditionswhichaimedtoeliminateanypotentialforsalarysubstitution.

ii) PRSI Reform & the Social Insurance FundCongress will oppose any removal or upward shift in the PRSI ceiling that is not accompanied by a commensurate reduction in the rate, particularly with regard to middle income workers.

TheProgrammeforGovernmentcontainsaproposaltoabolishtheceilingonPRSI.CongresswelcomestheabolitionoftheincomeceilingonPRSIasamovewhichwillimprovetheprogressivenessoftheincometaxsystem.However,itappearsthattheproposedcutintheratewillreducethesizeoftheSocialInsuranceFund.WeunderstandareviewoftheFundbyprivateconsultantsisdueandlookforwardtoitspublication.WhileCongresssupportsacomprehensivewelfaresystemandretirementbenefits,weareconcernedthatthereductionintherateofcontributionfortheself-employedby33percentisover-generousandtrustthattheconsultant’sreviewwillensurethereis“valueformoney”inthechangesproposedfortheself-employed,thatthereisafullassessmentofthecostandbenefitsandthatthereformisequitable.

AccordingtotheProgrammeforGovernment“theFundwillbereimbursedbytheExchequerofthecostofthisreform.”CongresswishestoseeafailsafemechanisminplacetoensuretheFundisnotshort-changedbyGovernmentinthefuture.ThegovernanceofthismassiveFundisarchaicinthemodernera,particularlyaslumpingitwiththeExchequerandallowingittoreceivetheinterest(imputeoractual)oncontributionsmadeforworkers’welfareiswrong.Congressisoftheviewthatthebestwaytoprotectthehundredsofmillionsofcontributionsforworkersinthisfundistheestablishmentofamoderngovernancestructure,perhapswithaBoardofTrusteesfortheSocialInsuranceFundwithamajorityofemployeerepresentatives.

CongresswillopposeanyremovalorupwardshiftinthePRSIceilingwhichisnotsimultaneouslyaccompaniedbyacommensuratereductionintherate,particularlyinregardtomiddleincomeworkers.

InTowards 2016,enhancedemployabilityistobeencouraged,withanemphasisonflexicurity,incomesecurityandlifelonglearning.TheSocialInsuranceFundshouldbeusedtogivesocialprotectionforthoseinatypicalworking,thoseonlowincomesandtoimprovematernitybenefit,parentalleaveetc.ThusitisimportantthattheFund,whichhadasurplusof€�.4bntwoyearsago,mustbeusedforthepurposeforwhichitwasestablishedandnotraidedforotherpurposes.CongresslooksforwardtothestudyoftheFundwhichistobepublishedshortlyandwillcommentfurtherthen.

TheFundmustbeusedforthepurposeforwhichitwasestablished.

�3iii) Proposed Review of TaxationThe proposed review of taxation is welcome and should help to establish a system of taxation whereby all citizens contribute in an equitable fashion and inefficient tax breaks and other distorting features are eliminated

CongresswelcomestheproposedreviewofIreland’staxsystembyaCommissiononTaxation.Congressbelievesthisisanopportunitytofundamentallyrestructurethetaxsystemtomeetthethreekeyobjectives:

�.Toraiserevenueforgovernment,inanequitableway;

�.Toredistributeincomeandwealthand

3.Toencouragepreferredeconomicactivities,inwaysthatdonotdistortefficiency.

Inadditiontothesesometimesconflictingobjectives,ataxsystemshouldbeassimpleaspossible,shouldbeevidence-basedandshouldrewardworkandnotspeculationandtheaccidentofbirth.CongressbelievesthattheIrishtaxsystemhasbecomesimpleroverthepastdecadeorso,thatitnodsincreasinglyinthedirectionofevidence-baseddecision-makingbutthatitstillhasanumberofstrongfeatureswhichmakeitbiasedagainstthosewhowork.

Onthefirstobjective,theabsoluteamountraisedbygovernmenthasriseninrealtermsformanyyearswithstrongeconomicgrowth,buttheIrishgovernmentnowspendslessondaytodaypublicservicesthananyothercountryintheEU�5asaproportionofGDP.IrishgovernmentsoncespentasmuchastheaverageintheEU�5,buthavecutitback.However,inthepastfewyears,publicspendingasaproportionofGDPhasbeen

slowlyrisingfromthehistoricallylowleveloftheyear�000.WhileCongressdoesnothavetheviewthathighpublicspendingisadesirablepolicyobjectiveinitself,wearefirmlyoftheviewthatlowlevelsofcurrentpublicspendingtranslateintopoorerpublicservices.Itmeansthatmanyveryworthwhilesocialandeconomicpolicyobjectivescannotbemet.Forexample,education,financedlargelybycurrentpublicspending,isoneofthekeyinvestmentsinthefutureoftheknowledgeeconomy.Irelandhashadtheadvantageofhigheconomicgrowthandincreasingrealcurrentpublicspendingwhichhasallowedpublicspending,asaproportionofGDP,tofalltolevelsfarbelowthoseofmodernadvancedstatesinEuropeandevenbelowthatoftheUSforsomeyears.Slowinggrowthmeanstaxeswillhavetoberaised,inthenearfuture.

Taxesareoneoftheprimarymethodsofincomeandwealthredistribution.Mostpeoplecontributetotaxationindirectincometaxes(withtheexceptionoftaxexiles)andtherearealsosometaxesoninheritancesinIrelandwhichhelpredistributewealth.This,andotherrevenue,fundspublicservices,includingthesocialwelfaresystem.Whilemuchprogresshasbeenmadeinreducingartificialtax‘incentives’andothersuchdistortions-whichhasenabledtaxratestobereducedovertheyears-therearestillmanyleft.Thesecontinuetodistortthemarketandsomeareveryinequitable.

Rewarding Work?Taxesonwealthandinheritanceshavebeensteadilyreducedtoafractionoftheratesthatappliedinthepast,whenIrelandwasapoorcountry.Nowasaverywealthycountry,withsomeextraordinarilywealthyindividuals,taxesoninheritancesaretoolow.ThethresholdinIrelandisjustshortofhalfamillionin�007at€496,8�4beforeanytaxispaidatallandthen

�4 therateisnotgraduatedasitwasbyaflatrateoflessthanhalfthemarginalincometaxrate.

TheGovernmentstatesthatitbelievesinrewardingwork4andpromotingenterprise,butitoftentaxesinheritances(andcapitalgains)atafractionofthetaxonwork.Thismustbechanged,withwindfallsbyvirtueofbirthorspeculationbeingtaxedatleastatthesameeffectiverateasthetaxationonworkandenterprise.Forexample,apersonontheminimumwagewouldhavetoworkforover�8yearstoearnthesamesumofmoneythatachildcaninheritfromaparentwithoutpayinganytaxonit.Apersoninheriting€�,000,000fromaparentwouldonlypayaneffectivetaxof�0.�percent,whileawageearnerpaysat4�percentplusPRSI!Itwouldtake57yearsontheminimumwagetoearnthatamountofmoney!

Tax Breaks are ExpenditureAsmentionedabove,therehasbeenasubstantialreductioninthetaxbreaksorincentivesgivenfor“preferredeconomicactivity.”Economistsregardtaxincentivesastax expenditures,thatistheyareaformofspendingbygovernments.Thustheyarenotwithoutcost.Iftheoverallbenefitdoesnotexceedthecosttotaxpayers,thenthereshouldbenoincentive/subsidy,inmostinstances.CapitalgainsaretaxedatlessthanhalfthemarginalrateofincometaxinIrelandandmanypeoplesuccessfullyseektoconvertincomeintogainsandsopaylesstax.Thisshouldbeaddressedimmediately.

Irelandisnolongerapoor,under-developedeconomyanditnolongerneedstogivegenerousstateincentivesandstateaidsintheformoftaxexpenditurestobusinesses,especiallywhenCorporationTaxesaresolow.Congressbelievesthattaxbreaksshouldbesubjecttorigorous

4 Budget�007,pA7andA�9.

economicevaluation.Itisnotsufficientthattherewere‘surveys’ofthebeneficiarieswhichshowthattheywishtheirtaxbreaktobecontinued.Thiswasthecaseinearly�007,whensuchasurveyshowedthatbeneficiarieswerehappywiththeBusinessExpansionScheme(BES).Thiswasnotaneconomicevaluation,norwasitevidence-basedpolicymaking.Theremovalofsuchtaxexpenditureseliminatesdistortions,correctsperverseincentivesandmayallownominaltaxratestoremainlowerthantheymightotherwisebe.

Inconclusion,CongresswelcomestheproposedestablishmentoftheCommissiononTaxationasanopportunitytofullyreviewtheefficiencyandequityofthewholeIrishTaxationsystem.However,thisreviewmustbeevidence-basedandgroundedinanoverallphilosophyofequity,combinedwitheconomicefficiencyandtherecognitionthattaxationisanintegralpartofamodernsocietyandnotasaburden.TheCommissionshouldalsoaddresstheclearlinkbetweenpublicspendingandtaxationandattempttoinformthepublicofthewidechoicesavailabletothemthroughthislinkage.

iv) Is Government Facilitating Tax Avoidance? Tax breaks are of dubious benefit in a thriving economy and serve merely to undermine equity and fairness in the tax system. They represent huge sums of income lost to the ExchequerTheannualparadeofthehighincomeearners,millionaireswhopaynotaxisparticularlygallingforCongressandtaxcompliantcitizens.Thisisbecausetheedificeofavoidancehasbeencarefullyconstructedbysuccessivegovernmentsas“taxincentives”toboost“desirableeconomicprojects.”However,inpractice,whilesomeofthesetaxbreaksmayassistsomebusinesses,theyfacilitate

Taxesareoneoftheprimarymethodsofincomeandwealthredistribution.

�5taxavoidancebyhighincomeearners.Inamodern,wealthy,nearfullemploymenteconomywherecompetitionisespousedbyGovernmentandbusiness,statesubsidiesforbusinessshouldbeathingofthepast,particularlyonthescaleseeninIreland.Nowthatweknowtherealcostofsomeofthese‘incentives’incashterms,Governmentshouldterminatemostofthemimmediately.

Theattempttocreateaminimumrateof�0percentontheveryhighestearnersisquestionable,whenmostmiddleincomeearnerspayat4�percent.ThisisbecauseitistheGovernment,throughitsvigorouspromotionoftaxavoidanceschemes,whichunderminesequityandfairnessinthetaxsystem.

Consistently,Governmentactionshaveunderminedtheseprinciplesandtheirownpronouncements.ThiswasneverclearerthanwiththedecisiontogreatlyexpandtheBusinessExpansionScheme(BES)inBudget�008,allowinghighearnerstoincreasetheirincometaxwrite-offfrom€3�,000to€�50,000andtoprolongtheschemeforsevenyears.Thiswascontrarytotheadviceofitsownconsultantswhorecommendednotaxbreaksforlongerthanthreeyearsandthatallbefullyevaluatedbeforeimplementation5.TheexpansionoftheBESwasdecidedwithoutanindependenteconomicevaluationofthebenefits.Further,themassivearea-basedpropertytaxwrite-offs,whichcostatotalof€�billionintaxforegonebymid�007,willcontinueforseveralyears.Further,anumberofthemcontinueindefinitelyinspiteoftheGovernment’sownprivateeconomicreports,whichdemonstratedthatproperty-basedtaxbreaksareoflittleoratbest,ofdubiousvalue.

5 IndeconreportforDeptofFinance,page308.

Thosetaxbreaksretaineddemonstrateaclearideologicalcommitmenttotheprivatisationofthehealthservices,beingforprivatehospitals,privatehealthclinicsandprivatesportscentres.

v) Corporation Tax CompetitionEU member states should collectively address the issue of Corporation Tax coordination, to avoid a ‘race to the bottom’

CongressisoftheviewthatCorporationTaxcompetitionisaracetothebottombynationstates.Webelievethattaxcompetitionbysovereigngovernments,inordertowooforeigndirectinvestment,willstimulatearacetothebottomwhichnostatecanwin.Irelandhashadfirst-moveradvantagebutsoonwillbepassedinthisrace.IrelandshouldjoinwithmostmemberstatesintheEUandaddresstheissueofCorporationTaxcoordinationofsomesort,whileretainingsomebasicrightsformemberstates.

Ontheotherhand,CongresswouldbeopposedtoaCommonConsolidatedCorporationTaxregimewhichisbasedonpointofsales,asitwouldbeunfairtoIrelandwhich,asasmallopeneconomy,hasveryhighexportsandiswheremanyEuropeancompaniesareheadquartered.Itdoesappearasifthegovernmentcouldsufferamajorlossofrevenueifthepointofconsumptionbasistakeseffect.ThusitispossiblethatCorporationTaxcoordinationintheEUmaybeamorefeasiblealternativeinthelongrun.

vi) The Bank LevyCongress is calling for a new Bank Levy based on deposits

TheGovernmentabolishedthebanklevysomeyearsago.Asthebanksweremajorbeneficiaries

�6 fromthereductionofthelow��.5percenttaxrate,ithadbeenexpectedthatthebanklevywouldcontinue.Thiswasnotthecase.

SomehaveproposedaBankLevytoraiseaverymodestamountfromthebankseachyear.CongressholdsthatwiththeextraordinaryprofitsbeingmadebyIrishbanksovertheyears,particularlywiththehigherprofitswhichtheymakeinIreland,thetinycontributiontosocietybythebanksshouldbeincreased,throughanewLevybasedontheirtotaldeposits.

vii) Indirect Taxation & InflationGovernment policy has contributed to the recent rise in inflation and must now take a lead in reversing the trend

Congressisperturbedatthesustainedhighlevelofinflationoverthelasttwoyears.Asmentionedabove,whenthefirsttrancheoftheTowards 2016paydealwasbeingnegotiated,mosteconomistswereforecastinginflationofaround3percentfor�006andunder3percentfor�007.Theoutcomehasbeen4percentin�006and5percentin�007.Theoptimisticforecastshavefailedtomaterialiseforseveralyears.Ireland’shighinflationhaserodedworkers’livingstandardsandthehighpricelevelsmakeitdifficultformanyworkingfamiliestomakeendsmeet.

Themaindriversofinflationhavebeenexternal,particularlytheinterestraterisessetbytheEuropeanCentralBankandrisingfuelprices,butthesewerepartiallymitigatedbytheriseintheEuroandlowpricerisesforgoods.TheprolongedhighrisesinservicesinflationinIrelandhascontinuedandisworrying.TheGovernmenthadaroleinpriceriseswhenitshiftedfromdirecttaxestoindirect.

Congressre-iteratesitsdemandthattheGovernmenttakealeadinpricerisereductionbyreducingtheVATratefrom��percentto�0percent,orevenlower.

viii) Tax Advantages for Private Equity FirmsAsset-stripping Private Equity firms should not enjoy tax advantages over normal commercial companies

Congresshasbeenperturbedbytheactivitiesofprivateequityfirmswhichhavenoallegiancetoregions,countriesoremployeesofthefirmstheytakeover.Congresshaspreviouslycalled6ontheGovernmenttoensurethatthesefirmsdonotenjoyanytaxadvantagesovernormalcommercialfirms.Congresssupportsthetaxdeductibilityofloaninterestasanormalbusinesscost.However,whenaprivateequityfirmtakesoveracommercialfirmwithemployeesandloadsthatfirmwithdebt,thenthestateshouldnotsubsidisethetakeoverwithtaxdeductibilityontheinterestonthedebt.Inordertorepaythecostofthetakeover,theprivateequityfirmmakesthetakeovertargethighlyleveragedwithdebt.Itcanoffsetalloftheinterestonthedebtagainstitstax.

TheGovernmentshouldexplorelimitingthedebtbeyondacertainproportionofafirm’sshareholders’value,particularlyinthecaseoffirmswhichhavebeentakenoverbyprivateequityorsimilarasset-strippingfirms.DenmarkhasalreadydonesoandUKhasalsomadesomechanges.Theremightbeanexceptioninthecaseoffirmswhichbuildupdebtinnormaltradingbeyondthelimitsetonthetaxdeductibilityofdebt.Whiletheroleofprivateequityfirmsmayhavediminishedwiththe�007FinancialCrisis,theissueisonewhich

6 IrishIndependent,March�6th�007.

�7Governmentshouldandmustaddressforthefuture.Governmentshouldensurethattaxloopholesintheareaarealsoclosed,suchascarriedinterestonprofitshareschemesandwhereincomeisshiftedintocapitalgains,which,ofcourse,isonlytaxedatlessthanhalfthemarginalincometaxrate

WhenFrenchPresidentNicolasSarkozyandGermanChancellorAngelaMerkelcallforgreaterregulationofinternationalfinancialmarkets7,theIrishgovernmentshouldtakenote.

ix) Addressing Climate Changea) BiofuelsA subsidy regime for biofuels would increase food price and would not be environmentally sustainable

Congresssupportsmeasurestoseriouslyaddressclimatechange.Climatechangeandglobalwarmingareoccurringfasterthanwaspreviouslybelieved.

Westronglybelievetheremustnotbeanysubsidyregimeforbiofuels,asthiswouldfurtherpushupthepriceoffood.EventheOECDhaswarnedthatitmaynotbesustainabletoproducebiofuelswithcurrentlevelsoftechnology8andtheprovisionoftaxpayers’eurosinsubsidiestofarmerstodivertcropsfromfoodisawasteofmoneyandinequitable.TheEUshouldconsiderreducingthetaxesonimportsofbiofuelsfromdevelopingcountries,whichcanbeashighas50percent.Furtherresearchonbiofuelsisrequiredbeforenewsubsidiesaremadeavailabletoindustryandfarmers,asitappearsthatthetechnologyremainsundeveloped.

7 On�0thofSeptember�007inajointstatement.8 BriceLalondeofOECD’ssustainabledevelopment

roundtable,FT�3September�007.

ItisimportantthatIrishtaxpayersdonotsubsidisefarmerstoproducesupposedlyeco-friendlyfuelswhichcostmoretotheenvironmentthanoilandgas.Forexample,theUSimposesatariffofmorethan50centspergallononsugar-basedethanolfromBrazil,whileitsubsidisesinefficientcorn-basedAmericanethanol.Itrequiresmorethanagallonofpetroltofertilise,harvest,transport,process,anddistillcorntoyieldonegallonofethanolintheUS.9Irishtaxpayersmustnotpaysuchperversesubsidiestofarmersandprocessors.NobiofuelsubsidyregimeshouldbeintroducedwithoutrigorouseconomicevaluationinIreland.Ifitmeansimportingenvironmentallyfriendlyorcheaperbiofuels,thenthisisthecourseweshouldadopt.Congresswillnotcondonestatesubsidiesthatpushupthepriceoffood,whichhasalreadygoneupwithrecentcommoditypricerises.

b) Emissions Trading & Carbon Taxes TheEU’semissionstradingschemeislargelyasubsidytoindustry.Congressdoesconcedethatmanyoftheindustriescoveredarelargeemployers,providinggoodjobsandmostareunionised.However,inIreland’scase,thissubsidytobusinesscomesontopofalonglistofbusinessfriendlyfiscalpoliciesincluding:

• CorporationTaxreducedfrom50percentto��.5percent;

• CapitalGainsTaxhalvedto�0percent;

• Employers’PRSIisthelowestinOECD;

• IntroductionofR&Dtaxcredits;

• Maintenanceofanextensivelistoftaxshelters.

9 JoeStiglitz, The Changing Climate On Climate Change,February�007.

�8 Nonetheless,capitalismobile.Ithasnoloyaltiesandwillgotowhereitwillgetthebestreturn.Howevertheremustbesomelimits,otherwisetheimplicationsforsocialcohesionareverysevere.Theissueofclimatechangeisonewhichhastobeaddressedandtaxationmustbepartofthesolution,butitmustbeframedinawaywhichisequitable.CongresslooksforwardtotheworkoftheCommissiononTaxation,inthisarea.

ItwasCongresswhichraisedtheissueofhighertaxesonSUVsinour�006submissionandwearepleasedthattheGovernmentisnowactingonoursuggestion,withthestudyofthebestwaytotaxsuchvehicles.Congressisoftheviewthatallnewvehiclessoldfromearlynextyearshouldbetaxedonthebasisofpollutioncreatedandalsoontheenvironmentalcostoftheiractualmanufacture.Essentially,large,highandheavyvehicleswhichdemandmorecomplexmanufacturingshouldbetaxedhigherthanothersandlowemissionandlowerfuelburninghybridsshouldbegivenabetterdealonVRT.ConsiderationshouldalsobegiventohigherdutiesonSUVsoflargesizewhichreduceroadvisibilitytootherdrivers.

x) Taxes & Royalties on Oil and GasWhile the introduction of a new tax on oil and gas profits is welcome, a tax on production would be more transparent and efficient

FormanyyearstheIrishpeoplereceivedvirtuallynothingfromanydiscoveryofoilandgasinourterritory,followingtheabolitionoftheRoyaltyTaxof��.5percentonproduction.TheIrishpeopleowntheseresources.Withdecliningworldoilandgasstocks,risingpricesandgreaterinnovationinoffshoreexplorationandproduction,thepossibilityofalargefield

beingdiscoveredoffourcoastisincreasing.Indeed,recentpromisingfindsseemtoindicateitisonlyamatteroftimebeforethishappens.

ThedecisionbygovernmentinAugusttoimposeanadditionaltaxonprofitsfromsuchfieldsiswelcome.However,Congressbelievesthataroyaltytax-ataxonproduction,ratherthanonprofitsismoretransparentandeasiertodetermine,andgivesadefinitereturntotheownersoftheresources,theIrishpeople.

xi) Security of Oil & Gas SupplyEU law does not prevent Ireland ensuring any oil or gas found here is offered for sale in first in Ireland, rather than on the international market

Ifthereisaworldwideoilandgasshortage,theseresourcescouldstillbepumpedoutofIrelandtoothermarketsandwewouldhavenosayinthematter.AnyoilorgascompanyhastherighttopipeandselltheproduceofanIrishoilofgasfieldtothehighestbidderontheinternationalmarket,withnopreferencebeinggiventotheIrishpeoplewhoowntheresources.Forsecurityofsupplyreasons,Irelandmusthavefirstrightofrefusalonanyoilandgasfoundinourterritories.ThereisnoobstacleunderEUrulesoncompetition,asthisisasecurityofsupplyissue.

Wewouldstillholdthatthere-introductionofaroyaltyonproductionwouldbepreferabletotheadditionaltaxonprofits.Profitscanbemanipulatedbytaxplanners,throughthere-configurationoftheexpenditureonexplorationanddevelopment.Suchataxwouldhavenoimpactonexplorationorproduction,providedthereisaminimumthresholdset.

Thedecisiontoimposeanadditionaltaxonprofitsfromoilandgasiswelcome.

�9AconditionofexplorationandproductionlicencesmustbethattheIrishpeoplewillhavetherightoffirstrefusalonallproducefromoilandgasfieldsinthenationalterritoryandatreasonableprices,basedonthepreviousyear’saverageprice.

Thenewregimeiscalledthe“profitresourcerenttax”wheretheoilorgascompanywillbetaxedonitsprofitsonascale,withhigherrateswheretheprofitratioishigher,thoughtherewillbenotaxontheresourceitself.

xii) Capital Taxes – Rewarding Work Budget 2008 can start the process of rewarding work, as opposed to favouring unearned income and inherited wealth

ManyGovernmentstatementsontaxationsupporttheprincipleofrewardingworkandenterprise,yetthetaxsystemisbiasedinfavourofunearnedincomeandinheritedwealth.Anopeningsectioninlastyear’sBudgetstatementbytheMinsterforFinance,MrCowen,washeaded“RewardingWork”�0andtheMinisterstatedthattheIrish“economicsuccessisdrivenbythehardworkandthecollectiveeffortofthepeople.”IntheProgrammeforGovernment,thesectionontaxationiscalled“AFairTaxSystem.”Itbeginsbystatingthat“ourfirstpriorityremainslowandmiddleincomeearners.”

Thebestwaytoassistthesepeople,whomakeupthemajorityofourmembership,istoensurethatincomefromallsourcesistaxedinthesameway.Thisprincipleoftaxationisthekeytoafairtaxsystem.Whiletherecanbesomepracticaldifficultiesintaxinggainsandwealthunderthisprinciple,thesecanbeovercome.

�0IbidpageA9anditisfollowedbyasectionentitled“promotingenterpriseandinnovation”andtheconclusionalsostressesthatthebudget“rewardswork.”

Thereisawholeindustrydevotedtotaxavoidance,withmanyinvolvedassomeofthestrongesttaxlobbyistsforthewealthyinIreland,through‘professional’bodiesanddirectintermediation.CongresswelcomestheHighCourtJudgment��whichdidnotallowforeignresidencetobeusedasamechanismfortaxavoidancebyaverywealthyindividual.Congressbelievesthatthewholeareaoftaxavoidancebyextraordinarilywealthyindividualsmustnowbelegislatedforandactiontakentoclampdownonthetaxexiles.

Andwhiletherehasbeensomeprogressinmakingthesystemfairerandmoreprogressive,therearemajorflawsinasystemwhichallowslargeamountsofincomeandwealthtoremainuntouchedoronlylightlytouchedbytaxation,whileallincomefromwork,especiallybyworkers,istaxedatthemarginalorhigherrate.

Thereformofcapitaltaxesisessentialifthereistobeafairtaxsystemandifworkandenterprisearetobetrulyrewarded.Asystemwhereinheritedwealthandincomeisvirtuallyuntaxedwhilesmallincomegainsaretaxedateffectivemarginalratesofnear50percentformiddleincomeworkersisunfair.Italsodistortsoursystemofrewardforeffortandwork.ThetaxationofcapitalgainsisunfaircomparedtothetaxationofincomeinIreland,favouringspeculationandunearnedincomeoverthatearnedthroughworkandenterprise.

Congressrecognisesthattherearepowerfulintereststhatwillopposeafairandevidence-basedtaxsystem,includingthewell-resourcedtaxplanners,butitisnowtimetoadheretothevalueswhichmostpeople,includingtheGovernment,publiclyespouse.Itisnowtime

��HighCourt,3�July�007RevenuevsLorraineKinsellaoftheRyan(Ryanair)familyaroundtheissueoftaxavoidanceofCGTof�0%on€�9mworthofRyanairshares.

�0 towalkthetalkontaxequitywiththeproposedTaxCommission,butastartcanbemadeinthisBudget!

xiii) Evasion, Avoidance & Other TaxesRevenue must pursue avoidance and evasion in all sectors of the economy

Whileprogresshasbeenmadeintacklingtaxevasion,CongressisoftheviewthattheRevenueshouldundertakemanymoretaxaudits.Theseauditsgenerateexcellentresultsandtheirwidesweepleadstofurtherevasionbeinguncovered,generatingastrongdeterrent.LevelsofevasionintheconstructionsectorareparticularlyhighandwhileRevenuehasfocusedonthisarea,moreneedstobedone,particularlyindealingwithbogusselfemployment.

Thereformofcapitaltaxesisessentialifthereistobeafairtaxsystem.

��

section two Better services for All

�� Chapter 4 - Health

ThisBudgetshouldseeanexpansioninmedicalcardnumbersaspartofamovetouniversalprovision,alongwithproperresourcingforacomprehensiveprimarycaresystem,freeatthepointofdelivery.Cutbacks,recruitmentembargosandprivatisationbystealth–the‘co-locationinitiative-arearecipeforcontinuingchaos.Inaddition,tofacilitatepropermediumandlong-termplanningthefundingsystemforcurrentspendingmustchangefromannualtomulti-annual,asitappliesforcapitalspending.

Theembargoonrecruitmentinthehealthsectorisatried,testedandfailedactionofthepast.Itisharmingpatientsanddamagingtheserviceitself.Cutsandembargosarecrudemeasureswhichdonotwork.Congressiswillingtoplayitspartindevelopingaworldclasshealthservice.Wearenotoftheviewthat‘throwingmoneyattheproblem’willmakethesystemwork.Butweareoftheviewthatbothagrowingpopulationandhealthinflationmeanmoredaytodayspendingisrequired.Thatisaninescapablereality.CongresshaspreviouslysetoutideasforhealthreforminourbriefingpaperAddressing the Health Care Crisis,publishedinJune�007.privatisationThedefiningissueinIrishhealthpolicyin�007/08isthecontinuingideologicalcommitmentbythegovernmenttotheprivatisationofhospitalcareundertheinnocuoustitleof‘co-location’.Congress,virtuallyallhealthworkersandthevastmajorityofIrishcitizensareopposedtotheprivatisationofthiscorepublicservice.

Healthcareisnotacommoditytobesoldtothehighestbidder,itisfundamentaltohowoursocietyisorganised.TheuseofnewterminologyandthemusteringofspuriouseconomicargumentsdonotwashwiththeIrishpublic.Thedecisiontopushaheadwithprivatisationofhospitalcareinspiteofthevirtualeliminationofitspoliticalsponsorsinthe�007GeneralElectionappearsmisguidedanditisveryideological.Theeconomicsdonotstanduptoscrutiny,withlargesumsoftaxsubsidiesgoingtowealthyinvestorsandtostatesubsidised‘private’hospitals.

Indeed,thetruecostofthetaxsubsidieswasfirstrevealedinaCongressstudyofthehealthservice,byProfessorDaleTussingandMaev-AnnWren,whichwaspublishedinNovember�005.Thestudyfoundthesubsidieswereapooruseofpublicmoneyandcouldcostthetaxpayerupto€400millioninreturnfor‘hospitals’thatremainwhollyinprivatehandsandoverwhichGovernmentwouldhavelittleornocontrol:

“It would have been a better use of state funds to invest in a public hospital, an institution which the state controls and to which the Government could ensure all citizens gain equal access based on need.” (TheHealthReport,Tussing&Wren,November�005)

Theauthorsfoundneithermeritnorlogicintheco-locationinitiative.

Ifthe‘co-location’ofIrishhospitalcareissuccessfullyimplemented,itwillhaveenormousconsequencesforequityofaccessandcoulddolasting,permanentdamage.Indeed,theimpactofthisandothermeasuresinhealthpolicywillbetodriveincreasinglevelsofcareintotheprivatesectorwherethereisnocontroloverstandardsorquality.

�3ItwouldtakeastronglymotivatedGovernmentalongtimetorepairthedamagewhichthisstate-subsidisedprivatisationprogrammewilldotoourhealthsystem.WecallontheGovernmenttoabandontheprogramme.IfGovernmentwillnotdothis,Congressinsiststhatatveryleastitshouldcommissionanindependent,evidence-basedreviewofthefinancialcostofthisinitiativeandanotheronitsimpactonhealthequity.Webelieve‘co-location’willnotstanduptoanysortofseriousscrutiny.

Reform of HealthInoursubmissionlastyear,Congressarguedthat,inspiteofthecrisisinhealthcare,therealsoexistedagoodopportunityforreform:“Thesourcesofstrengthuponwhichtobuildare,first,Irelandhasanendowmentofwell-trainedandskilledhealthservicestaff.Secondly,theIrisheconomyisstrong.Irelandcanaffordahealthcaresystemwhichisworldclassandwhichourpeopledeserve.Thirdly,Irelandcanbenefitfromfouryearsofdeepandinsightfulexaminationsofthehealthcaresystem.”��

Whiletherehasbeensomeprogress,includingtheestablishmentoftheHealthForum(aCongressinitiative)themaindriveseemstobetowardsprivatisationofhospitalcare.

AkeypriorityforCongressistheprovisionofwell-resourced,modernprimarycare,freeatthepointofdelivery,overthenext�0years.Irelandcanaffordthisanditwillreducehealthcarecostsasillnessesarefoundearlyinprimarycare.InmostEuropeancountries,accesstoGPandcommunitycareisatnocostorlittlecosttocitizens.Here,inrichIreland,70percentofthepopulationhavetopayasubstantialfeeeachtimetheyvisitaGP.

��Congress,�007, Spreading Prosperity:PreBudgetSubmission,

Primary,communityandcontinuingcarearepoorlydevelopedinIreland.Congresswishestoseetheimmediateexpansionofmedicalcardnumbers,withaplannedprogressiontouniversalprovision.Lastyear,wecalledforthedeliveryofthe�00�HealthStrategytargetsforpubliclyprovidedcareoftheelderly.Indeed,in�00�thethenGovernmentpromisedtodeliveronthecommitmentto3,000newbeds(�,800tobein-patient)thatwascontainedintheHealthStrategy.Thosebedsareurgentlyrequired.Indeed,giventherapidriseinpopulationitcouldwellbearguedthatthisfigureisinfactaminimumrequirement.OtherinitiativesonhealthforBudget�008areto:

• ExtendMedicalCardcoverageto40percentofthepopulation�3

• IntroduceaCostofDisabilityAllowance;

• IncreasefundsforspecialistservicesworkingonViolenceAgainstWomen;

• IncreaseincomeexemptionlimitforHealthLevy(seeIncomeTax);

• GreatlyimprovePrimaryCareinIreland;

• GreatlyimproveCommunityCare;

Inaddition,CongressisstronglyoftheopinionthataccesstodentalcareisextremelypoorinIreland.GiventhePRSIpaymentsmadebyallworkingpeopleitseemsperverseintheextremethatthisdoesnotgenerateanymeaningfulentitlementtoproperdentalcare.Budget�008must,atveryleast,begintoaddressthisglaringcontradiction.

�3TussingandWren,‘How Ireland Cares’,NewIsland/ICTU,�006

�4 Chapter Five - Adequate Resources for a Just Society

ThisBudgetpresentsanopportunitytobeginbuildingthepublicservicesnecessarytoensureabetterqualityoflifeforall.

TheDevelopmentalWelfareStatehasbeenadvocatedbyNESCandthesocialpartnersastherightapproachforIrelandtoadoptifwearetocreateamoreinclusiveandjustsociety.Towards 2016developedtheideafurtherbytakingalifecycleapproachthatpromisestoassistpeopleasrequired,ateachlifestage.HoweverasignificantgapremainsbetweenthatpromiseandwhatworkerswouldconsiderasnecessarytodeliveronthecommitmentsmadeinTowards 2016.

Thelifecycleapproachisbasedontheambitiousvisionthatpublicserviceswillinthefuturebebasedaroundtheindividual’sneedsandrequirements.Congressisseekingthedevelopmentoftheworldclasspublicservicesexpressedinthisagreement.Highqualitypublicservices,focusedonenhancingthequalityoflifeandwell-beingofcitizens,needtobeadequatelyresourcedtoachievethisgoal.Inthecontextofthegreaterpressureonpublicservicestoprovideevenabasicservice(education,maternity,health)duetoanincreasingpopulation,thisisanambitiousobjective.

TheNDPestablishedtheminimumfinancialenvelopeofresourcesneededfortheachievementofkeystrategicsocialobjectives.Specifically,€49.6billionforsocialinclusionmeasures(children,peoplewithdisabilities,etc.);€33.6billionforsocialinfrastructure(housing,health,justice,etc.);€�5.8billion

forhumancapital(schools,training,highereducation,etc.)overthenextsevenyearperiod,to�0�3.ThisisthefirstBudgetsincetheplanwaslaunchedinJanuary�007andthisBudgetmustprovidesufficientresourcesto‘kickstart’andgiveconfidencethattheseessentialelementsoftheplanwillberealised.

Budgetarypolicesshouldaimforafairdistributionofcostsandbenefitsandprovideforamodernsocialsecuritysystemthatprovidesincomesecurityrelativetoaperson’searnings.Weareseekinggreaterprotectionforworkerswithparticularlifeeventssuchasredundancy,unemployment,illhealthanddisabilityalongwithmoresupportforworkingfamiliesandforagreaterworklifebalance.

SufficientresourcesmustbemadeavailableforfullimplementationoftheTowards 2016 commitments,onthenewemploymentrightsregime.InadditioninlinewithothercommitmentsresourcesmustbegiventotheLabourCourtandtotheequalityinfrastructureprovidedbytheEqualityActstoreducetheincidenceofdiscrimination,withaparticularprioritytoremovethecurrentbacklogofequalitycasesbeforetheEqualityTribunal.

It’salsoimperativethatBudget�008makesseriousprogressonmeetingthecrucialcommitmentsonsportcontainedinTowards 2016.

SufficientresourcesmustbemadeavailableforfullimplementationoftheTowards 2016commitments.

�5Chapter Six - Supporting Working Families

CongressbelievesthisBudgetpresentsanopportunitytofundamentallytransformanddevelopoursystemofsupportsforworkingfamiliesandprovideforamorechild-centredapproachtocare.Thisshouldnotbeseenasacost,oradrainonresources,butratherasastrategicinvestmentinnecessarysupportsthatwillenhancesocialcohesion,facilitategreaterlabourforceparticipationandcontributetobettercompetitiveness.

Currently,IrelandisamongtheworstinEuropeintermsofthesupportsweprovideforworkingparents.CongressstronglybelievesthatthisBudgetpresentsanopportunitytobeginaradicalreformofexistingmeasuresandbuildthesupportsrequiredbyworkingfamilies.Specifically,weareseeking:I. ImprovedMaternityandPaternityLeave;

II. TheintroductionofaPaymentforParentalLeave;

III. ALegalRighttoFlexibleWorking;

IV. FreeEarlyChildhoodCarefor3-4yearolds;

V. Betterin-workbenefitsforworkingparents;

VI.FairtreatmentofSameSexandCohabitingCouples.

i) Improved Maternity & Paternity LeaveMaternity LeaveCongressiscallingforanincreaseof3monthspaidMaternityBenefit.

ThiswillincreasepaidMaternityLeaveto9months.Unpaidmaternityleavewillbeunchangedandremainat�6weeks.

Paternity LeaveFathersshouldbeprovidedwithonemonth’spaidPaternityLeave.PaternityBenefitshouldbepaidatthesamerateandinthesamewayasMaternityBenefit.

Shared Maternity/Paternity LeaveWeareseekingafurtherthreemonthspaidleavethatparentscanallocateanddividebetweenthemselves,astheywish,onasharedandparttimebasis.Thiswouldmeananentitlementtooneyear’spaidleaveduringthefirstyearofthechild’slifethatbothparentscanarrangeastheychoose.Irelandneedstovalueourfamiliesmoreandwecandothisbyintroducingaframeworkthatoffersrealchoiceandflexibilityformothersandfathers.

Maternity Benefit and Paternity BenefitThelevelofMaternityBenefitneedstobeincreasedtoprovidealevelofpaymentclosertoactualwagelevels.AtthemomentMaternitypayissetat80percentofearningsbutislimitedtoamaximumpaymentof€�80aweek.Thismeansthatallworkerswithearningsabove€350aweekreceivemuchlessthanthepromised80percentoftheirearnings.InfactaworkeronAverageIndustrialEarningswillreceivelessthanhalfoftheirwagesasMaternityBenefit.Congressiscallingforasubstantialincreaseintheceiling;afigureof€530represents80percentofaverageindustrialearnings.Thiswouldmeanthatallworkerspaiduptotheaverageindustrialearningswouldactuallyreceiveapaymentthatis80percentoftheirwages.AspreviouslystatedPaternityBenefitshouldbepaidatthesamerateasMaternityBenefit.ProrataentitlementsshouldapplyinrespectofAdoptiveLeaveandBenefit.

�6 ii) Introduce Paid Parental Leave CongressbelievesthisBudgetshouldseetheintroductionofapaymentinrespectofParentalLeave.

ThefactthatParentalLeaveisunpaidisrepeatedlyidentifiedbyemployeesasthesinglebiggestbarriertothemavailingofthisentitlement.Theabsenceofapaymentmeansthatemployeeswhotakeuptheleaveincuradirectcost.Thecosttofamilieswithaparentonunpaidparentalleaveisreflectedintermsofearningsandpensioncontributionsforgone.Forexample,parentswhotakethreemonthsleavetocarefortheirchildwillsuffera�5percentreductionintheirincome.Thishighcosttothefamilyoftenmeansthatparentalleaveisnottaken–80percentofeligibleparentshavenottakentheirParentalLeave.

MaintainingahighlevelofsocialprotectionisanobjectiveofIrelandandtheEU.ItisexplicitlyincludedinthetaskslistedinArticle�oftheTreatyonEuropeanUnion.SocialProtectionrepresentsafundamentalcomponentandadistinguishingfeatureoftheEuropeanSocialModel.OtherEUmemberstatesprovidePaidParentalLeave:Austria;Denmark;Finland;Germany;Italy;LuxembourgandSwedenallmakepaymentsinrespectofParentalLeave.InItaly,30percentofsalaryispaidbytheemployerforuptosixmonths,whileintheNetherlandsandBelgiumcollectiveagreementsprovideforadditionalpaymentswhileonParentalLeave.

ParentalLeavetocareforchildrenisnowtheonlyformofleavethatremainsunpaidinIreland.AllothercaringleavequalifiesforaSocialSecurityPayment.

UnpaidParentalLeavewasfirstintroducedin�998anditwouldbetimelyifBudget�008

wastoseetheintroductionofaParentalLeaveBenefit,tohelpworkingparentsbalanceworkandfamilylife.Thisshouldbepay-relatedandaimtoreplace80percentoftheincomeoftheworker,similartoMaternityBenefit.

iii) A Legal Right to Flexible WorkingCongressisseekingtheintroductionofastatutoryentitlementtoflexibleworkingarrangements.

Achievementofaneffectivebalancebetweenthedemandsoftheworkplaceandtheotheraspectsthatmakeupworkerslivesisofcrucialimportancetothepositivelong-termdevelopmentofIrishsociety.ReconciliationofworkandfamilylifehasbecomeincreasinglyimportantoverrecentyearsanditsachievementisakeyobjectiveofEUandnationalpolicy.Itiswidelyrecognisedthatthedevelopmentofflexibleworkingarrangementsisakeymechanismthroughwhichreconciliationofthedifferentspheresoflifecanbeattained.Workersneedtohavegreatercontrolovertheirworkinglives,particularlyastheiraspirations,commitments,responsibilitiesandopportunitieschangebothinandoutsideofwork.

Formanyworkersflexibleworkingarrangementsaredesirablebutforsomeworkerstheyareessentialiftheemployeeistoremaininemployment.ResearchcarriedoutforCongresshasshownthattheimpactofthelackofcareservicescombinedwiththeunavailabilityofflexibleworkinghasmeantthatworkers,mostoftenfemaleworkerswithchildcareandothercareresponsibilities,havehadtoleavetheworkforce.

WhilealotofvaluableworkhasbeenundertakenthroughtheNationalFrameworkCommitteeonWork/LifeBalance,our

�7experienceisthattoomanyemployersarestillrefusingevensimplerequestsforchangesinworkingarrangements.

UnderthelegislationproposedbyCongress,workerswillhavearighttorequesttheirpreferredflexibleworkingoptionandemployerswillbeobligedtoseriouslyconsiderthatrequestandonlyallowedtorefuseifthereisasubstantialbusinessreason.Flexibleworkingarrangementsinclude:reducedhours,flexitime,careerbreaks,compressedhoursandparttime,worksharing,jobsharing,termtimeworking,e-workingetc.ItisimportanttorememberthatthisrightalreadyexistsinthemajorityofEUcountries.

iv) ChildcareTodate,Governmentactiononthiscrucialissueforworkingparentshasbeenhaphazard,piecemealandanythingbutstrategic.Thispiecemealapproachdoesacleardisservicetomany,manypeopletryingonlytodotheirbestbytheirchildren.Ithasnoplaceinadeveloped��stCenturysociety.CongressbelievesGovernmentmustnowmoveswiftlytolaythefoundationsforabroadinfrastructureofcarethatcanmeetthecaringneedsofoursocietytodayandintothefuture.

Congressbelievesweneedradicalchangesimilartotheintroductionoffreeeducationforchildren.Wearethereforecallingforoneyear’sfreeuniversalearlyeducationforall3-4yearolds.Nothingshortofthistypeofstepchangeinvolvingdirectfreeprovisionofearlychildcareandoutofschoolhours’carewillsuffice.

Meetingthecostofchildcarecontinuestobeoneofthebiggestproblemsfacingworkingparents.Childcarecostsasmuchasamortgage.Therecentincreasesinchildbenefit

andtheintroductionoftheEarlyChildcareSupplementdonotevenbegintocoverthecost.Currently,theaveragecostis€��5aweekforeachchildwhich,forafamilywithtwochildren,representsover€�0,000everyyear.Foraworkeronaverageindustrialearningsthecostisunacceptablyandoftenprohibitivelyhigh.

Childcareremainsoneofthebiggestobstaclesforworkingmothers.StatisticsfromtheCSOfor�006showthat88.3percentofchildlessIrishwomenaged�0to44wereinemployment.Howeverforwomenwithchildrenagedunder3years,thisfiguredroppedto58percent,andforthosewithchildrenaged4-5thefigureis53percent.

Thisreflectswhatparentshavebeentellingus-thattheyfinditdifficulttoaffordchildcareandevenwhentheycan,itisimpossibletofindoutofschoolhourscarefortheirchildren.Workingparentsnolongerhaveasupportiveextendedfamilycloseathand,andthepublicprovisionofchildcare-bothearlyeducationforthe3-4yearoldsandageappropriateout-of-schoolhourscareuptoage�4-hasnowbecomeurgent.

UndertheEULisbonStrategy,thetargetwastohavepublicorpublicly-fundedchildcareplacesavailablefor90percentofchildrenagedbetween3yearsandschoolage(theOECDin�006estimatedthatwearecurrentlyat56percent)andfor33percentofchildrenagedunder3years(theOECDin�006estimatedthatwearecurrentlysomewherebetween�0-�5percent).Theearliestyearsofachild’slifearecriticalandprovidingearlycareandchildhoodeducationforallchildrenwillhavelongtermbenefits.

ThenewCommunityChildcareSubventionScheme(�008-�0�0)willcomeintoeffectonJanuary��008.Thisschemeinvolves

�8 significantchangestothemannerinwhichgrantsaregivenandwillincreasethecostofchildcareforworkingparents,makesomechildcareservicesunsustainableandplacechildcareworkersatrisk.Underthenewscheme,staffinggrantswillnolongerbegiventocommunitybasedchildcareprovidersbasedonthenumberofchildren,thesearereplacedbysubventions,rangingfrom€30forthoseinreceiptofFISto€80forthoseonsocialwelfareorintraining.However,unliketheexistingsystem,nosupportwillbeavailableforchildrenofworkingparents.Childcaregroupshaveestimatedthattheywillreceiveabout€35,000lessayearunderthenewsystem.Reducingfundingtocommunity-basedchildcarewilldonothingtoimprovestandardsinchildcare,nortobringaboutmuchneededimprovementsinthepayandconditionsofchildcarestaff.Thisnewfundingstructureislikelytoresultinareducedsocialmix,asservicestoworkingparentswillbeundermined.Introducingmeanstestingforcommunity-basedchildcareisbackwardsstep.Congressbelievesthattheincreasedresources(€�53m)wouldbebetterspentbyincreasinggrantsupportinwaythatencouragesagoodsocialmix,providesforimprovementsinthestandardsofchildcareandinamannerthatdrivesimprovementsinwages,conditionsofemploymentandcareeradvancementforchildcareworkersandimportantlyinwaythatimprovesratherreduceshelpforworkingparents.

Congressisconcernedtoensurethatthefundingwillbesufficientandresourcesallocatedinsuchafashionastofacilitateandensurethetraininganddevelopmentofchildcareworkers,acrossthesector.Toooftentheactualworkersareneglectedinanydebateonthisissue.Higherskillsandbettertrainingwill,inturn,improveoverallstandardsofcareacrossthesector,improvewages,conditions

andcareerprospectsforchildcareworkersandmakeitanattractivecareeroption.

Muchmoreneedstobedonetohelpworkingparentswhomustrelyonprivatechildcare.ThisBudgetshouldprovidetaxreliefonemployee’sexpenditureonchildcareandprivateoutofschoolhours’care,asacostofgoingtowork.Thereareseveralalternativewaysofmakingthismoreaffordablebyprovidingfinancialsupport,throughvouchersorelsethroughtaxreliefforchildcare,including:

• Developinganexemption from income tax for childcare expensesschemesimilartotheMonthly/AnnualBus/RailPassscheme;

• Introducingachildcare tax creditandmakingitrefundabletobetterassistlowerpaidworkers;

• Introducingachildcare vouchersystem.

v) Improved in-Work Benefits for Working ParentsThisBudgetisanopportunityfortheGovernmenttogetthestrategyrightforworkingfamilies,establishingthestructuresnecessarytoallowpeopletotakeupandstayinworkandtoensurethatworkpaysforeveryone.Thisshouldincludeanewtargetedchildallowancepayabletoallfamiliesbelowthepovertyline,regardlessofworkstatus.

Havingajobisnotalwaysenoughtoguaranteethatapersonlivesinapovertyfreehousehold.TheCombatPovertyAgencyhashighlightedthat“thereisagrowingpatternofworkingpovertyassociatedwiththemajorgrowthinemploymentinrecentyears.”Characteristicsofthehousehold,suchasthepresenceofotherlowpaidorunemployedadults,otheradult

�9dependantsincludingthosewithdisabilitiesoralongtermillness,alongwiththenumberofchildren,allhaveanimpactonwhetherfamiliesliveatorbelowthepovertyline.

TheCSOestimatesthatasmuchas7percentofthoseinworkareatriskofpovertyandtheCombatPovertyAgencyhaveputthenumberofworkingpeopleaffectedbypovertyat�57,000.Thisisanunacceptablesituationandactionisurgentlyrequiredinthisbudgettoimprovethesituationoftheseworkersandtheirfamilies.AkeyaimofTowards 2016isto:“Ensurethatsocialprotectionadequatelysupportsallpeopleofworkingagewhetherinthelabourforceoroutofit…Reformswillbeintroducedthataimtoprovidethosemostmarginalisedwiththeconfidenceandsupportsnecessarytoaccepttherisksinvolvedintakingupemployment.”

Inourpre-Budgetsubmissionlastyear,Congresshighlightedtheneedformoretobedonetohelptheworkingpoor.Whilesomepositivemeasureswereintroduced,particularlytheimprovedmeanstestforrentsupplement,overallthegovernmentfailedtoimplementourcallsformorework-friendlywelfare.Thesocialwelfaresystemisunnecessarilycomplexanditisdifficultforworkerstoforeseeandcounteractpovertytraps.Therearetoomanydifferentmeanstestsandtheconsequencesofasmallincreaseinhouseholdincomecanresultinawithdrawalofbenefits,leavingtheoverallfinancialpositionoftheworkernotmuchbetterthanbefore.Thisyearshouldseetheintroductionofasingletransparentmeanstestthattakesintoaccountthecostsofgoingtowork,suchastravelandchildcare.Secondarybenefitsshouldbepaidtopeoplebelowacertainincomeregardlessofwhethertheyareinemploymentornot.Thesemeasuresalongwithanewemploymentneutralchildbenefitsupplementadvocatedbelow,would

providegreaterincentivestotakeupandremaininemployment.

Addressingchildpovertyshouldbeapriority.Ifgoingtoworkmeansanythingitshouldsurelymeanthatfamiliesarenotatriskofpoverty.Onewaytoaddressin-workpovertyforfamiliesistointroduce a targeted child allowancepaidautomaticallytoallfamilies,bothinandoutofwork,toensuretheydonotfallbelowthepovertyline.

ThisisinlinewithrecommendationsfrombothNESCandtheCombatPovertyAgencywhohavecalledfortheintroductionof“an employment neutral child benefit supplement, payable to all low income households with children.”ItisalsoinlinewiththecommitmentsinTowards 2016whichpromise:“Progress towards the existing NAPS target for those relying on social welfare payments, that the combined value of child income supports measures be set at 33-35% of the minimum adult social welfare payment rate.”

Congressisproposingthatthenew child allowanceshouldbeavailabletoallfamilieswhofallbelowacertainlevelofincomeregardlessofwhethertheyareinemploymentorareonsocialwelfare.WebelievethatthesupplementshouldbesetattheNAPStargetof33percentoftheadultsocialwelfarerateforchildrenbelow��andat35percentoftheadultsocialwelfarerateforchildrenabove��.

Congressisseeking:

• Thattheminimumwageremainsoutsidethetaxnet.

• Theintroductionofa�ndtierchildallowancepaidtoallfamiliesbelowanincomelevelregardlessofworkstatus.

Thenewchildallowanceshouldbeavailabletoallfamilieswhofallbelowacertainlevelofincome.

30 • ImprovementstotheFamilyIncomeSupplement;anincreaseintheincomethresholdsandforthemeanstesttotakeworkrelatedcostssuchaschildcareandtheannualbus/railpassintoaccountwhencalculatingafamily’soverallearnings.

• Reducethestigmaofapplyingforsecondarybenefitsbyintroducingasinglemeanstestandincreasetheamountthatcanbeearned(aminimumof€338forasingleperson)beforesomeonelosesmuchneededbenefits.Provideforamoretaperedwithdrawalofbenefits.

• EnsurethatallfamiliesentitledtoreceiveFISareactuallyreceivingit.Areviewislongoverdueonthe‘need’fora��pageapplicationform.

vi) Fair Treatment of Same Sex and Cohabiting CouplesFormanyyearsoneassumptionunderlyingbothsocialwelfareprovisionandthetaxationcodewasthatof‘breadwinnerfather’withdependentspouseandchildreninalifelongmarriage.Thisis,however,nolongernecessarilythenorminIrishsociety.Congressiscallingforthisbudgettoendunfairtreatmentandensureequityoftreatmentbetweendifferenthouseholdtypesandrecognitionforcohabitingandsamesexcouplesandtheirrelationships,inrespectofthetaxandsocialwelfaresystems.

Chapter Seven - Increasing incomes for those on Social Welfare

Modernsocialwelfaresystemsareincreasinglyfocusedontheneedtoprovidethenecessarysupportsandprotection,alongwithincreasingtheindividual’sskilllevelsandemployability.CongressbelievesthisBudgetshouldbegintheprocessofrefocusingtheIrishmodelontheneedsofthemoderneconomyandsociety.

Irelandneedsamodernsocialsecuritysystemthatprovidesadequateincomesupportsthatgivebroadcoverageofsocialprotectionprovisions(unemploymentbenefits,pensions,healthcare)thathelppeoplecopeacrossthelifecycle.EconomicanalysisfromtheDanishModelconfirmsthathighsocialprotection,highemploymentandcompetitivenessaremutuallysupportive.Modernsocialsecuritysystemsincreasinglyofferdecentbenefits,alongwithactivelabourmarketpoliciesfocusedonincreasingemployability.

ThereareimportantlessonstobelearntfromthoseNordiccountrieswheretheconceptof‘flexicurity’originated,mostnotablyDenmark.TheDanishmodelcombinesgeneroussocialprotectionarrangementswithemploymentprotectionmeasures.Danishworkersfacingeconomicdismissalshavelongnoticeperiods(threemonths)providingthemtimetofindanotherjobbeforetheirexistingjobends.Theyhavearighttocontinuoustrainingtoincreasetheirskills,alongwithaguaranteeof80percentofworkingsalaryfor48months.ThismeansthatDanishworkersfeelthehighestdegreeofjobsecurityandjobsatisfactioninEU-widesurveys.

3�Budget�008providesanopportunitytomakeaseriousstartinimprovingtheincomestandardsofthosewhorelyonsocialwelfare.Towards 2016containsanumberofspecificcommitmentstosignificantlyimprovetheincomesofthosewhorelyonsocialwelfare.Theagreementspecificallycommitsto:“AchievetheNAPStargetof€�50perweekin�00�termsforlowestsocialwelfareratesby�007.Thevalueoftheratestobemaintainedatthisleveloverthecourseoftheagreement,subjecttoavailableresources.”

WithintheNationalAnti-PovertyStrategy,theGovernmentcommitteditselftoreachingaminimumsocialwelfarepaymentof€�50perweekby�007andlinkedthistargetwith30percentofgrossaverageindustrialearnings(GAIE).CongressconsidersthatbringingthelowestsocialwelfarepaymentuptotheTowards�0�6targetrateshouldbetreatedasapriorityandwearecallingforanminimumincreaseof€�4.�0aweek,bringingthelowestsocialwelfarepaymentupto€�00aweek.Prorataincreasesforotherpaymentsinlinewithcommitmentsshouldbemade.

Howeveralotmoreneedstobedonetobringpaymentlevelsuptotheamountthatworkerswouldconsideradequatetoofferthemincomesecurityintheeventthattheyweretolosetheiremployment.Theincomereplacementfunctionoftheunemploymentbenefitisveryweakandisunlikelytomeetworkerslivingexpensesormortgagerepayments.Congressbelievesthatitstimetoconsiderthere-introductionofaPayRelatedelementtoUnemploymentBenefitsoastoensuregreaterincomesecuritythatguaranteesthatworkerswouldreceiveagreaterproportionoftheirpreviouswages.

Increase Qualified Adult Dependant Allowances Governmenthaspromisedtoincreasethequalifiedadultpaymentforstatepensionsto�00%ofthenoncontributorypensionrateoverthenexttwoyears.Congressiscallingforactioninthisbudget.Allotherqualifiedadultdependantpaymentsshouldreach�00%ofthenoncontributorylevelby�0�0.

Analltoofrequentlyneglectedaspectofsocialwelfareadequacyistheamountpaidtospousesandpartners.Thegenderbiasofthesocialwelfaresystemtowardsthetraditional‘breadwinner’modelisnotalwaysexplicitlystated,butitbecomesclearwhentherealityisexamined,althoughthesystemofqualifiedadultsispurportedlygenderneutral,over95percentofqualifiedadultsarewomen.Congresshaslongidentifiedthatthepresumptionthatthereareeconomiesofscalebasedonanassumptionthat“twocanlivecheaperthanone”hasnotbeenobjectivelyarrivedat.Evenwhereeconomiesdoexist,theyareunlikelytobeofsuchabenefittojustifyadropto66percentoftheadultrateofpayment.

ii) Direct Provision for Asylum Seekers ThisBudgetshouldreinstatechildbenefitasauniversalpayment,paidtoeverychildlivinginIreland.

Congressisseekinganincreaseinthe‘directprovision’paymentsforpeoplewaitingforadecisionontheirclaimforasylumorleavetoremaininIrelandto€60perweekforadults(from€�9.�0);andto€35perweekforchildren(from€9.60).Inthefuturethesepaymentsshouldsimilartosocialwelfarepaymentsbeindexedtoaverageindustrialearnings.

3� iii) Increase Payment to Carers CongressiscallingforasignificantincreaseintheCarersBenefitandAllowanceto€�50aweek,wearealsocallingfortheincomedisregardstobeincreasedtoallowcarersearnmorefromparttimework.

Wearealsocallingformoreimaginationinthescheme,measurestoallowcaringtobesharedbyrelativesandtochangefromfulltimetoreduced/parttimehourswouldimprovethescheme.WearecallingforemployeestoshareanentitlementtoCarersLeaveforexampleonaonedayaweekbasis.Wearealsorequestingthatworkersbeprovidedwitharighttoflexibleworkingarrangementsthatwillfacilitateabettercombinationofcarersleaveandwork.Carersshouldbeallowedtocontinueinemploymentbecausethiscanbeverybeneficialtothecarernotjustfinanciallybutalsobecauseitallowsthecarertheopportunitytostayincontactwiththeirworkandcareer.

iv) Pensions & Older PeopleCongressstronglycondemnstheincreasedpracticeoftheclosureofdefinedbenefitoccupationalschemes.Thisisemployersdefaultingontheirresponsibilitiesandtransferringrisktoworkers.TheGovernmentmustdevelopastrategyforolderpeoplethatcoversallareasofpolicyrelevanttotheirqualityoflife,suchaspensions,care,healthcare,housingandemployment.CongressiscallingforanincreaseinandreformoftheStatepension,formoretobedonetoprotectdefinedbenefitoccupationalschemesandforincentivestoimprovepensiontakeup.

v) Ensuring Income Security in RetirementThisBudgetshouldsupportthedevelopmentofimprovedpensionprovisionandthereformoftheOldAgeContributoryPensiontoincludeanearnings-relatedcomponent.

WhileIreland’spensionsystemisnotunderthesameurgentpressurefrompopulationageingaselsewhereintheEU,ourdependencyratiois�6.5percentmeaningthattherearesixworkersforeveryoneover65.Thiswilldeclineto�0percentby�0�6meaningthattherewillbefourworkersandto3�percentby�050.TryingtoensurethatmorepeoplehaveadequatepensioncoveragemustbecomeasignificantGovernmentpriority.Almost50percentoftheworkforce–some900,000workers–donothavesupplementarypensioncoverage.Furtheractionisneededtoensureworkers’incomesecurityandshieldworkersfromadropinlivingstandardsonretirement.

WorkersareobligedtocontributetothestateinsurancefundthroughtheirPRSItoestablishanentitlementtotheOldAgeContributoryPension(OACP),thepaymentsofwhicharenotmeanstestednoraretheyaffectedbyearnedincome.Howeverdespiteaworkers’contributionsincreasinginlinewiththeirincome(atthemomentuptothePRSIceiling),thepensionisflatratedandcurrentlypaidat€�09.30aweekregardlessofhowmuchorforhowlongaworkercontributestothefund.ThismeansthattheStateOldAgeContributoryPensionisreallymoreaboutpovertyreductionthanaboutentitlingworkerstoapensionlinkedtoanincomereplacementobjective.

TheNationalEconomicandSocialCouncilintheirrecommendationsontheDevelopmentalWelfareState(May�005)haveoutlinedthebenefitsofintroducinganearningsrelated

Congressstronglycondemnstheincreasedpracticeofclosingdefinedbenefitschemes.

33componenttotheOACPwhichwouldreflectthevalueofaworkerscontributionsovertheirworkinglife.Theintroductionofanadditionalpayrelatedcomponentmaystrikeanappropriatebalancebetweenguaranteeingthereplacementvalueofthepensionintothefutureandthesustainabilityofthepensionssysteminthelongterm.ParticularlyasithasthemeritofalleviatingpressureondefinedbenefitoccupationalschemesasthemajoritycalculatethepensionableincomenetoftheOACP.

Budget�008musttakethefirststepstowards:

• IntroducinganadditionalearningsrelatedcomponenttotheOldAgeContributoryPensiontoguaranteeworkersanincreasedlevelofincomereplacementbasedonearningsinretirement,onatripartitebasiswithworkers,employersandGovernmentcontributing.

• Inlightofevidencethatretiredpeoplecurrentlyfaceahighriskofpoverty,givingprioritytoincreasingtheflatrateoftheContributoryandNonContributorypension.TheStatecontributorypensionmustincreasetoatleast€��5aweek,bringingitto34percentofGAIEinthisyear’sbudgetworkingonasteppedandspeedybasistowardstheobjectiveof40percentofGAIE.

• GiventhehigheratriskofpovertyratesamongwomeninoldagethisbudgetmustdeliversignificantprogresstowardsmeetingthegovernmentcommitmenttoincreasethequalifiedadultpaymentforStatepensions,paidmostlytowomen,to�00percentofnon-contributorypension.

vi) Improved Benefits for those over 66Congressisseekingtheincrementalextensionoftheentitlementto‘freeschemes’toallpensionersover66years.ToachievethatobjectiveCongressisseekingtheupwardadjustmentofthecurrentweeklyincomedisregardof€38.09,whichhasremainedunchangedforseveralyears,to€�00perweekinBudget�008.

TheHouseholdBenefitspackage(Electricity/GasAllowance,TelephoneRentalAllowanceandFreeTelevisionLicence)hastraditionallybeenavailabletopeopleaged66orover,whoareinreceiptofasocialwelfarepayment.Sincetheyear�00�allpeopleaged70andoverhavebeenentitledtofreeelectricityandtelephonerentalallowancesandafreetelevisionlicence.Peoplebetweentheagesof66and69yearswhodonothaveasocialwelfarepaymenthaveanentitlementtotheseschemes,subjecttoameanstest.Themeanstestlimitforpensionersagedbetween66and70whodonothaveasocialwelfarepensionisjust€��,433forasingleperson(€�9,796foramarriedcouple).

vii) Better Services for Older PeopleThedevelopmentofthirdagecommunitiesorretirementvillagesasasemiindependentplacetolivewithinexistingcommunitiesneedstobesupportedbylocalauthorities.Someacuteandgeneralhospitalscurrentlyestimatethatupto40percentoftheirbedcapacityisbeingusedtosupportolderpeoplewhocouldbeservedinalternativehome-basedorcommunityfacilities(shelteredorresidentialcentres)withappropriateformalcaresupport(medicalandpara-medical).Thishighnumberofolderpeopleinahospitalsetting(5.5%ofover65secondhighestintheEU)contradictsolderpeople’spreference(9outof�0)tobelookedafterintheirownhomeandcommunityforaslongaspossible.

34 • SupportandexpandhomesupportpackagesthatprovidecareandpriorityaccesstocommunityhealthservicessuchastheSlánAbhaileprogrammetoanationalbasis.Thisprogrammeenablesolderpeopletoreturnhomeafterbeinginhospitalduetothesupportofcarerssevendaysaweek.Italsoprovidesaccesstocommunityservicessuchasphysiotherapyandoccupationaltherapy.Onaveragetheolderpersonreceives�8.5hoursofcareeachweek.

• TheDepartmentofHealth&Childrenestimatesthatthegrowingnumberofolderpeoplealonewillrequirea�4percentincreaseinthenumberofacutebedsovertheperiod�000-�0��.Thereneedstobeanincreaseinhomecarepackagesalongwithasustainedincreaseinresidentialbedsforthosewhocannolongerliveintheirhomes.

• Ensuresufficientfundingforpalliativecareandothersupportsinthecommunity

• ThesocialservicesinspectorateneedstobegivenadequateresourcesandthestandardssetbyHIQAforlongtermresidentialhomesneedtobeadequatelyenforced.

• Thenewsubventionschemeneedstobeimplementedassoonaspossibletoensurefairandequaltreatmentofallolderpeopleinlongtermresidentialcare

• HomeHelpservicesneedtobeextendedtoallthosewhoneedthemandthenumberofhoursneedtobeincreased.

• Increasefundingandcoverageoftheruraltransportinitiativetoensurethatolderpeoplelivingalonecangetmoreactiveinruralcommunities.

• Issuetravelvoucherstoolderpeoplelivinginruralareaswhocannotaccesspublicorothertransport

• Provideadequatefundingtocommunitycentrestoprovidefacilitiesforolderpeople

• IncreasetheAgeTaxcredittoensureolderpeoplecanearnmore.

viii) Improvements in the lives of People with Illness or DisabilitiesThesocialwelfaresystemneedstorespondeffectivelytotherealneedsofpeoplewithdisabilities.TheNationalDisabilityStrategyandTowards 2016 bothcreatenewopportunitiesforpeoplewithdisabilities.The�008Budgetwillbethefirstoccasionforthisnewgovernmenttocommencefulfillingthesecommitments.Reformisneededtoschemesandserviceswhichsupportpeoplewithdisabilitiessothattheydosoinamannerwhichfacilitatesparticipationinworkandsocietyandwhichprovidesforalevelofincomewhichensuresaqualityoflife.Moreneedstobedonetoprovideincomesecurityforworkerswhoexperienceasuddenseriousillness.

Congressisthereforeseekingimprovementsintheweeklyratesofpayment(to€�00)alongwiththereintroductionofapayrelatedelementtoensurethatworkersincomewhileoutoninvaliditypensioninrespectofaseriousillnessmeetsaverageincomelevels.Wearealsocallingformoretobedonetoprovideoptionstoassistpeoplewithdisabilitiestobeabletoremaininandtakeupemployment,importantly

35theretentionofthemedicalcard.Congressisseekingactionon:

The Cost of Disability PaymentAsignificantproportionofpeoplewithdisabilitiesfaceextracostsofliving.Peoplewithdisabilitiesincuradditionalcostsindaytodaylivingassociatedwiththenatureanddegreeoftheimpairment.Thelowestinternationalestimateforapersonwithanimpairmentisabout€40aweekandforthosewithgreaterimpairmentstheamountiscloserto€��0aweek.TheneedforthispaymentwasconfirmedbyNESCwhichrecommendedthat:theGovernmentstronglyconsiderthecaseforaseparate‘costofdisabilitypayment’that,inlinewithitsanalysisintheDevelopmentalWelfareState,“wouldbepersonallytailoredandportableacrosstheemployment/nonemploymentdivide.”CongressisseekingtheintroductionofthisCostofDisabilitypaymentat€40perweek.Theprimarypurposewouldbetoequaliselivingstandardsandpromoteparticipationinsocietyforthepersonwithdisabilities.Itwouldbepaidtoapersoninoroutofwork.Better in Work BenefitsCongresscallsforearlyimplementationofthewelcomecommitmentintheProgrammeforGovernmentto“Allow people with disabilities to work without losing key essential medical card cover after three years”;

Employment SupportsMoreneedstobedonetohelppeoplewithdisabilitiestoremaininworkandtotakeupwork.Congressnotesthatthereareonly4�8peoplewithdisabilitiesontheWageSubsidyScheme.Thiscompareswith4,457inshelteredworkshops.Congresscallsfortheextensionofthewagesubsidy,backtoworkallowancesandsupportedemploymentschemestoassistpeoplewithdisabilitiesinthelabourforce.

Sheltered WorkshopsTherecentmediainterestinshelteredworkshopservicesiswelcome,andcomesaftermanyyearsofCongresscallingforthedraftcodeofpracticeforshelteredworkshopstobeimplemented.Itistobehopedthattheattentionnowfocusedontheissuewillfinallybringaboutthepoliticalwilltoseriouslyaddresstheissue.TheGovernment,particularlytheDepartmentofHealthandtheDepartmentofEnterpriseTradeandEmployment,mustnowimplementthiscodeofpractice,createtheregulationsandstatutoryallowancesanddirectresourcestoensurethatpeoplewithdisabilitiesreceivetheirrightsandadequatesupports.

Second Tier Invalidity PaymentWhileemphasisingtheimportanceoffocussingonmeasuresthatassistpeoplewithdisabilitiestoremaininwork(ortotakeupwork)itisneverthelessimportanttorecognisethatforsomepeople,becauseoftheseverenatureoftheirillness,conditionordisabilitythisisnotanoption.Infact,theirconditionismostlikelytodeteriorateovertime.Commonsenseandcompassionrequiresuchanacknowledgement.Alongwiththisacknowledgementmustcomeacommitmenttosecureastandardandqualityoflifeforthepersonandtheirfamily.

CongressisseekingtheintroductionofaSecondTierInvalidityPensionpayabletothosewhobecauseoftheseriousnessoftheirconditionwillnotbeinapositiontoearnintheirlifetimeanaverageincome.Weareproposingthatthelevelofthispaymentshouldbepayrelatedwithanupperceilingsetattheaveragewage.Thisistocompensatetheworkerconcernedwhohasnoopportunitytoimprovetheirfinancialcircumstancesduringtheirworkingage.Wearethereforeproposingamaximumpaymentintothefamilyof�00%ofGrossAverageIndustrialEarnings.

Congresscallsfortheextensionofthewagesubsidy,backtoworkallowancesandsupportedemploymentschemes.

36 proposals for a second tier invalidity payment

Claimant €387.00anincreaseof€197and58%ofGAIE

QualifiedAdult

€279.00anincreaseof€143.50and4�%ofGAIE

Totalfamilyweeklyincomebeforetaxis€666and�00%ofGAIE

The child dependant allowance is not taken into account.

Severe Illness Benefit Workerswhoexperienceasuddensevereillnessareinadequatelyprotectedagainstthesuddendropinincome.Currentlytheworkerwillreceiveonly€�85aweekonillnessbenefit.CongressrecommendsthattheGovernmentexaminetheintroductionofasocialsecuritypaymentwhichwilloffsetthenegativeincomeconsequencesandprovideforincomesecurityforaperiodofatleastthefirst6monthstocushionworkerswhoareoutofworkduetoasevereillness.

Chapter Eight - Migration & Social Integration

Labourmobilitybringsbenefitstosocietyandtothemigrantthemselves,butthedegreetowhichthisoccurscanbedependantontheextenttowhichsocialinclusionandsocialintegrationarefacilitated,supportedandachieved.

Achieving social integration for migrantsMobilitycanhaveanegativeside,itincludestheriskofsocialexclusionandexploitationespeciallyforthosemigrantswhomayalreadybevulnerable.EvidencefromaroundtheEUdemonstrateshowunmanagedmigration,

discriminationandthesocialexclusionofmigrantscanposearisktoacountry’ssocialcohesion.Reconcilingmigration,socialinclusionandintegrationinvolvesaddressingthebarriersthatcauselabourmarketvulnerabilityinthemigrantandlocalcommunity.Otherwiseasworkersfaceincreasingcompetitionforjobscertaingroupsofmigrantsmaybemadescapegoatsofunemploymentandinsecurity.Wewanttoavoidasituationwherelocalcommunitieswillbecomecharacterisedbylimitedsocialintegrationandtensionsbetweenneighbours.WeshouldnotallowthegrowthofpolariseddissatisfiedexcludedsecondgenerationcommunitiesevidentinotherEUmemberstates.Ifwearetoavoidthis,pathwaystosocialinclusionandsocialintegrationneedtobethoughtthrough,properlyplannedandprovided.Thisrequiresinvestment-itcannotbelefttochance.

Building integrated WorkplacesTheworkplaceisoneofthekeylocationswhereintegrationorproblemsarisingfrommigrationcanoccurandtheimportanceoftheleadershiprolebeingplayedbyCongressandouraffiliatedtradeunionsontheissuesofracism,integrationandequalityneedstoberecognised.Thisleadershipnotonlypromotesgoodworkplacerelationsandpracticebutalsoprovidesacornerstonearoundwhichourwidersocietycanseektoeliminateracismandpromoteequality.

CongresswelcomestheappointmentoftheMinisterofStateforIntegrationandtheplannedformationoftheIntegrationTaskForceandurgesthatitbefullyresourcedsothatitcandoitsveryimportantwork.Congressseeksadequaterepresentationfortradeunionstoparticipateinthistaskforce.Inadditionweareseekingresourcesformorepartnershipprogrammes,suchaslanguagetrainingandanti–

37discrimination,bridgebuilding,positiverelations,integrationactionsattheleveloftheenterprisesothatemployersandunionsareabletomeetthechallengeposedbythebroadculturaldiversitynowpresentintheIrishworkplace.

Building integrated Communities Somecommunitiesnowcomprise30percentimmigrantpopulationbutinsufficientresources,humanandfinancialareinplaceandtherearelimitedintegrationprogrammesandopportunitiesforeveryonelivinginthesecommunities.Despitetheboomsomecommunitiesexperiencethreetimesthenationalunemploymentlevel.ResourcesshouldbemadeavailableinthisBudgettofundpilot,innovativecommunityintegrationprogrammesintheseareas.

Wearecallingfortheprovisionofadedicatedbudgetlinetosupportthedevelopmentoftherefugeecommunityandotherimmigrant-ledorganisations.TherecommendationsoftheFitzpatrickReportcommissionedbytheNationalActionPlanAgainstRacismformaveryusefulguidelineinthisarea.

Arts Culture and sport as a Bridge to migrant CommunitiesInTowards 2016thesocialpartnersunderlinedtheimportanceofartsandcultureintheeconomyandinthequalityofpeoples’lives.Sporttooisrecognisedasplayingapartinthesocialandeconomicdevelopmentofthecountry.Thebenefitsoftheinvestmentcanbeassessedintermsofphysicalandmetalwellbeingofthepopulation,socialandculturaldevelopment,education,personaldevelopmentandeconomicimpact.Thepotentialroleofsportinbuildingbridgestothemigrantcommunityandinsupportingintegrationshouldnotbeunderestimated.InthisregardCongressiscallingforresourcestoreachtheIrishSports

Counciltargetsandforincreasedsupportsforsportsinfrastructureandsportingorganisationsparticularlythosethatcanaddressexclusion,inequalityandintegration.

Combating second generation exclusionLikewiseresourcestofulfiltheTowards�0�6commitmenttoenhancedsupportfortheeffectiveintegrationofnonEnglishspeakingchildrenofmigrantsatbothprimaryandsecond-levelthroughtheprovisionofanextra550languagesupportteachersby�009andthereformofthecurrentlimitoftwoadditionalteachersperschoolmustbeprovided.WithoutEnglishlanguagetrainingallmigrantswillremainpermanentlyexcludedandopentoexploitation.

Chapter Nine - Additional Issues

measures to Combat indebtednessConsumercredithasbeenincreasingatasignificantrateandIrishpeoplenowowemorethantheirdisposableincome.Whetherwecallitcreditordebt,borrowingisarealityforthemajorityofworkers.Therearefewworkerswhoarenotinsomesortofdebtinthattheyarecommittedtotherepaymentofmoniestheyhaveborrowedfortheirhome,car,educationortosimplymeethouseholdnecessities.

Thecasualtiesofthecurrentcreditboomwillbethosepeopleforwhomcreditbecomesunmanageabledebt.Atthemomentover-indebtedness,whereexpenditureexceedsincome,affectsonlyaminorityofworkershoweveritisclearthatachangeintheircircumstanceswhetherfromincreasinginterestratesoralifeeventsuchasillnessorunemploymentorevenalossinovertime,bonus

38 orcommissionpaymentshasthepotentialtoplaceaworkerandtheirfamilyunderimmediatefinancialpressure.Inothercasesborrowershavesimplyoverextendedthemselvesinasocietywherecreditisvigorouslypromoted.InareportentitledToo Deep?,theESRIfoundthattwooutofthreeborrowersfeelthattheirdebtsareputtingaburdenontheirhouseholdfinances.Andoneintenhouseholdsreportthattheyare‘experiencingdebtproblemsarisingfromordinarylivingexpenses’.Thisfigureof�0percentisupfrom8.7percentin�004andrevealsanincreasingtrendtowardsindebtedness.

Whatthestatisticsdon’tshowishowdebtistakingatollonthelivesofthosewhofindthemselvesonafinelinebetweenbeingabletomanagerepaymentoftheircommitmentsandplungingintoseriousdebt.

Workerswhohavebecomeover-indebtedfaceproblemsmeetingtherepaymentstoawiderangeofcreditorsonloans,overdrafts,creditcards,mailorder,hirepurchase,mortgageandutilitiesbills.Debtcommitmentsrangeacrossavarietyofagreementsfrommortgages,creditcardsandcarfinancearrangementstocreditunions,creditsale,hirepurchase,utilitycreditsalesandmoneylendingloans.TheMoneyAdviceandBudgetingServicehaverepeatedlydrawnattentiontothedistressthatdebtcausestopeople.

Debtcanhaveadevastatingimpactonpeople’slives.Debtcancauseincrediblestressandplaceaddedpressurebothonfamilyandworksituations.Dealingwithdebtisstressfulinmanyways:havingtocopewithspirallingdebtsandtheconstantdemandsforpaymentfromcreditors,whilsttryingtocontinueinemploymentandmanagehouseholdexpenditureonatightbudget.

Financialpressuresoftenleadtoargumentsandrelationshipbreakdowns.Debtcancausementalill-healthoraggravateexistinghealthdifficulties.Peoplewhoareover-indebtedreportsleeplessnightsworryingabouthowtopaytheirbills.Thisworryaboutdebtexacerbatedbyinappropriatecollectionmethodscancausedepression.Manypeoplereportfeelingashamed,theyoftenkeeptheirdebtproblemstothemselves.Keepingtheproblemsecretfromworkcolleagues,partnersandotherfamilymemberscancauseisolation.Somecreditorsevenphonepeopleattheirworkplaceinspiteofthelegalprotectionsthatshouldpreventthishappening(Section��oftheNon–fatalOffencesAgainstthePersonAct,prohibitsthispractice).

Aggressivecollectionpracticesandthepressureinvolvedleadmanytomakeunwiseandunaffordableoffersofrepaymentandthisfrequentlyincreasesthelevelofdebtandthedistressinvolvedasoneofthemostcommonresponsestoover-indebtednessisthatpeopleborrowmoretotrytoclearthedebt,gettingintofurtherhigh-costcredittotrytosettledebts.

Congressbelievesthatthewaywedealwithindebtednessanddebtenforcementisinurgentneedofoverhaul.Webelievethatourdebtenforcementsystemneedstobechangedtotreatthecasualtiesofcreditinahumanemannerratherthaninapunitiveway.Wearecallingforthisbudgettomakeavailabletheresourcesrequiredtoestablishanalternativedebtsettlementtribunalto:

• abolishimprisonmentfornonpaymentofdebt;

• provideanalternativeforumforvoluntarydebtsettlement;

Debtcancauseincrediblestressandplaceaddedpressurebothonfamilyandwork.

39• provideanopportunityforapersontoaskforthetribunaltodetermineanaffordableofferofpaymentsthatsuitstheirmeans;

• allowthetribunaltofreezeinterestandschedulerepaymentsofdebt;

• giveprotectiontoworkersinemploymentwhoarecomplyingwithdebtsettlementagreements;

• firmerregulationoflendingandcreditorpracticesthatcanexacerbateaperson’sfinancialdistress;

• enhancedrecoursesandroletotheMoneyAdviceandBudgetingServicestoprotectworkerswhohavebecomeover-indebted.

Finally,CongresswelcomestheGovernmentcommitmenttoimprovethelegislationinregardtoprohibitingPyramidSelling.Congressrecommendsthatthereformofthelegislationwouldalsoaddresstherecentgrowthin‘earnathome’schemessomeofwhichhavecharacteristicssimilartoPyramidschemesandchargethepersonmuchmoremoneythantheycouldhopetoearnfromthescheme.

overseas development AidCongresswelcomestheattainmentoftheinterimtargetof0.5%ofGNPby�007andurgesfurtherincreasesinthisbudgettoensuretheattainmentofIrelandscommitmenttoreach0.7%by�0��,andtowardsthenextinterimtargetof0.6%by�0�0.CongressnotesthecurrentreviewofIrishAid’smanagementcapacityandurgessignificantinvestmentinstaffdevelopmenttoensurethefullimplementationoftheWhitePaper.

tax treatment of CharitiesIntroduceaV.A.T.RefundSchemewherebyV.A.T.isrefundedonqualifyingexpendituretoRegisteredCharities.

trade unions subsIncreasetheTaxCreditfortradeunionsubsto€��0.

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