[Sinn Fein]

14 November 2001

 

Sharing the Wealth
Dáileadh an tSaibhris

Sinn Fein Pre-Budget 2002 Submission

Contents

Introduction

Budget 2002 is being framed in a dramatically changed economic climate. The unprecedented growth in the economy during the past five years has slowed to a standstill in the space of a few months. It remains to be seen if this slowdown can be halted and reversed. One thing is certain. It will have little adverse affect on the wealthy in our society who have been generously rewarded by the current government in every Budget since 1997. But for those on average or below average incomes the economic slowdown is already a reality they are ill-equipped to cope with thanks to the failure of the government to use economic growth to create equality.

The October 2001 Central Statistics Office Family Household Budget Survey clearly shows the level of inequality where the bottom 10% of households have to get by on £15 a day, while the wealthiest 10% have over £150 a day to spend. The survey also found that the income of the wealthy had far outstripped the growth of the poorest in our society and that 38% of pensioners were now among the least well off in our society.

The Fianna Fáil/Progressive Democrats government has had two enormous advantages enjoyed by no previous government in the 26 Counties. Firstly, it has been in office at a time of exceptional prosperity resulting in budget surpluses in four successive years. Secondly, despite its slim Dáil majority, it has been able to plan for five budgets in a row.

Those advantages have been scandalously squandered by the FF/PD Coalition government. Not only has it failed to tackle the structural inequalities which warp our economy and damage our society, it has actually worsened those inequalities and widened the gap between rich and poor.

In our first Pre-Budget submission to this administration in 1997 Sinn Fein stated that there was never ``a more favourable economic climate in which to cultivate equity and share prosperity''. Instead the government began its term of office by giving record tax cuts to the highest earners and cutting taxes for big business. It repeated that exercise in each of its budgets.

In 1998 we urged that the Budget should dramatically improve ``the quality and quantity of services provided by the State in health, education, housing, social welfare, infrastructure and employment creation''. But Budget 1999 led us to state that ``improved conditions for many sections of our society, and the conspicuous luxury enjoyed by a minority, contrasts sharply with the plight of those who have not been allowed to benefit''.

In Budget 2000 three times more was spent on tax reduction than on social welfare increases. In Budget 2001 there was a further reduction of 2% in the top rate of tax and yet again those who needed it least benefited most from tax cuts. It has been estimated that the gap in disposable income between a person earning £40,000 a year and a person who is unemployed has been widened by £159 a week by the present Government since it came to office.

After four FF/PD Budgets the Economic and Social Research Institute had to state in July 2001 that the ``high rate of relative income poverty is a serious structural problem that needs to be tackled while the resources are available''.

There has been accelerating economic growth since this government came to office in 1997 but -

This is the unequal society which now faces recession. And already we hear voices calling for belt-tightening and fiscal rectitude - the chorus that in the past meant cuts for the low paid and those on social welfare. The wealthy have been well cushioned against recession by this government. Those on lower incomes have seen neither the substantial direct gain in wages nor the improved services which they need at a time of economic uncertainty. They demand justice now.

In Budget 2002 the Fianna Fáil/Progressive Democrats Coalition government has its last opportunity to do what it has failed to do thus far - significantly redistribute wealth in our society. Such redistribution is even more necessary as we face an economic downturn.

Sinn Fein believes the priorities in Budget 2002 must be:

All-Ireland Economic Development

The Good Friday Agreement is an all-Ireland Agreement.

Through the new political institutions created under the Good Friday Agreement there is growing all-Ireland co-operation in the crucial fields of economic development, education, health, environment, agriculture, transport and tourism. In each of these areas we have already seen progress and programmes of work are being advanced through the implementation bodies.

The potential is obvious and it is clear that an all-Ireland economy would bring about considerable benefits to all living on the island.

It is essential that such co-operation continues.

Sinn Fein believes that the Irish Government should:

All-out Attack on the Housing Crisis

``The ever-widening increase in income inequalities and resources is nowhere more evident today than in the case of housing. One of the results is that home ownership is now beyond the reach of most people on average incomes. This in turn is adding to the pressures of an already over-stretched social housing sector.''

These are the words of the Report on Social Housing published by the National Economic and Social Forum (NESF). The NESF represents a broad cross-section of society from trade unions to employers, from farmers to local government members, community and voluntary groups. Even such a diverse group was able to agree that at the root of the current housing crisis is the Government's failure to provide social housing - that is houses built by the local authorities and housing co-ops.

Incredibly, given the massive need we see all around us, only 8 per cent of all houses are being built by the local authorities or voluntary sector. This is by far the lowest share for any period in the past century. Since 1996 the number on local authority waiting lists has risen by 43 per cent.

House prices in the private market increased by an average of 15 per cent in 2000. This drove more people onto local authority waiting lists and into private rented accommodation. While house prices have moderated somewhat in 2001 this has done nothing to ease the crisis.

People in private rented accommodation face poor living conditions, high rents and no proper security of tenure. Unscrupulous landlords can let sub-standard property for high rents and evict tenants with little difficulty. These landlords are being subsidised by taxpayers to the tune of over £100 million annually in rent supplements under the Supplementary Welfare Allowance Scheme.

The Commission on the Private Rented Sector presented its report in July 2000 but well over a year later the government has failed to take action even on the limited proposals of the Commission. Tenants are being left to suffer.

New house starts are down by some 20% in 2001. The slowdown in the private housing sector provides an opportunity for the government to use the available capacity of the construction industry to attack the housing crisis by increasing resources for public sector housing.

Therefore Sinn Fein's key housing recommendation which should be acted upon in Budget 2002 is:

We also call for:

Taxation Justice

Sinn Fein has been an untiring advocate of real tax reform and the creation of a just tax system in the 26 Counties. For the past decade the agenda of successive governments has been to implement tax cuts rather than wholesale tax reform. It is true that many ordinary workers have benefited from these cuts and widening of tax bands. Yet by far the greatest beneficiaries have been those on high incomes. These elite groups have benefited disproportionately from cuts in the higher rates of tax while still enjoying access to legal tax shelters and tax avoidance schemes that are not available to the vast majority of Irish workers.

November 15th, 2001 is the last deadline for the 50,000 holders of bogus DIRT accounts to come clean to the Revenue Commissioners and take advantage of what is yet another tax amnesty for the defrauders and white-collar criminals who have been robbing they the Irish taxpayer. It is ironic that the estimated £700 million take from these tax evaders is only slightly less than the £750 million the Coalition promises to increase day to day health spending by in 2002. We need an end to amnesties and a new beginning in our tax code.

At the same time, over the last few years the Irish taxpayer has witnessed ongoing revelations of abuse of the tax code. This covers everything from uncollected taxes to the revelations in the McCracken and Moriarty Tribunals and the Public Accounts Committee DIRT inquiry. These three forums have shown a range of illegal tax evasion schemes, offshore money-laundering schemes, and unlicensed private banks covertly operating out of the offices of one of Ireland's premier companies.

It has been clearly shown that the private and public banking companies have at times been active participants in systematic tax fraud. Their activities were compounded by a regulatory system that, at worst, was unwilling to tackle tax fraud and was, at best, incompetent and unable to enforce the tax laws of the State.

Sinn Fein believes that Budget 2002 presents a golden opportunity to accomplish two things:

  1. Take the low paid completely out of the tax net.
  2. Initiate a complete reform of the tax system, focusing on all areas of the tax code, including the loopholes and tax avoidance schemes built into the present system.

Such a reform process would include local government. It would stop the creeping forms of double taxation being reintroduced into the tax system by local authorities seeking to levy communities for spending shortfalls deliberately created by parsimonious central government policies.

The remit and record of both the Central Bank and the Revenue Commissioners should also be re-evaluated as part of this reform process.

Income Tax

Unlike previous years when widespread tax cuts were introduced this year all is changed and suddenly a new economic orthodoxy has emerged.

There can be no more tax cuts we are told, and what is available will only go to either widening tax bands or lowering the lower rate of tax. Already these proposals have been presented as some sort of deal for the low paid. It is nothing of the sort. A real income tax deal for the low paid would involve a much more radical realignment of tax rates, bands and the array of special tax breaks offered to the higher income earners.

A fair tax cut is one which puts exactly the same money in each worker's pocket, regardless of whether they are high paid or not. This way those on low incomes will finally begin to take the first steps towards a fair deal.

The Dublin Government must also recognise that many low-paid workers are not just young workers or part-time employees. They also include many thousands of full-time working adults who have families to support with all the costs of housing, health, education and childcare that that entails.

Sinn Fein proposes one clear-cut radical measure to tackle low-pay poverty - major increase in tax free allowances. A reintroduction of substantial tax-free allowances for dependent children is also a must.

Corporation Tax, Capital Gains Tax and Rent Control

Sinn Fein proposes:

The idea behind these proposals is that throughout the 26 Counties there are possibly tens of thousands of homes that have been bought purely as investment vehicles. They are not family homes. The owners of such dwellings have seen a huge rise in the money value of their assets. They have also been able to enjoy a hugely increased income stream from these properties in the form of rent. In many cases the rent being paid on the house bears no relation to the cost borne by the speculator who purchased it.

The Department of Social, Community and Family Affairs is also in many cases subsidising the income of these speculators through rent allowances paid to landlords by tenants. Rent control linked to the house purchase price - not its current market value - would help protect tenants, especially those in Dublin who have seen rents spiral upwards over the last two years.

An increase in Capital Gains Tax on speculators who own multiple dwellings would encourage them to take advantage of their windfall asset value increase and they would sell the house before the tax change is implemented. This would have two effects on the housing market in Dublin. One would be to free up much-needed houses in the South Dublin and other council areas. It would also help deflate housing prices. The rent control proposal would amplify these effects.

We are not suggesting an increase in Capital Gains Tax for owner-occupiers. We are only looking to levy the tax on multiple dwelling owners. The Capital Gains Tax legislation has in the past allowed for special cases where the tax was levied at a preferential rate. We are looking for a targeted higher rate which would be beneficial to society as a whole. It would not cause a disinvestment in real economic activity but would penalise speculators whose profit levels are in many cases a result of exploitative intent.

Other tax measures

Agriculture and Rural Development
Ensuring a Future for Farming

Sinn Fein believes there is an urgent need to act and formulate a strategy to resolve the crisis in Irish farming. Across Ireland, rural communities are disappearing. Families are leaving the land because their holdings are deemed not to be commercially viable.

It is still too early to estimate the full effect of the Foot and Mouth crisis on the rural economy and society. The crisis did show that the government can act swiftly and dynamically when it wants to.

Over the years since the last GATT Treaty in 1993, successive governments have been involved in a holding operation, seeking to maximise the gross amount of EU grant aid funding for farming. There has been little thought given to the inequities of how these funds are distributed or of their long-term impact on Irish farming.

Last year the Minister for Agriculture and Food announced over £16.7 billion in spending on farming over the next five years. Elements of the plan such as the Rural Environment Protection Scheme (REPS) and the £532 million earmarked for forestry are welcome. But there needs to be a recognition that, in order to succeed, any new programme on rural development needs to be built up and developed by the communities directly affected by rural underdevelopment.

Sinn Fein believes that the core objectives of any rural development programme should be:

In addition Sinn Fein proposes:-

Social Welfare - Moving Out of Poverty

Sinn Fein believes that progressive social welfare spending should aim to eliminate poverty. In Budget 2001 the government cut the top rate of tax at a cost of £163 million. For less than £150 million the government could have raised the basic social welfare rate by £14 per week for a single person and £24 per week for a couple. It made the wrong choice.

Sinn Fein proposes:

For Child Benefit, Child Dependant Allowances and childcare related measures see Section 10 - Make Childcare a Real Priority.

Towards Free Health Care for All

Private medical care targeted at the most well-off in our society is prospering. The public health system is lagging far behind. There are tens of thousands of people on hospital waiting lists in the 26 Counties while hospital beds and operating theatres are closed in many hospitals. There is a severe shortage of nurses. Hospital staff, especially nurses and junior doctors, are forced to work extremely long hours, which creates a real danger to the welfare of both patients and staff.

All this points to three major ills in our health system: lack of long-term government planning and bad management and organisation of the services; inequality within the system; and the legacy of years of under funding.

We welcome further government moves to reverse under-funding. But comprehensive action is needed on many fronts.

We need reform of training, staff organisation, work practices and pay at all levels in the health services to end inequality. Such inequality includes that between well-paid consultants, who operate profitably in both public and private practice, and the hard-pressed staff of public hospitals who do most of the healthcare work. The grip of a minority of consultants on the purse-strings and organisational structure of the health service must be broken.

Sinn Fein believes the government should be eliminating the two-tier, public/private system in health and moving towards an Irish National Health Service with free healthcare for all, funded from central government tax revenue. This would be in the context of extended co-operation and integration of health systems on an all-Ireland basis. There can be no more important use made of taxpayers' money.

In Budget 2002 Sinn Fein urges two major steps:

Equal Access to Education

The Higher Education Authority reported in 2000 that there had been no significant improvement in the number of school-leavers from poor backgrounds reaching university over the past five years. The figures show that of 14,000 students graduating from universities in this State, only 2.2 per cent come from households headed by an unskilled or semi-skilled worker. From the first rung of the education ladder at Junior Infants children of low income families carry a burden which means that they never reach the top rung at third level.

The abolition of university fees has done nothing to help the children of the least-well-off to get into college. They still cannot get to the starting line because of the prohibitive costs of going to college. They cannot live on the totally inadequate grants now available. Students from outside the university cities face the additional disincentive of the acute shortage of accommodation and the high cost of that accommodation if they are lucky enough to obtain it.

The Government must act to allow access to university to all on the basis of educational merit. It must provide increased maintenance grants to students from low-income backgrounds. It needs also to initiate special measures to provide student accommodation in the context of addressing the overall housing crisis.

Sinn Fein proposes:

Primary level

Second level

Third level

Adult education

Supporting People with Disabilities

The rights and needs of people with disabilities must be a Government priority.

Sinn Fein proposes:

Making Childcare a Real Priority

What value economic development if the children of the nation are not properly cared for? We must ensure that children receive the best care at all times. That includes care by parents in the home, care by other family members, paid care by childcare workers in the home, early childhood education, créches and other facilities provided by the community or voluntary sector or by private concerns.

In addition to the resources earmarked in the National Development Plan, a further commitment is needed which will really show the determination of the Government to prioritise this issue.

Therefore Sinn Fein proposes that:

We need a Childcare Strategy which values equally all children and parents, ensures the provision of quality regulated childcare services and prioritises the needs of children and families experiencing disadvantage and social exclusion. We need to establish a State-assisted and State-wide Childcare Service, in urban and rural areas, in tandem with existing service-providers such as the Border Counties Childcare Network.

The Budget must include immediate action to make childcare affordable. Sinn Fein proposes:

An Ghaeilge

Bhí sé geallta ag an rialtas Bille Teanga a chur os comhair an Oireachtais i 1999, i 2000 agus i 2001. Anois ní bheidh sé ann roimh 2002. Tá sé seo míthaitneamhach. Bheadh sé mar chuspóir ag an Bille seo ní hamháin cearta teanga a chosaint ach iad a chur chun cinn. Taobh leis an mBille tá gá le maoiniú ceart don Ghaeilge ón Stát. Le blianta beaga anuas tá an maoiniú seo tar éis sleamhnú. Má leanann an sleamhnú seo ní bheidh an Stát féin ná earnáil dheonach na Gaeilge in ann Bille Teanga a chur i bhfeidhm.

Molann Sinn Fein:-

The Irish Language

The Government promised an Irish Language Bill in 1999, 2000 and 2001 but now we are told it will not be ready before early 2002. This delay is totally unacceptable.

The aim of this Bill would be not only to defend the rights of Irish speakers but actively to promote them. Alongside this Bill there is a need for State funding for Irish. In recent years this funding has decreased. If the decrease continues then neither the State nor the Irish-language voluntary sector will be in a position to implement a Language Act.

Sinn Fein proposes:

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