Like Robin Hood in reverse – Fine Gael take from the poor and give to the rich

Posted: December 26, 2014 in Austerity, Budget 2012, Budget 2013, Budget 2014, Budget 2015, Economy, ESRI, Fine Gael

Like Robin Hood in reverse, Fine Gael take from the poor and give to the rich. To be more precise they take from low and middle income earners and give to the top 10%.

They are ably helped by their very own Friar Tuck but again in reverse. Labour are the jovial mendicant’s alter ego, slavishly bending to the authority of Frankfurt and Brussels.

And let’s not forget the band of merry men, those blind-leading-the-blind economists and commentators cheering on the Government as they squeeze the ordinary citizen just one more time.

Needless to say Government Ministers and backbenchers will dismiss these claims as yet another attempt to undermine the benefits of their budgets. They will complain loudly that the opposition are misrepresenting their intentions.

‘We are not a government that only looks after high earners in society’ they protest as they vote once again for a budget that does just that.

But don’t take my word for it. I’m one of those mischievous opposition politicians doing down a Government trying it’s best. Listen instead to the government funded and ideological orthodox Economic and Social Research Institute (ESRI).

Every year, after budget day, the ESRI analyses the impact of the measures agreed on people’s income.

The take the tax and social welfare changes and run them through a modelling programme called SWITCH.

This gives us a sense of whether people will have more or less money in their pockets in the coming year. It also tells us which section of society will lose and which will gain.

It is worth quoting their 2015 report at length:

The overall impact on household incomes of Budget 2015 and water charges is close to neutral, increasing average income by less than 0.1 per cent… The largest losses are for the bottom decile, an average loss of just over 1 per cent, and for the second decile. Losses are incurred in each of the bottom six deciles, with the percentage loss declining as incomes increase. From the seventh decile onwards there are small gains. The top decile gains the most with an average gain of 0.6 per cent. This pattern of losses in the bottom half of the income distribution, declining as income rises, and gains in the upper reaches, rising with income can clearly be described as regressive.

In plain English this means that while the average impact of Budget 2015 was pretty neutral, the bottom 60% lost while the top 40% gained.

What is also very striking in the ESRI conclusions is that the top 10% of earners are the only group whose gains are significant, while the bottom 30% of households lose the most.

This is what economists call a regressive budget. To the rest of us it is just plain unfair.

Fine Gael and Labour complain that the SWITCH model doesn’t include all aspects of the budget. This is true. But many economists believe that if the model did include all budgetary measures it would show an even greater level of unfairness as it would capture cuts to public services on which lower income groups depend more.

Of course this is not the first time Fine Gael and Labour have hit the poorest families hardest. This approach has been a feature of every budget they have introduced since taking office, according to the ESRI.

Budget 2012 took three and a half times more from the bottom 40% of households than it did from the top 30%. A similar, if less pronounced pattern was found by the ESRI in Budget 2013 and Budget 2014.

What is most offensive about Budget 2015, however, if that for the first time Government was in a position to increase the income of some households. That they chose to help those at the top tells you everything you need to know about their real priorities.

This is why our at-risk-of poverty, consistent poverty and material deprivation rates continue to rise.

This is why one in seven working households live at risk of poverty.

This is why a host of organisations including Social Justice Ireland, TASC and the Nevin Institute of Economic Research have criticised this government for passing budgets that are deeply unfair.

But most importantly this is why hundreds of thousands of people from every social class and every part of the country have marched the streets in opposition to the budgetary policies of the Government – symbolised by their opposition to water charges.

Fine Gael and Labour may protest that they are not a coalition for the rich, but low and middle income families know different.

The central economic policy of this government has been to place the burden of the economic crisis on those least able to pay.

To add insult to injury they carp on about a recovery that is only benefiting those at the top.

Meanwhile low and middle income families continue to struggle under the weight of household debt, property tax, water charges, rising prices and falling incomes.

Fine Gael and Labour, just like Fianna Fáil before them, are perpetuating a two tier society. It is deeply unfair and people know it.

It is high time for a genuine Robin Hood government. One that takes from those most able to pay and invests in a fair recovery for all.

This article was originally published on Journal.ie on December 24th 2014

 

 

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