The Interface between Research and Policy in Ireland:

The Case of Poverty

Dr Jonathan HealyPolicy and Research Analyst

Combat Poverty Agency

3/10/05

Some Definitions

Policy: a programme of actions adopted by an individual, group, or government, or the set of principles on which they are based

Research: methodical investigation into a subject in order to discover facts, to establish or revise a theory, or to develop a plan of action based on the facts discovered

Outline

1. Link between research and policy

2. Case study 1: child poverty

3. Case study 2: fuel poverty

4. Case study 3: social expenditure

5. Effectiveness of policy on poverty reduction

6. Suggestions for policy-oriented research

Research and Policy Interface

Research can inform policy either:- directly (policy submissions and statements,

requests by Ministers, etc.)- indirectly (evidence-based policy-oriented

research in academic, C&V and State sectors, and NGOs lobbying)

Combat Poverty Agency

Stage Agency established in 1986 by Statute Autonomous but DSFA-funded Advise on ways to reduce poverty in Ireland Remit to foster policy-focused research on

poverty in Ireland Aim: better public understanding of poverty and

appropriate policy responses

How Does CPA Link Research and Policy?

Funds and commissions policy-oriented research on all aspects of economic and social policy as it pertains to poverty

Undertakes in-house policy research and publishes findings as Policy Statements

Makes planned and ad hoc Policy Submissions on various poverty-related topics

Liaises with policymakers and influencers and promotes CPA research and policy messages

Combat Poverty Policy Submissions Submission to the Pensions Board on the Pensions Review Submission to the Department of Enterprise, Trade and

Employment on Repealing the Groceries Order Submission to the Department of Finance on Tax Reliefs and

Exemptions for High Earners Submission to Department of the Environment, Heritage and

Local Government on the Government's Homeless Strategy Submission on the Health Bill 2004 Submission on Budget 2005 Submission to the Consumer Strategy Group Submission to the National Task Force on Obesity Submission to the OECD on its review of higher education in

Ireland

Case Study 1: Child Poverty Policy Statement: Pro-active rather than reactive Child poverty: CPA key research theme Focus on child poverty because of Ireland’s poor

performance and Secondary analysis (in-house) of child support

packages in 22 OECD countries Examine current deficits and make recommendations

Child Poverty in Ireland (1973-2003)

0

5

10

15

20

25

30

1973 1987 1994 1997 2000 2001 2003

%

Relative Poverty Consistent Poverty

Latest 2003 Data

23.9% of households with children under 15 years have incomes below 60% of median (290,000 children ‘at risk of’ poverty)

14.7% of households with children under 15 years are both income poor and deprived (120,000 children)

32.6% of lone-parent households in consistent poverty

International Income Poverty Rates

0

10

20

30

40

50

60

BEL DEN GER GRE SPA FRA IRL ITA LUX NL AUS POR FIN SWE UK

%

Children aged <16 Lone-parent with dependent children Couple with 3+ dependent children

Net Child Support in OECD Countries

-200

-100

0

100

200

300

400

500A

US

LUX

FIN

FR

A

SW

E

GE

R

UK

BE

L

DE

N

NO

R

AU

ST

RA

L

IRL

ISR

CA

N

US

A

ITA

NZ

PO

R

SP

A

JAP

NL

GR

E

€PP

P p

er m

on

th

Ranking of Child-Support Packages

Ireland comes 5th (€281 per month) out of all 22 countries when judged on tax concessions and income supports alone.

Ireland comes 11th (€173 per month) out of all 22 countries when judged on all child supports.

Replacement Rates

0

20

40

60

80

100

120

140

160

180

AU

ST

RA

L

AU

S

BE

L

CA

N

DE

N

FIN

FR

A

GE

R

GR

E

IRL

ISR

ITA

JAP

LUX

NL

NO

R NZ

PO

R

SP

A

SW

E

UK

US

A

So

cial

Wel

fare

as

% o

f In

com

e

Lone Parent (1 child) Couple (2 children)

Marginal Tax Rates

0

20

40

60

80

100

120

140

160

AU

ST

RA

L

AU

S

BE

L

CA

N

DE

N

FIN

FR

A

GE

R

GR

E

IRL

ISR

ITA

JAP

LUX

NL

NO

R NZ

PO

R

SP

A

SW

E

UK

US

A

% o

f E

xtra

Ear

nin

gs

Pai

d i

n T

ax

Lone Parent (1 child) Couple (2 children)

Conclusions Ireland has ostensibly generous child income support

Ireland invests relatively little in subsidised services for families with children

Ireland has highest typical childcare costs in EU (€570 per month)

Though not in the worst category, Ireland’s comparative ranking on child support plummets after social services are factored in

Ireland exhibits high replacement rates and high marginal tax rates for lone parents => poverty trap

Policy Recommendations

Income support: Reform 2nd Tier with employment-neutral Child Benefit Supplement

Childcare: Consider subsidisation of childcare (using tapered mechanism) targeting low-income and vulnerable groups using FIS disregard

Health: Move towards universal healthcare system Policy mix requires re-emphasis of child support

package with new focus on quality service provision – subsidised childcare and improved subvention of healthcare, education and housing

Case Study 2: Fuel Poverty CPA/TCD-funded research under PRI

Strong policy context:- Rising and unstable energy prices - Increasing spend on fuel allowance- Ownership levels of domestic energy-efficiency measures

relatively low- Environmental context- Public health context (excess winter deaths/morbidity)

Research based on earlier empirical and methodological work undertaken for PhD

Persistent Fuel Poverty in Europe (2001)

0

10

20

30

40

50

60

D DK NL B L F UK IRL I EL E P A FIN

Fuel Poverty Risk Groups (2001)

05

101520253035404550

Ill/disabled

Lone parent

Income <

€12,700

Social G

roup E

Local Authority

tenant

Unem

ployed

1-personoccupancy

Separated/divorced/

widow

ed

Retired fem

ale

Prim

ary education

% o

f h

ou

seh

old

s af

fact

ed p

er g

rou

p

0

20000

40000

60000

80000

100000

120000

140000

No

. o

f h

ou

seh

old

s

% of households No. of households

Why Are Energy-Efficiency Standards Low?

Higher priorities6%

Don't w ant to borrow

3%

Can't afford32%

Don't w ant disruption

3%

Rent - Not responsible

3%

Not aw are of existence

19%

Not aw are of benefits

34%

Policy Recommendations

1. Implement national low-income energy-efficiency programme Prioritise double glazing, floor and cavity-wall insulation measures Target 24,000 homes p.a. for 10 years @ cost of €45m p.a. Private and social housing sectors included

2. Raise revenue through carbon/energy tax ‘Revenue recycling’ to safeguard low-income households from

inflationary price effects of carbon tax Tapered (means-tested) partial and full-cost grants to low-income

owner-occupier households (avoids ‘free-riders’)

Policy Recommendations (cont.)

3. Regulate to improve thermal standards in private rental sector which has highest poverty risk

4. Social housing remedial works programmes to continue with additional funds as necessary

5. Minimise transactions’ costs for high-income owner-occupiers

6. Avoid tax credits: risky, inefficient, regressive

7. Strong State-led information campaign (SEI)

Policy Recommendations (cont.)

8. Retain current fuel allowance- Reduces severity of experience- Index-link to fuel prices- Increase further to compensate poor households if carbon tax

introduced

9. ‘Action research’ to demonstrate actual (ex post) benefits of retrofit (inter-institutional)

10. Leadership of programme through ‘champion’ of energy efficiency and fuel poverty with State support (SEI)

Case Study 3: Social Expenditure

Commissioned policy research Context of low social spending in Ireland Study questions rationale for this level, using

comparative data Examines relationship between wealth, inequality and

social spending Allocation of social spending across different policy

areas Reforming social exp to achieve better outcomes

Findings

Irish social exp remains low relative to EU-15 Strong negative correlation between social

expenditure and income inequality Deficits most acute in public services Despite high correlation, hard to prove

causality between social exp and +ve social outcomes

Irish Social Expenditure Relative to OECD Average

% of OECD average

0 20 40 60 80 100 120 140 160 180

Old-age cash benefits

Disability cash benefits

Services for older people and those w ith disabilities

Family cash benefits

Family services

ALMPs

Unemployment cash benefits

Healthcare

Policy Recommendations

Review and close tax reliefs as appropriate to improve tax base

Integrate excluded groups into the labour force Improve mechanisms to increase incomes of

low-income working families and for linking welfare incomes to earned incomes

Poverty Reduction Effect (%)

0

10

20

30

40

50

60

70

80

EU-25

EU-15

B CZ DK D EA GR ES F IE IT LV LT LU HU MT NL A PL SL SK FI SE UK

Why is PRE effect So Low?

Social transfers are not working as effectively at reducing poverty in Ireland

Levels of social expenditure are comparatively low

Social transfers remain heavily means-tested rather than universal

Policy Failure?

Data dearth? Lack of evidence-based policy research? Lack of exchequer funds? Political stasis? Overly centralised decision-making process? Developmental Welfare State?

Suggestions for Policy-Oriented Research

Social science research should contain policy analysis Policy recommendations should be:- Focused- Time-specific- Costed (if possible)- Realistic• Research should be timely, contribute to debate on

topical issue