During his fourth budget speech, Minister for Finance Michael Noonan announced that a new universal social charge (USC) rate of 8 per cent was to apply to income above €70,000. From this, it seems Noonan and his finance mandarins think anyone earning in excess of that can easily afford to pay more.
A quick look at the household survey costs published by the AA suggests that might be the case. The cost of owning and running an average- priced home bought at the height of the property bubble in 2007 is now more than €22,000 a year, according to the AA’s survey ,which is now in its third year.
But when other costs are factored in, such as food, transport, health insurance, childcare, education and social inclusion, many families living modestly will have to come up with more than €50,000 to make ends meet.
After mortgage payments of €15,674 for the boom buyer, the study identifies repair, maintenance and contingency costs as the next biggest single outgoings homeowners face. It says the average owner will need to spend or set aside €1,279 over the next 12 months to keep up with wear and tear, down very slightly on last year.
Also down are the cost of heating and electricity. They come to €2,192 for a typical three- or four-bedroom detached house, compared with €2, 307 last year.
Other costs included are home insurance (building and contents), down from €483 to €473; telephone and broadband, down to €374 from €419; bin charges, down from €304 to €264; and a basic digital TV package, which is now €342, compared with €333 last year.
The cost of repair and replacement of household appliances is also included. This is set at €501 compared with €505 last year. The estimated cost for cleaning products is €317, up slightly on last year’s figure. The cost of a TV licence holds steady at €160, while property tax has been pegged at €315.
The study is comprehensive, but does not include food, clothes, running a car, entertainment or many expenses considered normal by most people.
As a guide, we used the standard financial statement that banks ask customers to fill in when restructuring debts, to work out other costs:
Health insurance: €2,571
We compared four similar family-friendly plans: Family Value from Aviva (€2,665); Better from Glo (€2,897); Essential Connect Saver from Laya (€2,412) and VHI’s Family Plan Level 1 (€2,310).
The average cost is €2,571, an increase of almost 10 per cent on last year.
Driving the average family car, which does 12.4km per litre, the average distance of 16,000km, a driver will spend about €1,935 this year on petrol, a saving of €78 on last year.
The average cost of comprehensive insurance for two adults costs comes close to €800. The average age of a car in Ireland is more than seven years, so annual motor tax based on 1.6-litre mid- sized, fairly modern car will be €478. At least €400 will have to be put aside for servicing and maintenance.
If you spend €10,000 on a car, keep it for five years and sell it for half the price you paid, the annual cost is €1,000, which takes the total running costs to €4,613 – down slightly on last year.
The household will spend about €150 a week on food, about €7,800 annually, and that doesn’t allow for any major blow-out at Christmas.
Social inclusion : €4,056
When the Irish Insolvency Service published its expenditure guidelines earlier this year, it allowed €29 a week for an adult for “social inclusion” or social life. If we allow just €10 to cover each child each week, the annual spend on social inclusion comes to €4,056.
Mobile phones: €736
According to figures published by ComReg, the average monthly mobile phone bill is €26.50. Therefore a two-adult family with average usage will pay €636. If we allow just €50 per person per year to cover replacement handsets, the annual cost comes to €736.
Education, childcare: €7,015
According to Barnardos, the average back-to-school costs for a child in fourth class is €380, while a child in first year will set parents back €735. We will allow a further €500 to cover costs for trips and extracurricular activities. Assuming our notional household has one child in primary school and one in secondary, the annual education cost climbs to € 1,615
Schools in Ireland are obliged to open for 183 days a year, so if both parents are working, after-school childcare costs have to be added to the bill. Our notional family have found themselves a childminder who charges €150 per week for the school year of 36 weeks which is a total each year of €5,400. Combining that and the education costs, the total spend rises to €7,015.
Assuming the man in our household visits the barber eight times a year and his partner visits the salon once every 10 weeks (plus once for a special occasion), the total cost of hair care will reach €800. If the family then spends just €50 a month on clothes, the amount needed rises to €1,400.
The total spend, then, without much by way of luxuries or treats, no holidays and absolutely no medical or dental bills, reaches €26,965. Add that to the costs outlined by the AA study and the annual spend for the average household reaches €50,203. Net. And that is a figure that most people would accept they would be very fortunate to earn.