Business leaders are calling for child benefits to be paid through smart cards which can only used at Irish shops.
Ibec, which represents firms and employers, claims a large proportion of the €2.2 billion in social welfare payments is squirreled away in savings accounts by the better-paid.
It has called for a new system, which it said would take only six months to set up, whereby the benefit is credited to an electronic card which could only be swiped by homegrown traders around the country.
The business group claimed such a move would pump as much as €300 million into the economy and create up to 3,600 jobs.
To encourage people to switch over to the smart card system, Ibec said cash payments of the child benefit should be slashed by a quarter.
Ibec director of policy Brendan Butler outlined the proposal as part of the group’s Unlocking Domestic Demand report. “The domestic economy is stuck in recession and just waiting for things to improve is not an option,” he said. “Simple and inexpensive steps can be taken to support consumer spending and create jobs.
“Public finance pressures mean that an exchequer-backed stimulus package is not an option, but government policy can change consumer behaviour and unlock untapped demand in the economy. Now is the time to act.”
The report has also urged:
- Reform of pension rules to allow people to spend some of their pension savings now.
- Stamp duty and property tax incentives for first-time buyers to get the property market moving again.
- Tax incentives to encourage more home renovations.
Mr Butler said the upcoming Budget had to be about more than just austerity measures and new thinking was needed to breathe life back into the flagging economy.
“For the domestic economy to grow we need to get back to more normal and sustainable spending and saving patterns,” he said. “We also need a sufficient flow of finance to credit-worthy individuals and businesses.
“While many are burdened with debt, others are saving far more than they normally would. The government must show more ambition for the economy and put in place polices that facilitate growth and recovery.”
Ibec claims its proposals could generate as much as €2.4 billion for the economy and create up to 25,000 jobs.
PA
