7 December 2000 Edition
McCreevy's Ireland is a not a just one
BY ROBBIE MacGABHANN
When you are poring over the detail of this week's Dublin Government budget, keep one important point at the top of your agenda. It is this - Ireland is a two-tier society.
Charlie McCreevy's real task in the budget this week was to start to dismantle the inquities of that two-tier society. Any judgement of whether this was a good budget or not must be made against the test of how far McCreevy and the Fianna Fáil/Progressive Democrat coalition had gone down the road to an equitable Ireland.
Those on higher incomes receive much more tax breaks and can avail of loopholes and legitimate avoidance not open to the low paid. This budget has done nothing to change that reality
Increasing pensions, social welfare payments, and child benefit were welcome steps, albeit long overdue. There are, though, serious flaws in the McCreevy gameplan. He made much of the different measures he was proposing but it must be emphasised that much much more was needed.
We live in a society where your wealth and income determines almost completely your social and economic role in society. It determines the quality of housing, healthcare and schooling you will receive.
Those who have the money resources receive the better quality housing, medical care and schooling. This is all the more inequitable because there are so many people in Irish society who have been left behind or who endure substandard housing along with inadequate health and educational services.
Hundreds of thousands of Irish people and their families subsist on welfare payments or low incomes. Those on higher incomes receive much more tax breaks and can avail of loopholes and legitimate avoidance not open to the low paid. This budget has done nothing to change that reality.
Charlie McCreevy's childcare proposals look significant on paper. Child benefit has increased by £25 a month for each of the first two childen to £67.50 a month. There is a £30 a month increase for the third and subsequent children.
Sinn Féin had proposed that all of the increases proposed over the three years of the Partnership for Prosperity and Fairness be introduced in this budget. That would have meant an increase of £33.50 a month for the first two children and £44 a month for the third and subsequent children.
Sinn Féin also proposed that these increases be made in January 2001, not in April, as proposed by McCreevy.
Much more was expected from McCreevy to tackle the child care crisis afflicting thousands of families, who find the costs of minding their children while working prohibitive. With creche payments ranging from £70 to £100 a week, there was an expectation that more would be done to both speed up the provision of creches throughout the 26 Couties and to fund the costs of paying for these creches.
McCreevy proposes to spend another £104 million on creches. Again, this is obviously a welcome commitment but it falls well short of what is actually needed.
We need to ensure that creches are being built throughout the state, not just in the wealthier areas where high income families live. We need to avoid the inequitable scenario that persists in primary and secondary level schools, where the schools in the more affluent areas have resources and facilities far greater than those found in the more economically marginalised areas.
Another important aspect of childcare was the welcome increase in the number of weeks allowed for maternity leave from 14 to 18 weeks. However, with maxium maternity benefit only £172 a week, many women will not be able to affford to spend these extra weeks at home with their child. On parental leave there was no firm commitment from McCreevy, only a promise of legislation next year.
This theme is repeated throughout McCreevy's budget. There are a range of measures that are welcome and seem good on paper but that in reality either pay lip service to a serious problem or are just a drop in the ocean of the spending really needed.
It was in the tax arena that the failure to tackle the two-tier society is most apparent in McCreevy's plans. Again, there were some welcome proposals in the billion-punt plus of tax cuts announced. McCreevy said that his measures will take another 133,000 workers out of the tax net.
McCreevy made much of the fact that he has now taken over 300,000 low paid workers out of the tax net over his four budgets. However, Sinn Féin proposed taking all low paid tax workers out of the tax net. The Sinn Féin proposals included doubling the personal allowances and if the finance minister had more cash to spend, to widen the tax band at which the 22% tax rate is levied.
McCreevy only increased allowances by £1,800 for a single person and then widened the low tax rate band, all good measures, even including the cut in the 22% tax rate.
However, there was an extra bonus for the higher income earners. They get everything the low paid got plus another 2% tax cut off the higher tax band. The two tax bands are now 20% at the low rate and 42% at the high rate
McCreevy sacrificed taking all minimum wage workers out of the tax net in order to give something extra to the high paid. He could also have used the funds from the high paid tax cut to make further increases in child benefit, but that is not McCreevy's way. Once again, he favoured the well off, making sure that as usual they got a little bit larger slice of cake.
When it came to health spending, McCreevy was again in back slapping mode. There were more people than ever working in the health sector and spending had increased to over £5 billion and in the course of the budget speech Charlie McCreevy added another £284 million.
Again there were positive measures, including the extension of free medical cards to everyone over the age of 70, but some central questions remain unanswered.
It is not enough to increase spending. We have to end the subsidising of the private sector by the public sector, as was highlighted in an ESRI report just weeks ago. This will not change and much of the billions in spending announced by McCreevy will go to subsidising private health care while public patients cannot even get appointments with consultants.
The other important issue is how many of the thousands of hospital beds taken out of the public system during the 1987 to 1989 period will be returned with this extra money.
One example of the small details overlooked by McCreevy is found in the £1.5 million increase in funding for breast cancer screening. There is at present only one facility for this in the 26 Counties and is centred in Dublin. Will the service now be regionalised? This is highly unlikely on a piddling £1.5 million. Many women are travelling hundreds of miles to and from St Vincent's Hospital and waiting up to four hours for a procedure that takes only 10 minutes. In this light the £1.5 million given for this service seems inadequate, particularly in the light of the £2.5 million given to the Football Association of Ireland.
Over the last year, the hundreds of thousands of people in the 26 Counties dependent on social welfare payments saw the value of their meagre increases from last year's budget eroded by increasing inflation.
At the same time, social welfare recipients had to sit though months of Charlie McCreevy and Bertie Ahern claiming that their inflation target of 3 per cent for the year would be met. Now, with an annual rate of inflation at least double that, the unemployed have found themselves worse off this year than last.
This time, McCreevy announced an increase of £8 a week on social welfare and an increase in contributory pensions to £106 a week.
Once again, these were welcome measures but fall far short of Sinn Féin's imaginative proposals. Sinn Féin proposed increasing all payments for older people to £106 a week and increasing social welfare payments by at least £14.50. This would have made huge progress towards a target of £100 a week for the lowest social welfare payments.
So, if you were one of the lucky ones who will benefit from the 2% cut in the higher rate of tax, spend a bit of time contemplating some of the better ways that money could have been spent.
Coalition fails to share the wealth - Ó Caoláin
Responding to Charlie McCreevy's budget Sinn Féin TD Caoimhghín Ó Caoláin said:
``Charlie McCreevy has failed to share the wealth equitably as well as showing that this government lacks a clear direction and vision.
``Many will give an initial welcome to the budget but when examine what more could have been done, they will realise how inadequate Minister McCreevy's budget really is. There are a number of positive elements which I have no hesitation in welcoming but overall this has been yet another missed opportunity to redistribute wealth in our society.
``The cut of 2% in the top rate of tax is indefensible. Once again those who need it least are to benefit most.
``In Sinn Fein's pre-Budget submission we urged that ALL tax reductions should be concentrated on removing the lower paid from the tax net. This has not been done. The single rate of tax-free allowance has reached a figure of £7,488 with the over 65s being allowed £8,500. Both of these fall significantly short of our proposal that those under £11,400 should be exempted and that single earners should not be included in the higher rate band until they reach a threshold of £28,400.
``Increases for pensioners were welcome but should have been applied to all social welfare recipients. Other social welfare recipients should have received at least a £10 per week increase.
``The Minister had nothing to offer to those senior citizens, mainly women who are dependent on the pension of their spouse for their income. He failed to introduce a non-contributory old-age pension that would be means assessed on an individual basis. These people, who are denied their independence and dignity, do not exist in Minister McCreevy's world despite his talk of appreciating the ``workers of yesteryear''.
``The extended period for fuel allowance is after all essential given Irish climate conditions. However, the minister had no increase in this payment to offer.
``Farming was relegated to a minor section of this Budget which offered little to that sector.
``In the vital area of housing, the Budget offers no radical measures to increase local authority provision and gives instead a tax exemption for those renting spare rooms - an admission of failure if ever there was one.''