It is our own response, analysis and critique of the budget that was published after budget day. We show that with very slightly less money than the Government spent on tax cuts, a much fairer approach could have been taken. Two things could have been done instead with the same money. First, income tax credits could have been made refundable, meaning that all the benefit would go to people in low-pay work and deal with the issue of poverty in work or the working poor issue. Second, there would be enough money to give €100 in refundable tax credits to every person who has a job, meaning, in effect, that everyone would get €100, couples would be €200 a year better off and the low-paid and the working poor would get slightly more. That is a much fairer outcome of the distribution and, in fact, there would be a small surplus left over for any other issues needing to be covered if this were done. That is just one example of what we mean when we say tax changes could be much fairer. These things could have been done and we spell them out in our analysis and critique. I will tie this back into equality budgeting.
The low total tax take is not sustainable in the long run. If we want to maintain existing levels of services in a situation in which the population is growing and ageing, we will not be able to provide those levels of service without additional taxation; therefore, that issue needs to be considered. We suggest the issue of corporate tax contributions, for example, be examined much more closely. We have proposed, for example, a minimum effective corporate tax rate of 6% - in other words, that corporations would have to pay at least 6% and that they would not be able to take the rate below that with whatever tax breaks they get. This would still leave the Government with plenty of space between the 12.5% rate and the 6% rate to encourage people to do research and development, move to the west or do whatever else.
We also wished to highlight that greater public investment was required. Ireland has one of the lowest levels of public investment in the European Union, which we find quite scary because of the long-run implications of such a low level of public investment. While the resources available in the budget for redistribution were relatively small, the Government did not spend them all on the investment side; as I said, it devoted close to a third of them to reducing taxation. We need to think laterally about how this is done. We have made suggestions as to how there could be a substantial increase in the investment in social housing, for example, while keeping it off the Government's books at the same time in order that there would not be problems with the fiscal measures from Brussels.
The next issue we wanted to highlight was transparency. We have a serious concern that the budget document supplied by the Government raised some questions about transparency. For example, we do not believe the information and backup figures for the healthcare budget are really transparent. I will spell this out. Outstanding expenditure of approximately €100 million is being carried forward but we cannot see where the provision for that is in the budget for 2018. It seems to us that there is an overhang of €100 million, an overspend in 2017 being carried into 2018, which, because it will be last year's money when 2018 comes, will become the first charge next year. Then, to maintain that level of service, that €100 million will become a bill again, and we cannot see this in the budget numbers. The second issue that causes us problems in that regard is that we do not believe the provision for pay increases in health is adequate. When one thinks about a sector that has 100,000 employees and the allocation that is in the books, it seems to us that quite a substantial component of the pay increase is not actually provided for in the health budget, which means, in effect, that as the pay increases are already agreed, it therefore means there must be cuts somewhere else if the budget is to balance in 2018, and we do not see this. Third, while we welcome the announcement of new initiatives and increased overall expenditure on health, it does not seem to us to be possible to maintain the existing level of service and at the same time implement all the new health care initiatives in the budget. There is an issue about the transparency of the budget numbers and we have drawn attention to it in previous years. This is a critically important issue for Deputies and Senators because ultimately it is the Members of the Oireachtas who vote on the budget and make the choices and so on.
The issue of budget proofing is hugely important and needs to be addressed. There has been a devastating impact on a lot of people in the past ten years as a result of the crash and all the various things that have flowed from it. We do not think budget 2018 has taken any significant initiative to measure whether, for example, poverty and inequality will fall or rise as a result of the budget's overall impact. We are happy to see a paper on how to proceed on equality budgeting, and it is very strong on one dimension of equality budgeting and equality proofing, that is, the issue of gender. That is very important and budget proofing from a gender perspective is critically important and absolutely must be done. However, it is not the only dimension. In the paper prepared by the Department and published on the day of the budget, only in the last third does the issue of distribution arise in any serious way, and it seems to us that this is a critically important issue. I will come back to what the key headings should be in terms of budget proofing. We argue and believe very strongly that budget proofing should be an integral part of all future budgets in Ireland. We also think this committee has a serious role to play in ensuring budget proofing is part of the process. Much work could be done to back up this committee. Much work also could be done in advance, that is, before the budget also.
As for ensuring a good future for the country that produces well-being for everyone, we set out in our opening statement a table with five columns. The opening statement has been supplied to the committee. We are saying that in a policy framework for a just Ireland, there are five things - members can see them across the top of the table - that people and the Government should be working for: to build a vibrant economy, to have decent services and infrastructure, to have just taxation, to have good governance and to be sustainable in whatever we do. I think there would be fairly strong or widespread agreement across these headings. The challenge is to work out how they are operationalised and so on. We suggest, in terms of policy proofing the budget, that these five areas need to be proofed. What does this mean in practice? One of the things that should be measured in respect of the vibrant economy, for example, is whether there has been adequate public investment, given the scale of the situation in any year or what is being planned over a period. Furthermore, there is the importance, when one is equality proofing a budget, of ensuring that the choices made promote fiscal and financial stability. We need sustainable economic growth. That is one element. The second element is proofing the services and the infrastructure to ensure, for example, that the services are becoming less two-tier if they are already two-tier, that they are not moving in the wrong direction and that the infrastructure is being provided not only to maintain the existing level of service but also to improve it.
With regard to just taxation, we need increased equity in taxation and reduced income inequality. There is solid scope for equality proofing in the budget.
The next issue is good governance. What we are speaking about here is a measure of whether the budget is a participative process. At one level the budget is, of course, the document produced by the Government because it is the Government's view of the priorities and, given the resources available, what it will do. What we would say is that it is important to involve the various sectors of society in the process of working out the best options. The reason for this is that the various sectors have different experiences of the realities in which we live and of the policies as implemented and it is important to bring this experience to the table, together with possible ideas, suggestions and proposals worked out about how these issues could be resolved.
We believe the issue of sustainability is critical for equality proofing. An example of what we would be looking at here is whether the changes and initiatives in the budget promote balanced regional development. To help with this, we have been arguing for quite a while that we need to go beyond our current toolkit that measures whether we are making progress, which is measured by GDP and one or two other things, to a much more nuanced approach that would, perhaps, include a lot of other indicators. There are examples of this in other countries, where they have shadow national accounts. They keep the national accounts exactly as they are kept everywhere, but they have another set which is more nuanced. For example, this set adds in the value of unpaid work or takes out the use of raw materials that cannot be replaced.
Drafting a budget involves major decision-making about the direction of society and how available resources can best be used to address the challenges being faced by society, while moving towards a desirable and just future. Equality proofing is central to this. I absolutely agree the work on gender proofing that has already begun should be continued, but we strongly urge a much wider approach to cover the types of issues we have set out in order that we get a comprehensive proofing of the budget to ensure it works to build a vibrant economy and well-being for all in a sustainable way, with everybody participating in shaping the decisions that are being made.
