Budget 'must protect low earners'

Protecting the income of the poorest in an economy that is “flatlining” is critical to stimulating economic growth, according to the independent equality think-tank Tasc.

Women and children lost the most in the last Budget while men lost the least, Tasc said in its equality audit of last year's budget, adding that measures that continued this trend would harm the economy further.

The audit – entitled Winners and Losers? Equality Lessons for Budget 2012 - was published today.

The 7,207 households sampled in the report included single people, lone parents, married couples with just one earner and married couples with two incomes.

“The category most adversely affected by the measured Budget 2011 changes was the 'single with children' group. This category saw their gross income fall by an average of five per cent,” the audit said.

“The least adversely affected was the 'married with two incomes - higher earner'. The gross annual income of this category was reduced by an average of 1.3 per cent. This was the category with the highest ratio of males (80 per cent) to females (20 per cent).”

Cuts to child benefit and the one-parent family tax credit were significant in the lowest income groups being disproportionately affected by last year’s budget.

“Further cuts to these transfers will exacerbate the level of income inequality between genders and put growing numbers of adults and children in this category at risk of poverty,” it said.

Tasc said the lone parent group is also that at most risk of consistent poverty. “It is imperative that the budgetary measures chosen for Budget 2012 do not impose the burden of the adjustment on those least able to absorb reductions in income, and least ale to withstand diminished access to vital public services.”

Not only would this be devastating for the individuals and families, but it made no economic sense to take money away from people who spent every cent of their income on local goods and services, which in turn provided employment and taxation that went back into the economy.

“The measures in the last budget, which have taken money away from the poorest, ho spend it all locally, certainly have not helped the economy,” said Sinead Pentony, head of policy with Tasc.

The more equal a society was, the better it performed and the more productive were its citizens, she said. “Inequality played a crucial role in causing the global crisis. Closing the equality gap will not only enhance the wellbeing of individuals but will also help boost demand in the economy.”

A equality audit should form part of the budget formation process every year, she said.

“It’s not rocket science. It’s done in other countries. We have been able to do this analysis on a very limited budget. It is crucial that one be carried out by the Department of Finance in advance of every budget.”