We must give a hand up to middle income workers

In Blog, Business & Jobs, Families, Jobs by Denis Naughten

Today in Dáil Éireann, I pointed out to An Taoiseach that 63 days ago I said to him that Budget 2022 must be different. I pointed out that we have a once in a generation opportunity to restructure our economy.

Sadly, that did not happen, and Budget 2022 was just a little bit for everybody; and the families who are just over the income thresholds for various State supports have again been forgotten again. These hard-working families, the so-called squeezed middle who pay for everything, including the bulk of our income tax, have remained invisible when it comes to State supports because they are just a few euro, sometimes as little as €1, over an arbitrary income threshold.

Take childcare as an example of one the challenges faced by these families.  An average family spends 12% of their disposable income on the care of a 3-year-old child; that’s of course if they are lucky enough to secure a place.   And while the Budget 2022 childcare changes are welcome, according to the ESRI this will see an average disposable income gain of point .02% for families.  However, lower-middle income families will actually lose part of their subsidy due to the freezing of childcare income thresholds for 2022.

At the other end of the age spectrum the story is not much better.

Take Stephen, whose father is a school caretaker, and his mother is a school cleaner. Because Stephen earned an extra €1,000 from his part time job just to be able to afford to go to college, he ended up down €2,500 by going over the SUSI income threshold. While Budget 2022 increased the SUSI grant thresholds for the first time in a decade, it will do little to alter the trend we’ve seen over the last 6 years which shows that while student numbers have risen by more than 17%, the number of students in receipt of a SUSI grant has actually fallen by 6%.  And I’m afraid that the €200 increase to the grant next year, will just about belatedly cover the increasing cost of energy and little else.

And on the topic of energy, this winter increased electricity and heating costs will hit every family hard.  And working families are not only meeting their own costs, they are also paying for the increases to the fuel allowance scheme. Yet the value of retrofitting grants has gone down from one third to just over one quarter, due to the rising cost of materials and there is a real concern that the value of the grant will continue to be diminished.

But for the invisible middle, grants for these families are of little use when they do not have the €18-20,000 to put with the grant to reduce their heating bills, improve their health, increase the comfort of their homes and help our climate. And over the next decade, Government is asking these families to pay an extra €100,000 to deliver on its climate action plan, and yet they are being pushed further and further away from the financial supports that are needed to make this happen.

The point that I was making to the Taoiseach is that the invisible middle, the ‘people who get up early in the morning’, the people who keep the doors of our businesses and services open, because they do that extra hour of overtime; paying their taxes every week, every fortnight, or every month; end up on 31st December worse off for working hard, just like Stephen.

And that’s why Government must restructure our whole economy.

For more information see: Oireachtas Library Briefing Paper Middle Income Earners

Also see:

Returning to work must be the most financially beneficial option for individuals and families http://–https://denisnaughten.ie/2021/09/15/returning-to-work-must-be-the-most-financially-beneficial-option-for-individuals-and-families-naughten/