Working poor need more than Marie Antoinette

It will surely go down as Richard Bruton's Marie Antoinette moment. We had just learned the real cost of water for families would be close to €500 a year, despite Government promises to keep average costs at half that amount. And the "free allowances" for children? Well, they would be trimmed back to cover one shower – and a single, measly toilet flush. And, then, the final indignity: charges for our water – even the bog-coloured stuff that comes out of the taps in Roscommon – will be among the highest in Europe. Our Minister for Jobs, Enterprise and Innovation was unrepentant over the bank holiday weekend, insisting the Government hadn't misled the public over the cost of water in the run-up to the local elections. "It gives people the opportunity to manage their usage of what is a valuable resource. It costs us €1.5 billion to produce this resource. We produce water to Ballygowan standards, if you like, and we have up to now not been charging for it," Richard Bruton said.

That should ease the pain at least: knowing that all along we’ve been bathing in twice-purified mineral water. Maybe next time, sprinkle some Gerbera daisies and rose petals in the bath, just to complete the effect. It’s how our Cabinet Ministers roll, apparently.

Impact of austerity

It’s risible in one way – but revealing in another. There seems to be a genuine disconnect in Government between the impact of austerity measures and the reality on the ground. You can see it in the sales pitch around the recovery. The message we’ve been hearing for months now is that the dark clouds are parting and a sun-lit upland has emerged. The economy is growing, unemployment is falling, the tax take is increasing, growth projections are being revised upwards.

All this is true. But peel away the shiny veneer and a much darker picture emerges. Real income is falling, chipped away by a conveyor belt of new taxes and charges. And these figures haven’t even factored in water charges. Most people are finding it harder, not easier, to make ends meet, despite repeated assertions by the Government that all our sacrifices have paid off. Wages, in real terms, have been falling for the past five years, even accelerating last year. Last week brought yet another set of figures: the disposable income of households is falling despite more people being at work. Any improvement in people’s circumstances is being devoured by new taxes and charges.

It is becoming clearer than ever that a job in itself is not a guarantee of escaping hardship. Around one in five workers is now earning less than the “living wage” – a sum above the minimum wage, but below what campaigners consider to be the minimum to make ends meet.

Latest figures show also that about 120,000 who are living in poverty are employed. Wages, in real terms, have been falling for the past five years, even accelerating downwards last year. We don’t hear much about the working poor. These are people who aren’t in the squeezed middle, that amorphous group which has attracted so much media attention. Nor are they lounging about on Benefits Street. They are the many thousands of working couples and families who – in a very quiet way – are living on a precarious and crumbling financial cliff edge. Most of the working poor qualify for almost nothing, yet pay for everything. Outside the income thresholds for benefits such as back-to-school allowances, rent allowance or medical cards, they are exposed to the full force of cost increases, taxes and charges. Most muddle through – but they have no wiggle room. So when a larger-than-expected utility or health bill arrives out of the blue, it can be like a grenade delivered through the letter box.

The Government's answer – based on its kite-flying to date – is to do something for middle-income households in the budget. Most indications suggest Michael Noonan will widen tax bands to take more people out of the higher tax bracket. It's a move that will win votes – but do nothing for the working poor.

Lower incomes

If anything, funnelling money into these kinds of tax cuts will make it even more difficult to deliver the vital services and income supports which form the basis of a truly prosperous society – and which are relied on most by those on lower incomes.

It should be clear to anyone in Government that any tax changes need to be targeted to make work pay. Labour market protection is also needed to tackle the scourge of insecure, zero-hour-type contracts. And employers who can afford to pay more need to be prompted to pay living wages to their employees. But what fundamentally needs to changes is the idea within Government that any job is better than no job. Heaping even more on the shoulders of those already struggling to get by is not a sustainable economic policy. It is simply storing up problems for the future.

The dire consequences of failing to tackle this should be obvious to anyone – even Marie Antoinette. Fintan O’Toole is on leave