SISTEMA DE MOVILIDAD

7.19 The above challenges must be addressed not only by Government but also by all the other actors and interest groupings in our society, if the multi-dimensional and deep-rooted problems of social exclusion and inequality are to be more effectively tackled.

7.20 The Forum would be strongly opposed to any suggestion that the recent slowing- down on our economy’s growth rate (and the associated significant fall-off in the rate of increase in Exchequer tax receipts and the likely halving this year of the Exchequer surplus) should be used to provide a pretext to curtail long-overdue improvements to public services. Equally, the process of tax reforms to benefit the low-paid and improve the rewards and incentives to work should continue uninterrupted. The experience of the 1980s, when the poor bore a disproportionate share of the fiscal adjustments, should not be repeated.

7.21 Major policy initiatives and policy frameworks such as the Strategic Management

Initiative, the Programme for Prosperity and Fairness, the National Anti-Poverty Strategy,

and the National Development Plan 2000-2006 all have the potential to provide greater momentum and set down a more strategic direction and focus towards more resolute, integrated and targeted actions and results in this area, than was the case with other such programmes in the past.

7.22 But this will require on-going commitment, direction and focused attention through the social partnership process if it is to succeed and if the gap between rhetoric and concrete results on the ground is to be narrowed. The trade-off between efficiency and equity considerations needs to be reassessed, and greater emphasis and weight should now to be given to the latter.

7.23 In this regard, in the Forum’s view the more immediate strategic priorities which need to be tackled should include:

The current NAPS review and the setting of more ambitious targets and

34 “Where Did All the Growth Go? External Shocks, Social Conflict and Growth Collapses”, NBER Working Paper

including disadvantaged groups not covered up to now such as women, older people and children;

Income adequacy35 _{for those dependant on social welfare payments, with}

particular reference to linking and benchmarking these to average incomes in the economy as a whole;

Improving redistributive impacts through the tax /social welfare systems; studies have shown that our tax system, in the overall tends to be neutral, so that the redistribution of incomes has to be achieved largely through the social welfare system;

Moving on from aspirational and over-generalised objectives, and now setting down more precise and quantified targets in relation to equality objectives, if the “framework-type programmes” contained in national partnership agreements are to be given real clout in achieving more worthwhile results;

Setting of fiscal targets through the social partnership process (in relation to a number of key areas such as targets for Exchequer balances36_{, and}

parameters for distributing the fiscal burden between incomes, profits and other income sources);

The limits of income tax reductions and the implications of further overall reductions (as distinct from reductions for those on low pay) for financing public services; opinion polls have consistently shown that the public would now be prepared to forego such reductions in return for improvements to public services; and

Long over-due improvements to the quality and delivery of public services most notably, the two-tier healthcare system37_{, the growing waiting lists for}

public housing, education disadvantage38 _{and the widening deficiencies in}

public transport facilities; in this respect, it would be essential to set down specific and measurable targets, with supporting strategies, timetables and monitoring mechanisms for their achievement.

Forum Report No. 21 – Third Periodic Report on the Work of the Forum

page 84

35 While our welfare system is among the best targeted it is also one of the least generous in terms of payments in the EU, see Forster and Pellizzari “Trends and Driving Factors in Income Distribution and

Poverty in the OECD Area”, OECD, 2000; Ireland spends less of its GDP on social protection than any

other EU Member State (16.1% as compared to an EU average of 27.7%).

36 Current public expenditure here, as a % of GDP, is now at 30% (marginally above that of the US at 28%) and is one of the lowest in the industrialised world; this compares with 47% in France, 52% in Denmark and Sweden; a decade earlier, we were at the EU average of 45%.

37 The latest UN Human Development Report for 2001 shows that, in relation to priorities in public spending on education and health, Ireland ranks 18th among the industrialised group of countries; our expenditure on health (both public and private) relative to GDP, for example, is about the same as in the UK and Finland but only about one-third that of the US and is also significantly lower than that in the Benelux, France, Denmark and Germany.

38 Public expenditure on education in this country, relative to GDP, amounts to 4.8%, compared to an EU average of 5.1%; the highest ratios are in Denmark (8.0%) and Sweden (7.9%).

7.24 We are now better positioned than we ever were to tackle the above priorities in a more integrated and effective manner as we have, in relative terms, one of the most robust economies and public finances in Europe (despite the recent marked slowing-down). Moreover, we now also have a much better understanding of what will work and will not work in our economy as a result, for example, of the monitoring and evaluative structures in place such as those operating under the Programme for Prosperity and Fairness, the Strategic Management

Initiative and other institutional innovations such as the Forum’s role in the case

of equality and social programmes.

7.25 But difficult choices will have to made in this area in attempting to achieve the optimum balance between tax reductions on the one hand (we now have one of the lowest tax burdens39_{in Europe), further improve our public services such as}

education, housing, health and transport services while at the same time continuing to underpin competitiveness, enhance our productive capacity and comply with our EU obligations under the Growth and Stability Pact. Nobody with any sense of responsibility, and not least that of the Forum, is advocating a return to the profligate expenditure and tax policies of the late 1970s and early 1980s and which led to such disastrous economic and social consequences for the best part of a decade.