Friday, 13 February 2015

The “Two Irelands”

Cormac Staunton: Christian Aid hosted a conference in Dublin yesterday on the “Human Rights Impact of Tax and Fiscal Policy”. There were a number of interesting speakers and contributors on issues of global tax policy and how it links with human rights, sustainable development and equality.

In this post I want to focus on a discussion between two panelists that I found particularly interesting. To many of those present it might not even have been the most interesting discussion in that session. But to me it spoke volumes about the central importance of inequality.

In the final session of the afternoon, Aine Lawlor (RTE) moderated a discussion between John Mark McCafferty of St. Vincent De Paul, Fergal O’Brien of IBEC and John Christensen of the Tax Justice Network. While Fergal O’Brien and John Christensen had a ‘spirited’ debate about business tax avoidance (which I won’t delve into here), there was another more subtle discussion taking place amongst the panelists.

Fergal O’Brien spoke about the role of inward investment (FDI) in creating thousands of real, quality jobs in Ireland. He argued that these were well spread throughout the country: even financial services jobs were located in towns and communities, not just in the IFSC. He spoke of recent falling unemployment and the positive role of business in creating jobs since the crash.

John Mark McCafferty spoke of rising deprivation levels since the downturn. He highlighted the recent child poverty statistics, which show nearly 30% of children living in poverty: and this has increased in recent years. He spoke of the direct impact that cuts to public services are having on families, in particular lone parents. He spoke of precarious employment and in-work poverty. 

Aine Lawlor correctly identified that O’Brien and McCafferty weren’t necessarily disagreeing; they were just talking about two different Irelands. The fact that both Irelands (co)exist highlights the central problem we face: economic inequality. 

The forthcoming TASC report on economic inequality in Ireland Cherishing All Equally looks at a range of factors that determine and explain economic inequality including incomes, employment, wealth, public services, taxation and the cost of living.

While there are two Irelands - good jobs on one hand, poverty and deprivation on the other – the issue is how they connect. The ‘market’ is becoming more and more unequal, to the point that Ireland has the highest levels of market inequality in the OECD. 20% of Irish workers are officially on ‘low pay’, one of the highest levels in Western Europe.

While we redistribute cash through welfare payments, we have an overall ‘low tax’ system which means we have low investment in public services. This model relies on people to purchase many of the services they need, often a quite a high cost. Or they provide the service themselves as ‘unwaged’ work. Or they simply go without.

For those doing ‘well’ this lack of public services is less of a problem. They have access to a private car rather than public transport. They can access private medical care and private schools (or ‘grinds’). 

For those on low incomes, paying for GP visits and school books uses up disposable income, which is money that would otherwise be spent in the local economy, reducing demand and employment. When almost 30% of adults are suffering deprivation, that’s a lot of lost spending… and fewer jobs.

If our model is based on high-value-add, well-paid, high-skilled jobs then we need to recognise that not everyone will be able to benefit from this. FDI may have given us 100,000 jobs, but there are 3.6 million adults in Ireland. 

The alternative is a holistic approach, involving investment in jobs, infrastructure and public services. It is clear that ‘the market’ alone will not achieve this in an equitable way. As Professor Philip Alston, UN Special Rapporteur on Extreme Poverty and Human Rights, warned during his keynote address to the conference: “a low-tax policy can degenerate into a mantra”.

We hope that Cherishing All Equally – report available on TASC's website from Monday the 16th of February – can be first step towards a greater understanding of economic inequality in Ireland, and lead to a debate about how we can create an economy and society in which all can flourish.

Cormac Staunton is Policy Analyst at TASC. You can follow him on Twitter @Cormac_Staunton

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