NESC sets parameters for a new national agreement

Tax reductions aimed at the lower-paid and a drive to combat poverty and social exclusion are the central recommendations of a new report from the National Economic and Social Council.

The report, expected to be published tomorrow, tells the Government that the key reform in the tax system should be increasing personal income-tax allowances, which gives the greatest benefit to lower-paid workers.

The NESC, which includes representatives of the Government, trade unions, employers and agriculture, makes a strong call for a new national programme to replace Partnership 2000. The report, designed as a blueprint for talks on a new agreement, also calls for significant increases in social welfare payments and a range of new childcare measures.

The final report, draft details of which were reported last month in The Irish Times, comes as the Government finalises its plans for spending and taxation next year. It says that the growth in day-to-day public spending should be slowed and that the Government must aim to maintain a sizeable Budget surplus of revenue over spending.

In deciding on further income-tax cuts, the council says, the Government should have as a priority an increase in personal tax allowances - the amount of income an individual earns before entering the tax net. The second priority should be widening the standard rate income-tax band so that fewer people pay tax at the higher rate. These recommendations may influence the Government in finalising the December Budget.

The report does not lay down specific recommendations for wage increases under a new national programme. However, it does see scope for improving living standards of employees through a combination of pay increases, lower taxes and an increased emphasis on performance-related pay. Greater use of profit-sharing is one way forward, it says, but with no clear recommendation it appears that this will be the subject of tough negotiations in the forthcoming talks on a new agreement.

The report also calls for a new programme to tackle social exclusion and poverty and emphasises that clear targets are needed in this area.

A new benchmark level of payments needs to be set to provide social welfare recipients with a reasonable standard of living, it says. After that, welfare payments should be linked to improvements in the general standard of living, to ensure that the gap between the poor and the rest of society does not widen further.

With the Government due to consider new measures on childcare for the Budget, the report also contains detailed recommendations in this area. Child benefit payments should be increased substantially, it says, since this is the best way to support families. It makes a strong case for taxing child benefit payments.

The report calls for aid for existing creches and pre-school facilities to meet the standards set down in childcare regulations. It also recommends a major programme of new investment in education and training, much of it aimed at the unemployed and disadvantaged in society.