Elaine Loughlin: Government trapped by its across-the-board cost-of-living supports

Advocacy groups say supports should be targeted at those most in need — but now that we're used to universal subventions, the Government will find it difficult to start saying no

Having got citizens and businesses fully hooked on what were supposed to be temporary supports, the Government has tied itself up in a political ruse that it now can’t get out of.

Once-off cost-of-living measures have already been repeated and will be doled out again in the coming months. Time-limited supports are also expected to be extended.

While there have been some tensions in recent days over the retention or scrapping of particular measures, the unanimous refrain across the Coalition has been the need for both a universal and a targeted approach.

With the myriad of supports and payments announced to help with rising costs due to expire at the end of the month, the Coalition leaders will this week have to decide how to start weaning an expectant population off subsidies.

Social Protection Minister Heather Humphreys last week made it clear that a “mix of universal and targeted” supports to “help people with the cost of living right across all sections of society” is the preferred option.

There is likely to be pushback against the end of universal supports including those announced in Budget 2023 by ministers Paschal Donohoe and Michael McGrath. File picture: Brian Lawless/PA

This was echoed by Justice Minister Simon Harris on Sunday, who said there needs to be a “universal element recognising that all families, all workers, all people are feeling the cost-of-living impact”.

Another double payment of child welfare; the retention of supports for those in receipt of fuel allowance; the extension of the temporary business energy support scheme (TBSS) in a simplified format, and the possibility of at least one more energy credit are all in the mix ahead of a crunch meeting of ministers Paschal Donohoe and Michael McGrath on Thursday.

The continuation of the discount in excise on petrol and diesel, bringing the cost down by 20c and 15c per litre respectively, has been faced with some pushback from the Greens, but those in the other two parties are eager it be kept, even at a slightly lower level.

The pressure to keep financial supports is clearly coming from within the Government ranks, but has been added to by a growing noise from the opposition that has been calling for emergency budgets and additional measures.

Oxfam Ireland chief Jim Clarken; Social Justice Ireland (SJI) chief Seán Healy; SJI analyst Colette Bennett, and Oxfam policy coordinator Simon Murtagh on Kildare St a fortnight ago when they met members of the Oireachtas. Picture: Gareth Chaney/Collins

Rising inflation has plunged many families into real hardship, but for others it has been at worst a minor discomfort. The impact of across-the-board increases has not been disrupted equally.

CSO statistics show that a significant number of households still have a healthy nest egg and were in a position to save 19% of their income in the third quarter of 2022. This was down from 20% in Q2 2022 but is still massively up from before the pandemic, when households saved around 10% of their total disposable income.

Organisations such as Barnardos feel any State supports should be given to those who have been hit the hardest and say children living in low-income families are at greatest risk of going without day-to-day essentials such as food, heat, and electricity.

“The cost-of-living increases have definitely impacted every single household across the country but it’s not a crisis for every household,” said Social Justice Ireland research and policy analyst Susanne Rogers.

A recent Oxfam report, which found that there are now 20,575 individuals in Ireland worth over €4.7m, emphasises this point.

Economist Austin Hughes said basic economics would favour more targeted supports but also points out: '[Y]ou could find households that in theory would not be among the most deprived in the society facing really serious pressures'. Picture: Naoise Culhane 

“If there’s only so much money in the kitty, which we keep getting told, choices have to be made, we would like that resource to be used a bit more wisely, and really put into the pockets of those lower income households,” Ms Rogers said, adding that instead of another round of universal payments, social welfare rates should be increased.

The Government may have been bounced into the cost-of-living crisis at speed, which merited a blunt but immediate response last year, but the intervening months should have provided enough time to devise a more nuanced approach to payments.

As economist Austin Hughes put it: “Economics 101, the basic economic theory, would tell you that the supports shouldn’t be universal.”

However, the reality is less black and white and while the case for supporting households is still very strong, the channels which this assistance is filtered through are more awkward.

“The risks of doing too much are probably less pronounced than the risks of doing too little,” Hughes said.

“The likelihood is if people get a few bob more, they will either save it and will make their household finances more resilient or they will spend it and a lot of it will be channeled back into the economy and into supporting jobs.

“The opposite case for the risks of doing too little — there are households where, in theory, they might be out of the social welfare net, but they could have a huge mortgage or other costs.

“So you could find households that in theory would not be among the most deprived in the society facing really serious pressures,” he said.

Unprecedented but essential emergency supports were brought in when the pandemic hit. The Government was then thrust into another crisis as the war in Ukraine hit and inflation skyrocketed.

It means families and businesses have been bounced from one temporary subsidy to another for the best part of three years.

While Covid provided a clear start and end date for the rollout and subsequent rolling back of emergency supports, the cost-of-living crisis, which has pushed up the price of everything from a concrete block to a banana, is more nuanced and arguably something that is not short-term but is here to stay.

Doling out energy rebates and child welfare bonuses to all will go down well with the electorate but the longer temporary payments continue the more difficult they will be to unwind.

Did You Know?

The first meeting of Dáil Éireann in Dublin’s Mansion House was held on January 21, 1919.

February 1919: The first Dáil meeting in the round room of the Mansion House, Dublin. Hulton Archive/Illustrated London News/Getty

The date was chosen as the state opening of Westminster was to occur in February, and they wanted the Dáil to hold its inaugural public session before it.

All of those who won seats in the general election were invited. To no one’s great surprise, none of the unionists accepted. The six Home Rule MPs also boycotted the first sitting of the Dáil and all subsequent ones.

 

This week in years gone by

1932

February 16: The 1932 general election resulted in the first change of government since the foundation of the State as Cumann na nGaedheal was defeated by Fianna Fáil under the leadership of Éamon de Valera. Fianna Fáil would go on to be the largest party in Dáil Éireann at every general election until 2011.

1948

February 18: The general election of 1948 resulted in another first, this time the first coalition Government in the State’s history. While Fianna Fáil gained the most seats, it was Fine Gael’s John A Costello who was selected as Taoiseach after he defeated Éamon de Valera by 75 votes.

1971

February 15: “A new era in Irish currency” began as Ireland switched to the decimal. While people juggled with the unaccustomed ‘dot’, the Decimal Currency Board reported that the conversion was going smoothly. A note on the front page advised readers that “in decimal terms, the price of the Cork Examiner on and from today, is 3 1/2p. per copy”.

2009

February 21: The colossal scale of the multi-billion euro toxic debt taxpayers were exposed to by the nationalisation of Anglo Irish Bank was revealed when an outside assessment was published by then Finance Minister Brian Lenihan. The PWC report showed the bank faced a worst-case scenario of having to write off €6bn worth of loans across 2009 and 2010.

2017

February 16: As pressure grew from the co-called Fine Gael five-a-side, Enda Kenny was given days to resign as Taoiseach or face a motion of no-confidence in his leadership. However, he held onto power for many months before finally stepping down as leader of his party on June 2.

Hot topicals 

Spring Forward: Sinn Féin is bringing forward a motion on the cost of living on Tuesday evening. Measures it wants to see introduced include a spring bonus to help families and individuals.

Tomorrow, the Social Democrats will bring forward another inflation-related motion, this time focusing on the price of energy and the introduction of a windfall tax on the profits of suppliers.

Full Disclosure: The Patient Safety Bill, which will introduce open disclosure in the healthcare service, is due up in the Dáil on Wednesday evening. The Government had hoped to get the bill through before Christmas but Health Minister Stephen Donnelly agreed to amend it after opposition parties and advocacy groups said the initial bill was flawed.

International Protection: With an average of 124 people arriving here from Ukraine each week and many others seeking protection from different parts of the world, the Government is under severe pressure to find emergency accommodation. On Thursday, there will be a discussion in the Dáil on the coordination of services for those seeking protection in Ireland.

Nursing Homes: The health committee will grill department officials on the nursing home charges controversy when it meets on Wednesday morning.