MINISTER FOR SOCIAL Protection Joan Burton has given the first major indication that Labour will strongly resist any big cuts to social welfare benefits in December’s Budget.
In a strong speech this weekend, the Minister emphasised to Labour party members that the party is committed to a strong social welfare system and asked for members not to judge government decisions too harshly. She also said she would like to see tax loopholes closed to ensure high earners pay more tax, and an increase in PRSI for employers and employees.
Minister Burton also revealed that almost 900 people have had their benefits cut by around 23 per cent for not taking up employment or training offered to them.
During the speech at a Labour Youth summer school in Kilkenny, the Minister said that cutting social welfare benefits to people who need them would have a negative effect on the economy, saying:
How much of the €188 per week paid to a recipient of Jobseekers Allowance leaks out of the economy in the form of savings or transfers abroad? I think that the answer is evident – very little if any at all.So then ask yourself this: what impact would across the board welfare cuts have on businesses operating in the Irish economy? On retailers? On tradesmen? On their suppliers?
She said that while she accepted that not all welfare spend is targeted as effectively as it could be, people should not fall into the trap of believing the “sometimes simplistic analysis that compares the highest earning welfare recipient with the lowest earning employee to paint a picture of welfare spongers on the take”.
This type of populist narrative not only disparages the many thousands of our citizens who, despite their best efforts, depend on, and are grateful for, the safety net of welfare but it also undermines the community ethos that is core to welfare - an ethos that underpins our system of social democracy.
The Minister said that was was needed was to “reform the system of welfare to make it more effective” by ensuring it does not promote welfare dependency but instead, has as its central tenet “the aim of engaging with people to help them out of dependency and back into the labour force”.
“The citizen’s duty to work whenever possible”
The Minister defined her vision for the welfare state as being about “the citizen’s duty to work whenever possible”. She said her primary aim as Minister has been to “transform the system of social protection in this country from one of passive income support to one of active engagement with people who are unfortunate enough to become unemployed”.
She also revealed that she is looking at bringing in a system which would guarantee a job and training to young people if they have been unemployed for a period of time.
She noted that many commentators have said that Ireland needs to move to European-average levels of taxation in order to provide the types of services that people need while keeping state finances in a sustainable state.
“At the upper end, there may be a lot of truth in this largely because of the wide variety of tax reliefs which continue to exist to enable the wealthy to sustain an effective level of taxation far lower than the headline top rates,” said Minister Burton.
She cited the example of a landlord with a ‘substantial’ number of investment properties drawing down a six-figure income but who has to pay little tax due to the legacy of property tax shelters.
Welfare traps
She said she felt that “the public remains to be convinced that people at work are always better off than people on welfare,” and said that she has been focusing on welfare traps which hit people who stop working and remain reliant on benefits.
The Minister said that people who don’t engage with work programmes like JobBridge and TÚS will be penalised, and noted that almost 900 people have had their payments reduced already by about 23 per cent.
“If they don’t produce evidence that they are genuinely seeking work they face losing their payments altogether,” she said.
In the speech, the Minister said that people who argued that “at this time of scarcity, we cannot afford welfare” are wrong.
She cited historical analogies – including post-war Britain and Roosevelt’s New Deal in Depression-era America – as examples of how the welfare state successfully expanded and reacted as a response to austerity, and argued that Ireland should be looking at a similar response.
The speech will be seen as a statement of intent by Labour on where it stands before Budget negotiations begin. Earlier this week Fine Gael HQ sent a message to all its TDs telling them that the Cabinet has not yet made any decisions about what will be contained in December’s Budget and that discussions will not take place until autumn.
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