REKINDLING THE SPIRIT OF IDEALISM
Dr Leo Varadkar TD, Minister for Social Protection
In 2014 – when I was Minister for Transport, Tourism, and Sport – I was delighted to accept an invitation to come here and speak about trust in politics. Last year – as Minister for Health – I came to speak about our health service. This year – as Minister for Social Protection – I am pleased to be back to discuss inequality and social alienation in Ireland. I hope I get another invitation next year.
The human impact of the collapse
In the programme for this debate we are asked whether inequality is growing in Ireland. As we all know, Ireland has only recently emerged from one of the greatest economic crises since the foundation of the State. It’s worth reminding ourselves of the facts from that dark period. Unemployment soared from 6.5% in 2008 to almost 15% within a few years. Our national debt grew to 120% of GDP. Household incomes fell by 16%.
According to the CSO’s Survey of Income and Living Conditions, affectionately known as the SILC, income inequality widened with Ireland’s Gini co-efficient rising from 29.3 in 2009 to 31.8 in 2014, albeit still around average in the developed world. Poverty rates also rose during the Great Recession from 5.5% in 2009 to 8.2% at its peak in 2013. The human impact of the economic collapse was worse than any statistics can describe; forced emigration, lost homes, lost businesses, lost hopes and even lost lives. It was Ireland’s lost decade.
The rise in inequality has not yet been reversed
Ireland has now emerged from that dark period. Unemployment has fallen from its peak of 15% to 7.8% and long-term unemployment is down to 4.7%. More than 100,000 jobs have been created over the last four years. A good job is, and always has been, the best route out of poverty for the vast majority of adults of working age and their families. GDP and GNP have recovered and are now higher than at any point before the financial crisis. Home values have recovered. Trade is at an all-time high. The deficit is almost eliminated and our national debt is back below the European average.
The most recent statistics, which are from 2014, show a fall in poverty, a fall in the deprivation rate and the first rise in median incomes for many years. We expect these positive trends to continue into 2015 and 2016. But while the economy has recovered fully, living standards have not and the rise in inequality has not yet been reversed. When people say that they haven’t experienced the recovery in their lives or in their locality, it’s probably because they have not.
The wounds of Ireland’s lost decade remain unhealed. Our unemployment rate of almost 8% for adults is still much too high. As of 2014, median incomes were still 10% lower than six years before, the deprivation rate 12 points higher and poverty rate 2.5 points higher.
Prosperity is a necessary but insufficient foundation for a good and fair society. Alone, prosperity is not enough unless it is a possibility for one and all. There is a growing divide between rural Ireland and urban Ireland, between the east coast where the population is rising and western counties, like this one, Donegal, where it continues to fall. A generational divide is opening up with many younger people locked out of the mortgage market, with poorer pension provision, without security in employment, and on terms and conditions less favourable than their older co-workers.
There is, of course, more to inequality than income. There are other forms of inequality. For many decades this country was a cold house for many citizens – for women, for people who were gay, lesbian or transgender, and for children. We have worked to bring about equality before the law for all citizens. The marriage equality referendum and children’s rights referendums and the actions that followed have demonstrated that. But we need to do more.
In many ways, Irish society is more fragmented now than it has been for generations. The result of the last General Election and the fragmentation of Irish politics is perhaps evidence of that. Many believed that a recovering economy would reduce that fragmentation as unemployment fell and living standards started to rise. That hasn’t happened. While hundreds of thousands of people are back at work, those who haven’t found jobs feel more left behind than ever. And while living standards, incomes and wealth have recovered for very many people, those who have not yet experienced a restoration in their living standards feel even more alienated now than before.
A long-term vision and determination to fix the root causes
Without the right policy decisions, there is a real danger that the short term social storm caused by the recession could develop into a long-term rift in our society. Inequality also gives rise to feelings of social alienation and fuels political extremism. I believe it is possible to tackle this challenge head on, by applying a long-term vision based on a determination to fix the root causes, not just the symptoms.
The Brexit referendum left us a range of challenges in this country for the next few years – political, economic, and social. But it also teaches us many lessons. In Britain it represented a failure of government, a failure of opposition, a failure of leadership. It exposed the gaps in British society: between the generations, between the social classes, cities vs seaside and market towns, Scotland vs England & Wales. The deep disaffection in the midlands and deindustrialised North contrasted with the globalised, new-economy world city that is London. People voted against a system and society they were alienated from, as much as they did against the European Union. The strategy of those in power was a negative one: ‘Project Fear’, to frighten or intimidate people into voting to Remain lest things got worse for them. It was unsuccessful and it back-fired badly. ‘Project Hate’, the strategy of the Leave campaign, was also a negative one, stirring dark feelings of nationalism; fears of migration; envy of others’ success or good fortune; mistrust of Government. It appealed to many voters.
The groundswell of support for the rhetoric of Donald Trump bears similarities to Project Hate – it’s not the first plagiarism problem they’ve had – as does the rise of the populist far-right and far-left in Europe, and religious-inspired extremism in other parts of the world. The response of centrist politicians is often to articulate fear of these forces rather than confronting them and presenting an alternative positive vision for the future.
Politics must elevate and inspire
Politics cannot and should not be about fear or hate or resentment and division. It should be positive, unifying, hopeful and optimistic. It must elevate, and inspire, because the alternative is the angry dramas we see playing out in so many places across the world. To paraphrase Robert Kennedy – who himself was paraphrasing the great Irishman George Bernard Shaw – instead of seeing the world and all of its flaws and asking ‘why ?’, we must image the world as it might be and ask ‘why not?’.
So how should we imagine the world? What is the alternative to Project Fear and Project Hate? I believe we need a different sort of project: Project Opportunity. It means building an enterprise economy made prosperous by the goods and services we sell at home and trade abroad, one that rewards work and innovation, not speculation. And it means building an Ireland in which everyone gets a fair go, in which the central mission of Government is to provide equal opportunities to all of its citizens so that everyone gets a chance to succeed and to provide a strong safety net, a threshold of decency below which nobody can fall. I believe this can be done in three ways – jobs, services and benefits – and my Department can play a leading role in all three.
A good, well-paid job is the best route out of poverty and into prosperity. No welfare payment can or should ever compete with the salary or wages from a week’s work. So, we need to ensure that everyone has the opportunity to get a good job. To do this we need to continue to pursue economic policies that create the environment in which more jobs are created, policies that support business, promote trade, ensure we remain competitive and that we have the social and economic infrastructure in place to enable the economy to continue to grow and individuals reach their full potential.
This is the path on which this Government has embarked. We have set a target to reduce unemployment to below 6% and to halve long-term unemployment to less than 2.5%. To achieve this ambition, my Department will step up its work to engage individually with jobseekers, place them in employment and train them for it through our network of Intreo offices and recruitment and placement services like JobPath. We will also provide incentives to employers like JobPlus and the Wage Subsidy Scheme to take on more people with disabilities and the long-term unemployed. And we will streamline, modernise and reform training and work experience programmes from a replacement for JobBridge to Community Employment.
We also need to ensure that taking the opportunity of work actually pays. There are far too many people who get up early in the morning, and work hard but who cannot make ends meet. So, we need to provide for further increases of the minimum wage rising to €10.50 by the end of the decade, phase out the universal social charge, and expand the benefits that people get through their PRSI and the social insurance system, starting with paternity benefit in September and greater social protection for the self-employed next year. I will also develop and try to build a consensus around a new universal occupation pension scheme for Irish workers to top up the state pension when they retire. Half currently have no such provision.
Reducing the cost of social services
While Ireland compares well in terms of headline pay rates, social welfare payments and personal taxation, much of this is negated by the high cost of accessing services like childcare, education and healthcare and also housing. This has to be a priority for Government. Reducing the cost of these services will be so much more valuable to struggling families and citizens than small changes to tax and social welfare. Being able to access affordable childcare will overcome a major barrier to workplace and educational opportunities for many families, particularly lone parents. The cost of going to school in Ireland is much higher than in other countries where subsidised school meals, school books and school transport are more prevalent. We can make improvements in all of these areas.
Social transfers are an effective means of reducing poverty
Ill-health itself is a major barrier to opportunity for many citizens and is closely associated with high rates of poverty and deprivation. The introduction of free GP care for all children under six has eased the burden of raising a family for hundreds of thousands of parents and should be expanded to cover all children as part of the move to universal healthcare. A €5 per week increase in child benefit across the board would cost €60 million a year. The same amount of money invested in reducing the cost of school, childcare or healthcare, would in my view go a lot further.
Social transfers are an effective means of reducing poverty, inequality and alienation. Were it not for social welfare payments – about half of which are paid to pensioners and children and half to carers, people with disabilities and jobseekers – over half of the country would be at risk of poverty. Indeed, international studies show that were it not for the redistributive effect of our progressive tax and welfare systems Ireland would be one of the most unequal countries in the West. Studies also show that the poverty reduction effect of our social welfare system outstrips that of almost every other European country. So, it is important to protect the value of these payments now and into the future.
I believe this can best be done by indexing weekly social welfare payments to the cost of living or to average earnings, and enshrining that principle in legislation. This will ensure that people who depend on these payments never again see their standard of living eroded or falling behind society in general. I am confident that we can secure cross-party support for this legislation, and bring it through in the lifetime of this government.
Aside from this, we need to be more targeted and smarter in the benefits we do pay. The new Working Family Payment will be designed to ensure that no family is better off on welfare than at work thus removing the disincentive to take up a job or work longer hours.
Brian Friel is a very appropriate literary subject for the MacGill summer school this year. In one of his earliest plays he wondered what happened to ‘the clean spirit of idealism that fired the people to freedom’ after independence. It is worth reflecting on that spirit of idealism in this centenary year of the 1916 Rising, and how we can ensure that it is rekindled.
What we need is idealism based on principle, not populism based on cynicism. We have it in our power to become more ambitious, more generous, and more reforming as we solve the deep-rooted problems in Irish society. Achieving all of this will be challenging. In doing so we should be wary of leaders and parties who offer simplistic answers to complex issues, particularly when those answers appear to be cost-free or place the burden of cost on someone we cannot see.
We can learn from the lessons of our recent history and build on the positive social, cultural and economic progress that is already underway, or we can repeat the failures of our past with terrible consequences for us all, but particularly our young people. Having come through the worst recession in a generation, Ireland now stands on the threshold of enormous opportunity. Our economy and public finances are back in order, our population is rising and our demographics are favourable. We have plentiful resources on land and in the sea, we have a relatively cohesive and peaceful society and are comfortable and confident about our place in Europe and the world. Let’s make sure that we make the most of this time of opportunity to build an Ireland in which we can be proud – free, prosperous, European and offering equality of opportunity for all.