Wider economy would benefit if middle earners got a little help

IT WILL stick in the craw to those on middle incomes that Nama developers who would be bankrupt but for the State are enjoying sixfigure salaries as they ‘work out’ their loans. Some 132 firms were dissolved in the week ending November 2, according to Vision-Net.ie – which provides credit information on businesses and individuals, with liquidators appointed to another 70.

Not all were forced closures, but many of the directors of these firms will not have had the opportunity to draw generous salaries while their businesses crumbled.

Whatever about the relief provided in last month’s Budget, middle-income earners are being put to the pin of their collar in trying to afford the most basic of life’s essentials.

Childcare costs are expensive, and rising. The cost of renting a home is at a record high. Buying a new home is beyond the reach of most workers in our major cities. Estate agents predict that by next year, only pockets of Dublin within the M50 will be affordable to those on average salaries.

In 2016, there were just over 2.4 million people paying income tax, including single people, couples taxed as a joint unit, and widowers. Of these, 1.45 million were assessed as earning €35,000 a year, or less. This cohort of people rightly qualify for social housing support.

If families on low incomes have outgoing costs including rent/mortgage, childcare or travel, they may also qualify for a medical card, or a GP-only card.

This is not to suggest for a moment they lead pampered lifestyles. Far from it. But if a household earns between €35,000 and €90,000 – remember that ‘average’ weekly full-time earnings are around €47,000 a year – there is little or no support.

Figures from the Central Statistics Office show there are 777,000 people in this category, and the failure of the State to provide some support ultimately costs more in the long-run.

Housing in the major cities is largely unaffordable for this cohort, meaning they move further away from their workplaces in search of somewhere affordable.

For a couple with children, it means they probably run two cars, at an annual cost of more than €10,500 each, according to the AA. It probably means both have jobs, meaning children are in costly childcare.

There’s the social cost of time spent travelling, not to mention the health implications from long commutes. Then there are the air quality and climate issues which arise from our commuting culture.

And this isn’t a problem confined to the cities. It’s everywhere.

The solution, for most, is lower housing costs. On this, the State knows what to do, but is painfully slow in acting. The average price of a home in Dublin is €360,000. You have to earn around €100,000 to afford that.

The less money put in hands of landlords or paid in mortgages, the more there is to save or spend in the wider economy. That makes sense.