The "Poverty Trap" budget

[DerKaiser]

There have many debates recently on how the state should cuts costs including:

1) Private patients effectively pay the full cost of their treatments
2) Parents of kids attending private schools pay the full cost of their education
3) 3rd level students must pay their full costs
4) Employers must pay full sick leave benefits for their employees
5) PRSI no longer entitles people to dental benefits
6) Child benefit has suffered disproportionately large cuts compared to most forms of social welfare.

What's the common thread?

People in jobs are not only paying much increased tax rate, but any benefits they enjoyed previously appear to be getting disproportionately cut.

The mantra I've heard ahead of the budget is effectively that those fully dependent on social welfare will be protected.

This leaves me with two questions:

1) Are we well on our way to a "Poverty Trap" budget that discourages any form of ambition to improve one circumstances?

2) Is the protection of those entirely dependent on social welfare misguided in light of the fact that such people may not be even the least well off social/economic group in this country anymore?

[Pique318]

Uh oh
http://www.cartoonstock.com/lowres/jfa2492l.jpg

As it happens, I agree with you, but don't you know that the most vulnibble in society cannot be asked to contribute.
Sure they didn't cause this mess, us paye workers did and we're all minted with money in the bank to pay for any and all taxes/charges tat are imposed.

[cork]

Originally Posted by DerKaiser

5) PRSI no longer entitles people to dental benefits

There needs to be a change here.



Parents of kids attending private schools pay the full cost of their education.

I agree. Why should the taxpayer be subsidising these?

[Firefly]

Originally Posted by cork

Parents of kids attending private schools pay the full cost of their education.

I agree. Why should the taxpayer be subsidising these?

On the surface I would agree with this. However, from what I hear, the state just pays the teachers' salaries - which it would have to do if those children were schooled publicly. The other costs (such as school upkeep) etc is paid for via the fees thus saving the state. Again, this is from what I hear..can anyone confirm/refute this?

[blueband]

Originally Posted by DerKaiser

2) Is the protection of those entirely dependent on social welfare misguided in light of the fact that such people may not be even the least well off social/economic group in this country anymore?

surely those entirely dependent on social welfare are the least well off.

[mathepac]

Originally Posted by blueband

surely those entirely dependent on social welfare are the least well off.

Correct and since the new government came into power they are even less well off.

1. €0.50 per prescription item dispensed charged to medical card holders
2. Electricity allowance cut from 400 to 300 units per two-monthly bill
3. or
4. electricity cash payment cut from €43.80 / month to €35.80 / month
5. Gas allowance cut from €489 to €393 per annum (€42 every two months in summer, €89 every two months in winter)
6. or from €40.70 to €32.70 / month cash payment
7. Regular (or irregular) blood tests are no longer covered by the medical card. These cost at least €25 a time at most GP surgeries
8. Eye tests & Medicals for driving licence renewals are no longer covered on the medical card. These now cost approx. €35 and €25 each.
9. Telephone allowance cut from €25.91 to €22.22 / month
10. or
11. cash payment cut from €26 to €22.30
12. For new applicants, there will be a delay of 24 weeks from application to [approval] payment of any Social Welfare benefit (CWO SWA payments if approved are made within two weeks usually)
13. Payment of arrears (if approved) for any Social Welfare benefit will take at least 10 weeks from payment of the benefit (24 weeks + 10 weeks = 34 weeks)
14. Household Benefits Package applications take 7 weeks from receipt of application to reaching the start of the approval process.

[orka]

Originally Posted by Firefly

On the surface I would agree with this. However, from what I hear, the state just pays the teachers' salaries - which it would have to do if those children were schooled publicly. The other costs (such as school upkeep) etc is paid for via the fees thus saving the state. Again, this is from what I hear..can anyone confirm/refute this?

Yes that's true. If all children were educated publicly, the state would have to pay all costs (building upkeep etc.) rather than just the teachers's salaries. Having a private school system saves the state money. So no taxpayer is 'subsidising' those in private education - they pay less because the parents pay fees on top of their taxes which should entitle their children to a full eductaion.

Originally Posted by blueband

surely those entirely dependent on social welfare are the least well off.

I think that's what DerKaiser is questioning - are we in danger of reaching a point (maybe we passed it some time back) where some of those in work would be better off out of work and/or those on benefits are better off staying there?

There are undoubtedly situations, maybe just above cutoff points for certain benefits (eg getting a medical card, qualifying for Family Income Supplement) where someone might be better off on benefits. And there is the oft-quoted example (possibly theoretical but from our current benefits/taxation system) of a family with three children, on max rent allowance getting the equivalent of a working salary of about 42K.

And there are also undoubtedly many families with loans, mortgages and reduced circumstances where their disposable income after repayments leaves them with less disposable income than those on benefits - different reasons and maybe temporary until things either turnaround or they become bankrupt/start again - but nonetheless, on a day-to-day, hand-to-mouth assessment of who is 'least well off', overly-debt-burdened workers could definitely come out worse than even those entirely dependent on social welfare.

[shnaek]

Very good post, orka. Spot on.

[blueband]

i thought the govenment had a survey carried out some time ago which clearly showed that those even in very low paid jobs are still far batter off then those on social welfare

[DerKaiser]

Originally Posted by shnaek

Very good post, orka. Spot on.

was about to say the very same thing

[DerKaiser]

Originally Posted by blueband

i thought the govenment had a survey carried out some time ago which clearly showed that those even in very low paid jobs are still far batter off then those on social welfare

All other things being equal! Some of the "other things" are detailed in Orka's final paragraph

[Husker]

Originally Posted by blueband

i thought the govenment had a survey carried out some time ago which clearly showed that those even in very low paid jobs are still far batter off then those on social welfare

Esri study reported that about 3 per cent were better off on the dole.

http://www.esri.ie/UserFiles/publica...jacb201155.pdf

[Shawady]

The problem is when you have a family dependent on social welfare, they are better off claiming benefits than a low paid job.

Only two weeks ago a close friend of mine had to refuse a job because he would have less money. His circumstances are he has 3 children and receives €420 a week and other benefits. He was offered a job for 25K a year and this amounted to €400 a week. He reckoned he would be entitled to family income supplement but because there is a backlog of 3-4 months he would not be able to survive until then.

[shnaek]

Originally Posted by Husker

Esri study reported that about 3 per cent were better off on the dole.

http://www.esri.ie/UserFiles/publica...jacb201155.pdf

Who believes the ESRI? Just look at some of their reports over the last 5 years. Monkeys would have done a better job.

[Thirsty]

Fee paying schools are actually cheaper from a tax payers point of view.

...friend of mine had to refuse a job...

A foolish decision in my opinion; you'll never get a pay rise or promotion on social welfare. Working is a long term choice, SW should be a short term choice. Now we have people viewing it the the other way round.

[Shawady]

Originally Posted by Thirsty

A foolish decision in my opinion; you'll never get a pay rise or promotion on social welfare.

I agree but you can see how in this situation a single person living at home getting €190 in social welfare would take the job but a father of three wouldn't.
There is talk that child benefit should be means tested but the government must be careful that this does not create a further disincentive to work.

[werner]

How about something radical? instead of attacking the weakest and poorest in society by savage stealth taxes and heavy welfare cuts (o.k. there has to be reform of some welfare payments etc.)

Use something that is equitable a.k.a. progressive taxation...where the wealthier pay more in tax than the low paid

Apologies I forgot, in Ireland thiose who can afford to pay, don't!..tax is only for the little people and middle income earners

[Firefly]

Originally Posted by werner

How about something radical? instead of attacking the weakest and poorest in society by savage stealth taxes and heavy welfare cuts (o.k. there has to be reform of some welfare payments etc.)

Use something that is equitable a.k.a. progressive taxation...where the wealthier pay more in tax than the low paid

Apologies I forgot, in Ireland thiose who can afford to pay, don't!..tax is only for the little people and middle income earners

Not sure if that's a serious post or not but in any case, it has been pointed out that those on high incomes do in fact pay the most in tax whilst there is a whole segment of workers who are exempt from income tax.

How about something even more radical....let's slash public spending and taxes?

[mandelbrot]

Originally Posted by Husker

Esri study reported that about 3 per cent were better off on the dole.

http://www.esri.ie/UserFiles/publica...jacb201155.pdf

Heard the guy from the ESRI on with Matt Cooper a few weeks ago, and he confirmed that the report didn't take into account the incremental household costs incurred when people go back to work - costs of commuting / motor, childcare, clothing etc.. which would not be incurred otherwise.

So, he had to admit that the figure could rise substantially if those factors were taken into account...

[shnaek]

Originally Posted by mandelbrot

Heard the guy from the ESRI on with Matt Cooper a few weeks ago, and he confirmed that the report didn't take into account the incremental household costs incurred when people go back to work - costs of commuting / motor, childcare, clothing etc.. which would not be incurred otherwise.

So, he had to admit that the figure could rise substantially if those factors were taken into account...

That would be the ESRI alright. Can't believe a word they say.

People often point at the Scandanavian model as one worth following, but I don't know how much people know about that model. For example, there is no infinite entitlement to social welfare in those countries. That is one thing we could certainly do with bringing in over here.

We can't afford to continuously increase the burden the 1.5million people who are left working in this country without touching our 'benefits' system. It is inevitable that at some point it becomes untenable to continue to work, particularly if you are working in an area which you don't enjoy.