Voters need to face some facts: if they want EU-average level social services, they cannot have American level taxes, argues Seán Healy.
The main question to be answered in Election 2007 is: what kind of Ireland do we want in the coming decades? In this context the recent Irish Times/TNS mrbi opinion poll finding that a substantial majority of voters are not prepared to pay more taxes to fund public services is significant. Voters believe the Government already has enough money to fund those services.
Ireland's economy has been doing well. Employment is growing. Our per capita income is among the highest in the world. The population is expanding and likely to exceed five million by 2020.
At the same time almost one in five of the population has an income below the poverty line (€11,000 for a single person, €25,400 for a household of four). Social services are not at the level one would expect in such a prosperous society. Infrastructure in areas such as public transport is not at an EU-average standard.
Developing a fair and sustainable society would require bringing our social services (eg education, health, welfare) and infrastructure (eg social housing, public transport) up to an EU-average level at least.
It would also require that issues such as the environment, carers, balanced regional development and the working poor be addressed in a comprehensive and integrated programme so that every person has access to what is required to live life with dignity.
This requires that voters face up to the fact that if we want social services and infrastructure at EU-average levels these must be paid for. We cannot expect to provide European levels of services and infrastructure while seeking American levels of taxation.
Ireland's total tax-take is well below the EU average at present - whether measured as a percentage of GDP or GNP. Consequently, it is not surprising that our services and infrastructure are not at an EU-average level. If we want to change this situation we must recognise that it involves a trade-off between the State's infrastructure and social provision on the one hand and the level of taxation on the other.
Addressing the deficiencies in Ireland's infrastructure and social provision will require greater effectiveness and efficiency in delivery. It will require the development of systems that ensure the tax-payer gets value for money. These requirements have implications for the public sector as well as for other sectors responsible for delivering infrastructure and social services.
Addressing these deficiencies will also require government to allocate further resources to the implementation of policies in these areas.
An analysis of the three-year projections provided by the Department of Finance in Budget 2007 shows that the exchequer can afford to spend significantly more money over the next few years on improving infrastructure and services.
It is clear that we do not need an increase in taxation in the short to medium term to deliver the level of services and infrastructure being demanded by the majority. However, in the longer term changes in the economy will require that Ireland bring its tax-take closer to the EU-average if it is to maintain this level of infrastructure and social provision.
Small increases in taxation are certainly feasible and there is little evidence to suggest that such increases would have any significant negative impact on the economy. Cori Justice has argued that these increases should not be attained through increasing income taxation but rather via reforming and broadening the tax base so that Ireland's taxation system becomes fairer.
For any government the list of potential reforms it can focus on in developing a fair and sustainable society is extensive. Consequently, it is always necessary to rationally decide on a set of worthwhile priorities that should be pursued. Making these choices is difficult; no country can do all it wishes to do.
However, at present Cori Justice believes that as well as developing a fairer tax system the incoming government should adopt and implement the following national priorities during its term of office.
• Addressing the infrastructure and social provision deficit
Ireland continues to display serious deficits in its social infrastructure and social provision. Using GDP or GNP, Ireland's spending on social expenditure stands out as being well below the EU average. Only poorer new member states record lower proportions of social expenditure. In the context of these figures, it is not surprising that there are high levels of poverty and exclusion in Ireland. The gaps in our social provision should be addressed now.
• Reducing poverty to EU-levels
Over the next few years it will be possible to reduce Ireland's poverty rate to at least the EU average. This can be achieved through policies which continue to benchmark social welfare payments to average industrial earnings; provide equity of social welfare rates across genders; to enhance the early childhood supplement; to support carers; and provide higher state pensions and disability payments.
• Adopting standard fiscal management policies
As Ireland adjusts to a slower, and more sustainable, economic growth level, a number of economic challenges arise. Fiscal policies must evolve so that it is acceptable that the nation borrows to fund capital investments.
• Developing long-term planning
An essential element of any society is its ability to plan for the future. Forecasted population increases imply major challenges for the years to come.
• Shifting policy to target growth in per capita national income
A series of new indicators are needed to measure the development of societies. In the short term it is worthwhile for economic policy to focus on growing per capita national incomes rather than just their nominal levels. In the longer term alternative scorecards, such as a set of shadow national accounts, are needed.
• Developing a rights-based approach
Developing a rights-based approach to social, economic and cultural issues is essential. The need to develop these rights is becoming ever more urgent for Ireland and the EU.
We stand at a crossroads. Ireland needs a government committed to an agenda for fair and sustainable progress. The choice is ours.
Fr Seán Healy is director of Cori, the Conference of Religious of Ireland, an organisation of the Catholic Church which serves the leadership of its religious congregations. Cori Justice is a division of Cori and campaigns for a society in which Gospel values are dominant. The election briefing produced by Cori Justice is available at www.cori.ie/justice