Dept of Finance Report: We are a welfare nation

[Brendan Burgess]

Report gives stark warning: We’re a welfare nation

We’ve become a welfare nation “overly dependent” on state payments compared to other countries, newly published Government papers have warned.

Almost every person in Ireland benefits, directly or indirectly, from some form of social welfare payment which amount to €20bn a year.

...
There are 1.3m people in receipt of a weekly social welfare payment in respect of two million beneficiaries. A further 625,300 families receive a monthly child benefit payment in respect of 1.2m children.

Of the weekly welfare recipients, 616,200 are in receipt of a pensions payment and 205,560 receive jobseeker’s payments. Some 194,010 received a disability allowance or an invalidity pension and 79,910 were in receipt of carer’s allowance or benefit.

 

[Brendan Burgess]

The paper was produced by the Tax Strategy Group.

TSG 18-04 – Budget 2019 Issues – DEASP

The relevant paragraph is on Page 3


4. Throughout the recession social transfers performed strongly in reducing the at-risk-of-
poverty rate. In 2016, social transfers (excluding pensions) reduced the at-risk of
poverty rate from 33.6% to 16.5%, or 17.1 percentage points in absolute terms. This
represents a poverty reduction effect of 51%. The comparable figure in 2015 was
51.6%. The 2016 figure compares with the 2006 poverty reduction effect of 47.2%, an
improvement of 3.8 percentage points. The impact of social transfers in reducing
poverty is one of the highest in the EU. This reflects the progressive and targeted
nature of social transfers. However it also suggests that Ireland may, compared to other
States, be overly dependent on monetary social transfers and that there may be issues
to be addressed with regard to the level and distribution of market incomes and the
availability of non-monetary social services.

 

[Protocol]

I've said this over and over.

Half the pop are on welfare.

It's staggering.

 

[Protocol]

The number I need to calculate is the number of working-age adults on welfare.

JSB =
JSA =
OPF =
DA =
CA =

 

[Protocol]

The Examiner article states the following:

In response, Age Action Ireland said more than three quarters of pensioners rely on state payments for the bulk of their income.

“State pension and secondary supports have yet to return to pre-recession level,” a spokeswoman said.

“Most recent EU SILC figures show that one in 10 older people are living in poverty in Ireland. Many more older people survive on incomes only just above the poverty line,” she added.


Yet that contradicts the TSG report:

19. Considered together the budgets from 2015 – 2018 have seen a 5.6% increase in the value of pensions while most other welfare payments have seen an increase of 2.7%. These increases compare with increases in the Harmonised Consumer Price Index of 1.8% over the same period (January 2015 – March 2018). In real terms, pension payments are now 5.3% higher than their pre-recession 2008 levels. Most other payments are 3.7% lower in real terms than their 2008 values.

 

[Sophrosyne]

Even though they have improved over the years, I don't think SILC reports are that reliable.

Another issue is that the number of people receiving each benefit is counted separately. I think this gives a false impression of the total number receiving welfare.

One person (or one family unit) may receive several different benefits and therefore, would be counted several times.

 

[Purple]

In response, Age Action Ireland said more than three quarters of pensioners rely on state payments for the bulk of their income.

Do they include retired State employees in that figure?

 

[Purple]

I know I'll be attacked and called a monster for saying this but I don't think well off people, pensions aside, should get welfare payments.

I don't think there should be any universal payments like children's allowance, over 70's and under 6 medical cards, long term widows/widowers pensions for well off working age people. If people need it they should get it. If they don't need it they shouldn't get it.

I wouldn't cut the budget by much though, I'd increase payment rates for short term unemployed and I'd give a significant income to anyone who is long term unemployed if they attend college (and pass their exams).
The rest I'd spend on training and education programmes where employers were incentivised to hire (and train) long term unemployed people. Training would have to be a large element though.

It is crazy that at the moment the State takes money out of your right pocket and puts it back into your left pocket, less their hefty administration charge.

 

[Sophrosyne]

If people need it they should get it. If they don't need it they shouldn't get it.

I think most people would agree with this but the devil is in the detail.

• Firstly, there would have to be a definition of "well off".
• Secondly, it would entail an administrative process of identification - assessment of means, etc.

Assessing means can be problematic. If people can hide their real income from Revenue, they can hide it for welfare purposes.

Welfare payments are usually paid for a stated purpose, but regardless of that purpose, recipients have discretion over how they are spent, e.g. in the pub.

Perhaps part of the payments should be in kind rather than in cash.

 

[runningrecord]

I would agree with giving higher rates to short term unemployed - but only for a certain length of time - there shouldn't be someone who is able bodied long term receiving unemployment assistance.
The problem in this country now is there are too many people who feel the state is 'obliged' to support them, or they're 'entitled' to all sorts but never any sense of being responsible - it's always someone elses fault.
Childrens allowance should not be given to very well off people and should be capped at a certain amount for all.
There are too many allowances and too many benefits available.
I also think social welfare payments should be poiiced better and the punishment for fraud much more severe.

 

[Protocol]

Purple,
you seem to be suggesting the abolition of PRSI-based Social Insurance, other than SI pensions?

SI benefits are not means-tested, as they are based on SI contributions.

Illness benefit
Invalidity Pension
Carers Benefit
JSB

 

[Sophrosyne]

The problem in this country now is there are too many people who feel the state is 'obliged' to support them, or they're 'entitled' to all sorts but never any sense of being responsible - it's always someone elses fault.

Again, a lot of people would agree with this.

Government policies, including welfare policies should encourage a culture of personal responsibility.

The difficulty is in achieving this without incurring an administrative burden in policing benefits greater than any savings made.

For instance, if you are engaged in the black economy, you might be very "well off" but your income is invisible for both Revenue and welfare purposes. Similarly, there are any number of devices to legitimately, or indeed illegitimately, reduce your income for both tax and welfare purposes.

Until a method, or a combination of methods, is found to achieve the goal mentioned above, the entitlement culture will continue.

 

[T McGibney]

Similarly, there are any number of devices to legitimately, or indeed illegitimately, reduce your income for both tax and welfare purposes.

Any number? 2 or 3 examples of such legitimate devices would be nice, if you can muster them.

 

[Sophrosyne]

Any number? 2 or 3 examples of such legitimate devices would be nice, if you can muster them.

As an accountant, I am surprized you need to ask.

 

[T McGibney]

As an accountant, I am surprized you need to ask.

Are you? I'm still curious to know what these legitimate devices are.

 

[inflation]

Budget 2019: Government urged to consider increase in PRSI
Department of Employment Affairs and Social Protection says rise in PRSI could be used to pay for Ireland’s welfare regime

https://www.irishtimes.com/business/eco ... -1.3596300

At the same time, as is noted by the department in a separate report, Ireland may be “overly dependent” on welfare benefits. That is putting pressure on the Exchequer. The solution could be to raise the amount of social insurance workers pay.

I despair sometimes

 

[trasneoir]

I don't think there should be any universal payments like children's allowance, over 70's and under 6 medical cards, long term widows/widowers pensions for well off working age people. If people need it they should get it.

Means testing every welfare payment could add more administrative cost than it saves on payments.

If we want to tax people with higher income, it's a lot simpler to tax their income rather than their income+pension+children+medical.
In my ideal world, the highest tax band would be something like 70%. In that world, means testing child benefit would seem beyond petty to me.

If they don't need it they shouldn't get it.

It might help to frame it as a circumstance-based _discount_ instead of a payout.

 

[Sophrosyne]

We still have an issue with the reported number of individuals claiming welfare. The data is benefit rather than people centred.

An individual who receives, say 3 different benefits will be reflected in 3 different benefit lists and so will be counted 3 times, thus exaggerating the percentage of the population on welfare.

A second people centred dataset would show the number of benefits per individual.

I suspect that aside from certain benefits such as pensions and child benefit, other welfare payments are concentrated on individuals claiming several benefits within certain clusters of the population.

 

[Purple]

Purple,
you seem to be suggesting the abolition of PRSI-based Social Insurance, other than SI pensions?

SI benefits are not means-tested, as they are based on SI contributions.

Illness benefit
Invalidity Pension
Carers Benefit
JSB

Yes, we can't afford them. Working aged people with high incomes and a high earning capacity shouldn't get widows/widowers pensions, carers benefit etc.

Means testing every welfare payment could add more administrative cost than it saves on payments.

If we want to tax people with higher income, it's a lot simpler to tax their income rather than their income+pension+children+medical.

Just make all the handouts taxable, particularly child benefit. Maybe increase it by 10% then tax it. Maybe just introduce refundable tax credits for each child (and make all welfare payments that way). That would reduce the administrative cost by tens of millions.

In my ideal world, the highest tax band would be something like 70%. In that world, means testing child benefit would seem beyond petty to me.

In my ideal world the top tax rate, including all deductions, would be under 50%.
Child benefit for high earners is like a rebate less the State's administration charge; they take €180 and give it back less a €20 handling fee. It would be better if they just didn't take the €140 and used the €20 for something more productive.

 

[Protocol]

Purple,

you do realise SI exists for good, economic reasons?

Many countries have various forms of SI for many decades.

Are they all wrong, and you are correct?