Now that people have had time to digest the detail, the reaction to last week's budget has been very disappointing for the government.
There were three big ticket items -- the €5 a week increase in all welfare payments and benefits including the state old age pension, the new grants to help parents pay for childcare, and the big tax refund to help first time buyers get a home of their own.
All three have been greeted with a sort of national shrug of indifference. Instead of gratitude, there has been a chorus of dissatisfied questioning of the three initiatives. Which shows just how demanding and picky people here have become since the boom.
The national mood now is such that whatever the government had done, it was never going to be enough. They might have been better off doing as little as possible since we can't afford this anyway, and it means borrowing even more and running a deficit for yet another year. For such a paltry political payback, it was hardly worth the bother.
The "fiver a week" rise in almost all state benefits and welfare payments from next March has been widely ridiculed. Old folk and jobless people have been on radio pointing out how little it will buy them.
This ignores the fact that the state pension and unemployment payments in Ireland are already far ahead of what is given in the richest countries in Europe -- at least one-third higher than in the U.K., for example.
No delay in increasing TDs salaries but €5 pension increases not seen as a priority by Government #Budget2017 pic.twitter.com/vmaSAqM9UL
— Sinn Féin (@sinnfeinireland) October 11, 2016
When British people hear about this they wonder how we do it. The answer, since the crash, is that we borrow the money.
Just like we will have to borrow the money to give pay hikes to the gardai, teachers and others on the state payroll who are now preparing to strike for "pay restoration," even though very few workers in the private sector got back the pay they lost during the financial collapse.
The secondary (high school) teachers last week announced seven days of strikes in the coming weeks, to add to the four days the gardai will be on strike. This despite the fact that both teachers and police here in general have higher pay than their counterparts in the U.K.
Apart from being irresponsible, the strikes are going to create chaos for parents and will dissipate any feel good factor from the budget.
Equally disappointing for the government has been the reaction to the budget initiative giving a big tax refund (five percent of the house price up to a maximum of €20,000) to first time home buyers. In the past week every financial commentator here has predicted that the move will simply lead to higher house prices, since the real problem is lack of supply. And right on cue, within a day or two of the budget, some builders did increase prices on homes in building schemes that were already underway.
The government is not really denying that the initiative could cause a price hike, since it seems to believe that builders need more incentive to get busy again. The builders involved said that when a housing scheme is built in several stages, it is normal for prices to go up for houses in the later stages, so this was just business a usual. That may be true, but there seems little doubt that most of the tax refund given to buyers is indeed going to end up in the pockets of the builders.
The buyers who qualify for a tax refund may not care about this if the extra money allows them to buy a home despite the new Central Bank limits on how much people can borrow. But not everyone will qualify.
For a start, you must be a first time buyer. So if you bought an apartment a few years ago and are now married and have a kid and want to sell and buy a house, sorry, you don't qualify.
Also, the first time buyer must be buying a newly built home, not a second hand home, even though up to 80 percent of first time buyers in recent years have bought secondhand homes.
You can only claim back tax you paid over the last four years, so if you were out of a job for much of that time you won't be getting much back. The scheme will operate for three years, so buyers need to be able to put together the €50,000 or so cash they will need in that time frame. And returning emigrants can't get a refund because they paid their tax in other countries.
The arguing about the first time buyers tax refund, however, is nothing compared to the angst the new childcare support initiative has generated. In principle it's a good idea and long overdue since Ireland lags far behind the childcare support offered in other countries in Europe.
But, as always, the devil is in the detail. First off, it's horrendously complicated, and if you want to go through all the detail involved you can look it up online because it would take several thousand words here to explain fully.
There are two schemes, the "universal" subsidy and the "targeted" subsidy, the former aimed at middle and higher income families and the latter at lower income families. The universal will give payments of around €80 a child per month, a drop in the ocean since the average cost of sending one child to a creche in Dublin is around €900 per month (with a small reduction for a second child).
The targeted scheme offers far more, close to the full cost of childcare for very low income families. The subsidy amount will vary depending on net income, number of children and ages of children.
So a very low income family getting the maximum level of subsidy will qualify for over €5 an hour for a baby and just under €4 an hour for a young child. As income increases, there is a reducing scale of subsidy payments.
The brain freezing complexity of it all is not what is causing most concern. All subsidy payments will go directly to the creche or child minder, not to the parent.
To qualify, the childcare must be done by creches or individual child minders who are Tusla registered (Tusla being the new quango -- sorry, state body -- which regulates childcare in Ireland).
Being registered means form filling and doing childcare courses and has implications for those outside the tax net, which may not appeal to the vast majority of individual child minders here who operate in the black economy.
Over 4,000 creches, pre-schools, day care centers, etc., are registered with Tusla -- they don't have a choice, it's the law -- but of the thousands of individual child minders in the country less than 150 are registered.
These individual child minders are the grandparents, friends, neighbors or young women who like looking after kids or don't have the qualifications to do other jobs. The problem with this new subsidy system is that these child minders are excluded, as are the parents who use them. To get the new state financial support they are being forced to engage with Tusla whether they want to or not.
‘One for Everyone in the Audience’ budget neglects stay at home carers, young people and climate change #Budget2017 https://t.co/DdbNtT6u0J pic.twitter.com/6EWurfpeve
— Green Party Ireland (@greenparty_ie) October 11, 2016
There is another, much more contentious aspect to all this. Apart from a minor increase (€100) in the very low home carer tax credit for single income families, a parent who decides to stay at home to look after the children does not benefit from the new regime at all.
In most cases this is the mother, although these days there are also stay-at-home dads. It is hard to avoid the conclusion that, whatever the intention, the effect of the new subsidy will be to encourage both parents to go out to work and put their children into registered childcare, usually a creche.
In the old days here, this would be seen as an attack on the traditional family where the man went out to work and the mother stayed at home to mind the children. These days it is accepted that mothers should be able to have a career outside the home if they want.
But it's no longer as simple as that. Many young mothers -- or fathers -- these days believe that leaving kids in a creche all day and only having an exhausted hour with them in the evening is not good for children or families. So one parent puts their career on hold for the important early years of a child's life.
Among those who can afford to do so, there are many parents here now making this decision. The new subsidy regime does nothing for them.
The minister for children, who is responsible for the new childcare deal, is the American academic and independent politician Katherine Zappone, who lucked out in becoming a minister in the minority government in the last election. She has lived and taught here for over 20 years and is already well-known as a feminist and gay activist. But despite being here for some time, she still comes across as a bit impatient with the locals who don't share her views and a bit abrupt in how she deals with them.
She has unapologetically said in interviews since the budget that the new childcare subsidy is aimed at helping parents (primarily women) who want to work outside the home and therefore stay-at-home moms or dads will not benefit or family members (like grandparents) who look after children whether they are paid or not.
Even for an academic, this seems particularly clueless and also out of date in a post-feminist world where many women choose to stay at home while the kids are young. Zappone is adding fuel to a fire that won't be easily extinguished.
There had to be a simpler, more inclusive way of supporting parents, like making childcare costs tax deductible, which would have avoided the complicated, divisive and expensive state structure now being put in place and left parents in control.
Comments