FEMINIST OPEN FORUM

 Budget 2012: anti women and anti children

Orla O’Connor, Head of Policy, National Women’s Council of Ireland

CONTEXT OF BUDGET 2012

• €3.6 billion (at least) Budget adjustment agreed under EU/ECB/IMF Memorandum of Understanding
• Government-cuts to public expenditure 2.1 : Taxation €1.5 billion
• Unemployment: Women’s unemployment has now rapidly increased. Women’s unemployment has increased by 10.1% in the last year in comparison to 6.8% for men.
• Poverty: Women’s poverty has increased; consistent poverty levels increased to 5.5% from 4.2% during 2008-09 while the level of deprivation of two or more items increased by almost 25% in the same period.
• Lone Parents: Lone parent households reported the high levels of poverty 18-9.6% and deprivation 18.7-16.4% .
• Locally-Based Women’s Projects: The  funding has been cut by 15% and this has reduced the level services that the organisations can provide.  Some of the women’s networks have closed while others have been forced to cut back on staff and on services.
• Violence Against Women: In the past 3 years the domestic violence services have experienced significant cuts. In addition to this there has been over 40% increase in demand for services and this continues to grow.
• Debt: Women are struggling in families to manage household debt and reduced income. Over 24% of households are in arrears with one or more of the following items: utility bills, rent or mortgage payments, hire purchase agreements or other loans/bills.
• In 2009, almost 48% of households stated that they would be unable to meet an expense of €1,085 without borrowing.

 BUDGET 2012: ANTI WOMEN AND CHILDREN

 POSITIVE MEASURES

• Welfare rates maintained;
• Child benefit rates for first and second child maintained and payment remains universal;
• Pre-school year maintained.

 NEGATIVE MEASURES

Child Benefit for third child reduced from €167 – €148 (2012) – €140 (2013) and fourth child and more children – reduced from €177 – €160 (2012) – €140 (2013).  This will negatively affect larger families who have a high risk of poverty and have experienced an increase in deprivation.

Grant of €635 for multiple births will be scrapped.

Back to School Clothing and Footwear Allowance cut by €55 from €305 to €250 for children aged 12 years and older and by €50 from €200-€150 for children aged four to 11 years. These cuts come at a time when Barnardos has estimated the cost approx €500 for uniform, shoes, books and school items, and at a time when voluntary contributions from schools are increasing to replace the shortfall of government funds.

Lone Parents – have faced a series cuts, the cumulative effect of the cuts will place increasing numbers of lone parent families in poverty.

• Age of the youngest child will be reduced to 7yrs by 2014 in order to get the lone parent allowance, when the youngest child reaches 7yrs lone parents will be placed on Unemployment Assistance and have to be available for full time work.
• Lone parents accessing Community Employment Schemes will have to give up One Parent Family Payment and go onto the Community Employment Payment, this will represent a significant loss of income as previously lone parents kept the One Parent Family Payment and received the CE payment in addition. This was a valuable way of supporting lone parents into progressing into education and training and employment.
• Earnings disregard (the amount you can earn and still claim One Parent Family Payment) has been reduced from €146-€130 in 2012 and further reductions will be introduced over the next four years.  This will act as a disincentive to take up employment and will particularly mean that lone parents will be more likely to remain in low paid, low status employment with little prospect of career progression.

Childcare:

• The staff/child ratios increased from 1: 10 – 1:11 which is going in the opposite direction of ensuring quality childcare.
• Reduction in support for Community Childcare Subvention which will lead to increased costs to parents on low incomes (€100-€95).
• Increased costs of childcare for those on FAS/VEC Programmes  of between €25-€15 due to a reduction in capitation to childcare providers.

Violence Against Women: As all commentators are saying, the devil is in the detail regarding the €543 – €800 million cuts in the health budget but it will most certainly have a massive impact on women. The Minister has confirmed that there will be a reduction of services but no further detail as yet.  It is very likely that there will be further cuts to services protecting women from violence, again we will not know this until we see the HSE National Service plan for 2012 but if the intention is €800 million savings, this sector will not be spared.

Prescription Charges: The changes to the drug payment scheme raising the threshold by €12 euro from €120 to €132 per month will also have a visible impact on women with children on low incomes who are trying to manage household budget.

Lack of strategy or vision for reform of health system: The government is investing €50 million in primary care sector in introducing free GP care for long term illness scheme  and plan to phase in free GP care for all over a four year period but it is very difficult to see how universal health care will become a reality when €800 million cuts are planned for an already collapsing health care system. Women need investment in primary health care as it is lack of income that is the biggest barrier to women accessing healthcare for themselves and their children.

Women’s Groups – Local women’s groups  While it is as yet unclear the extent to which locally based women’s centres and projects, (providing vital services, supports and community based education and training to the most vulnerable women) will be cut there is widespread concern that these organisations will also be severely hit. €8million is being cut from the Local and Community Development Programme under which these 17 women’s centres are funded.

Nationally : National Women’s Council of Ireland – cut by 35% which if it goes ahead puts the future of the organisation at risk.

Community Employment : The cuts to Community Employment will make it very difficult for women’s organisations who were relying on CE to provide services and to provide core funding to continue. Women rely on CE as an access point for employment and training, women rely on CE for services particularly support for childcare – double hit to women.

NWCI PERSPECTIVE: WE CANNOT CUT OUR WAY OUT OF THE CRISIS

Choices

1. Balance between taxation and cuts to public expenditure needs to be reversed
2. Ireland’s tax take is low by European and international standards
3. Budget’s impact needs to be assessed in terms of its effect on women
4. Meeting the IMF/EU bailout terms is not sustainable – predicated on growth rates that will not occur if ‘cuts’ policy is maintained

Budget 2012: Who pays? Who benefits?

Sinead Pentony, Head of Policy, TASC

TASC is an independent, progressive think-tank concerned with equality and we have a particular interest in examining how the decisions relating to our economy impact on equality.

The national Budget, every year, is an opportunity for social change. Budgetary decisions are about  who pays and who benefits in terms of taxation and public services. It represents crucial political choices that can profoundly affect our economy; and our society. Its important to remember that even though we are in a bailout fund, we still have choices in relation how we close the deficit.

The budget also tells us a lot about the priorities of the Government. After this week’s budget we can be in no doubt that women are not a priority of the current Government. A number of reports have been published recently by TASC, ICTU, the Community Platform and Claiming our Future and our messages are very similar.

• We all acknowledge that there’s a problem with our public finances.
• We are all advocating that the gap between what we spend and we bring into the State coffers needs to be filled by raising tax rather than cutting spending.
• From a gender equality perspective closing the deficit by increasing certain taxes is much better than cutting spending, because women tend to rely more on public services than men along, while men tend to earn more and own more assets than women.
• We all make the case for protecting people on low incomes and that taxation measures should be targeted at higher earners.
• There are equality and economic arguments for protecting low incomes:

(i) The equality arguments centre around ensuring that people can live in dignity and meet their basic needs – putting a roof over their heads, heating, hot food.

(ii) The economic arguments focus on the fact that these are the people who spendeverything they earn in order to live and cutting their incomes cuts spending in thelocal economy. Maintaining incomes at a certain level maintains demand in the economy.

Before I talk about the Budget that was announced this week, I’d like to tell about TASC’s gender analysis of last year’s budget which we launched a couple of weeks ago – its called Winners and Losers? …equality lessons for budget 2012, and we focused on how budget 2011 impacted on the incomes of women and men.

The research was undertaken with support from the EU and the Equality Authority. We quantified the impact of tax changes and social welfare cuts on the incomes of women and men.

The main results of the gender impact assessment are as follows:

Women are concentrated in low income groups.

• Social transfers are more important to low earners than high earners – by that I mean, social transfers make up a larger proportion of the income of low income groups.
• A number of tax changes in budget 2011 brought large numbers of low earners into the tax net. These tax changes included the introduction of the Universal Social Charge, reductions in tax credits and widening of tax bands.
• A combination of the social welfare cuts and the tax changes resulted in budget 2011 having a disproportionate impact on low income groups … and on women as they are concentrated in the low income groups.

The group most adversely affected by budget 2011 measures that we examined is those who are ‘single with children’. Three quarters of this group is made up of women and they lost 5 per cent of their income. The average income of this group was €13,323 which means that they lost an average of €667. The group that was least adversely affected was a married couple with children with two earners – where there was a higher earner earning 70 per cent of the household income.

Eighty per cent of this group were male and they lost 1.3 per cent of the income as a result of the budgetary measures that we looked at. The average income of this group was €66,337 which means that they lost an average of €870. Our analysis shows that the highest earning group earned 5 times the income of the lowest earning group but they lost only 30 per cent more of their income as a result of the budgetary measures.

The policy implications from our gender impact assessment are as follows:

Lone parents are the group that was most affected by the budget 2011 measures that we analysed. This is the group that is least able to absorb a reduction in their income. We know this because lone parents are the household group that is most ‘at risk of poverty’ and they are also more likely to experience consistent poverty than any other group. And by that I mean going without certain items that are deemed essential in order to meet their basic needs – heating, hot food, adequate clothing…

Children are the demographic group that are most at risk of poverty and more likely to be living in poverty than other group in Irish society. The latest poverty statistics from CSO published last week tell us that one out of every five children is at risk of poverty. TASC’s analysis highlighted the need for all proposed budgetary measures to be tested before they are implemented and this can only be achieved by undertaking a distributional analysis of how different budget proposals will impact on different income groups.

The absence of a comprehensive analysis of the distribution of income and wealth in Ireland is a fundamental problem when it comes to policy development. Basically, we don’t have enough information and evidence-based analysis to make the right budgetary choices for our economy and our society. This type of analysis is standard practice in many countries such as Sweden, so there is expertise and experience that we can draw on.

So what happened this week?

As we all know this week’s budget involved taking a further €3.8 billion out of the economy. This is austerity budget number five, and it is a continuation of the previous government’s failed budgetary strategy. The current budgetary strategy is incompatible with growth, jobs and equality.

Budget 2012 has been a very bad budget for women, children and equality in general. The breakdown of the budget was €2.2 billion in cuts and €1.6 billion in taxation measures. The budget was presented on the basis of three guiding principles: fairness, jobs and reform. To quote Minister Howlin: ‘fairness aims to ensure that the burden of the cuts is shared fairly’…

…but fairness, like beauty is in the eye of the beholder – its subjective and it difficult to measure. Equality (and particularly income equality), is objective and measurable – you can quantify the impact of budgetary measures on different income groups. I’m going to touch on a number of budgetary measures that will impact on women.

The Department of Social Protection measures announced yesterday included maintaining primary social welfare rates and the rate of child benefit for the first and second child. This is good news. But there are going to be cuts to the higher rates of child benefit for the third and subsequent children over two years. Having looked at the Department of Social Protection’s statistics you can estimate the number of children that will be affected by the changes to child benefit – 460,450 to be exact, while 663,553 will not be affected directly by this change – but inflation will reduce the value of the payment indirectly.

The budget included a whole raft of changes in relation to the One Parent Family Payments, labour market activation policy measures and education supports aimed at facilitating participation in education and training. When you take the whole range of measures announced this week there is only one conclusion you can arrive at – it’s going to be more difficult for people living on low incomes, who are primarily women, to make ends meet, to access education and training and to find and stay in employment.

When you add children to the equation these challenges will be even greater. This is even before we ask the question – where are the jobs going to come from? The budget included announcements that public sector numbers will be reduced by 6,000 in 2012. The capital budget is also be cut by €750million which makes up approximately one third of the overall reduction in public expenditure.

The economy has been starved of investment for the last number of years and we cannot begin the process of recovery and job creation in the absence of significant investment. TASC and others have made creative suggestions about how investment could be financed.

Closing the gap in the public finances must be counter-balanced with an investment strategy aimed at embedding job creation and growth in the economy. In the absence of a twin-track approach to dealing with the crisis we cannot create the conditions for recovery which is desperately needed.

Before I talk about the main taxation measures that were introduced this week I want to mention a number of budget cuts that are not going to save the Exchequer a significant amount of money, but will have a disproportionate impact on the provision of locally delivered services and advocacy work that provides a voice for marginalised groups and equality in general.

These cuts include the 35 per cent cut to the budget of the National Womens’ Council, which will save the Exchequer €187,000. To put this in context, the cut to the NWCI budget will reduce the deficit by 0.001198 per cent.

The savings to the Exchequer are negligible, so the decision to cut the budget of the NWCI can only be described as a continuation of the previous government’s policy of silencing dissenting voices through budget cuts to advocacy and policy work.

Another example is the decision by the Department of Justice and Equality to cut the budget for equality proofing by 100 per cent, which amounted to €150,000. This budget line was a mechanism by which the already financially challenged Equality Authority was able to use €150,000 drawn down from the European Social Fund through the Department of Justice and Equality to run a programme of activities supporting equality competencies and mainstreaming measures by employers, trade unions and others.

And at absolutely no extra cost to the Exchequer because it was match funded by the salary money the Equality Authority already had. In this case there were actually no savings to be made, so we can only conclude that there is an implicit objective of rolling back the years when it comes to embedding equality principles and practices in policy making processes.

I’m going to move on to tax now.

A big part of yesterday’s announcements related to measures aimed at resuscitating the property market. Although every successful advanced economy has a functioning property market that makes an important contribution to economic activity, this Budget seems to be relying on new property-based tax breaks rather than a programme of strategic investment to support economic activity.

The main taxation measures announced in the budget include changes to the Universal Social Charge (USC), increases in VAT, carbon tax, motor tax, Capital Gains Tax (CGT), Capital Acquisition Tax (CAT) along with the introduction of the household charge. The changes to the USC are welcome and certainly pass the fairness test on the grounds of equity on their own terms. However, when you combine the changes to the USC with the decision to base the jobseekers’ benefit payment week on a 5-day week rather than a 6-day week, the likely outcome is that people earning less than €10,000 – who are probably working on a part-time basis and likely to be women – will actually lose more of their income, especially when the increases in VAT and carbon tax is included, not to mention the household charge.

The increases in CGT and CAT are also to be welcomed as these are taxes on the sale and transfer of assets. The application of PRSI to other forms of income along with increases in DIRT is also good news, although the former will only come into effect in 2013. In general though, Ireland is a poor performer when it comes to taxing assets and wealth compared to other European countries. In 2009, Ireland’s implicit rate of tax on capital was just 52 per cent of the average rate prevailing in the European Union.

So while these increases are a step in the right direction, much more could have been done in this budget to spread the burden of the adjustment more equally by targeting the income and assets of high earners. An example of where more could have been done relates to the taxation of Irish people who are non-resident for tax purposes.

The domicile levy can only be described as a failed attempt to ensure that this group of people are made to pay their fair share. Revenue recently reported that the levy brought in approximately €1.5 million into the State coffers. Plans to abolish the “citizenship” condition for payment are unlikely to make any difference to the amount of revenue generated through this measure.

Indirect flat taxation measures such as VAT and the carbon tax are blunt instruments for collecting revenue. They are regressive and take proportionately more from low income families, and TASC’s research shows us that women are concentrated in low income households. Such measures are also counter-productive because they reduce the spending power of such households which will further depress consumer demand and ultimately lead to more jobs losses and job insecurity.

The household charge is a good example of how not to introduce a property tax because it is going to apply to all houses (with a few exceptions) regardless of location, house size and income. While the introduction of a Site Valuation Tax has been flagged for 2014, the household charge will cause alot of pain in the meantime. TASC has developed an equality-proofed residential property tax model that could have been introduced relatively easily and used on an interim basis.

As organisations start quantifying the effects of the overall Budget, the picture that seems to be emerging is one where everyone will be affected by the budgetary measures, but once again, low income families will lose proportionately more through reductions in their income, spending power and access to essential public services.

I’d like to conclude by saying that Budget 2012 lacks any credible commitments to either fairness or job creation. The cumulative impact will be to lower domestic demand further, exacerbate inequality and increase unemployment.

In relation to equality, there appears to be no sense that the interests of low income groups will be put before those of high income and high wealth individuals. This means that women and children will continue to bear the brunt of responses to the crisis as long as the current policy of austerity is pursued.

In order to achieve a sustainable economic recovery in Ireland, with equality, we need to change our economics. Mainstream European economic policy involves a more equitable distribution of income, tighter regulation of finance, and social investment to give everyone a better quality of life.

In the current context it is more important than ever that the effects of budgetary measures are quantified and alternatives policy options put forward in an effort to demonstrate how we can make a break with the failed economic policies of the past and the present, and to bring about the changes that will move us in a new and different direction.

Thank you.