Dole payments set for cut as country braces for Budget
on 14/10/2013 16:54:52
Spending cuts and tax hikes worth €2.5bn will be announced tomorrow, which Government leaders insist will ease the country's exit from its strict bailout programme.
Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin will unveil details of the adjustment - made of two parts spending cuts and one part tax increases.
Among the casualties in the raft of cuts and slices will be the nation's young jobseekers, who stand to have their weekly dole payments slashed by almost a third.
The personal rate of €100 per week that applies to 18 to 21-year-olds is expected to be extended to those up to the age of 24, who currently receive €144.
Fianna Fáil have demanded a fair budget with those most able to pay forced to carry the greatest portion of the burden.
Finance spokesman Michael McGrath said: "The litmus test is whether the distribution of the burden of the adjustment is carried by those who have the best capacity to pay it."
He said a cut in the dole rate has to be supplemented with a meaningful alternative to being unemployed in order to be fair.
Plans to introduce free GP care for under-fives will remain on course, while pupil-teacher ratios will be protected under the raft of spending cuts.
Older people are also braced for a hit. While their core weekly rates, fuel allowance and free travel allowance are expected to remain untouched, they could see a chop in their telephone allowance.
Smokers can expect the cost of tobacco to rise, while tax on alcohol, soft drinks and gambling may also increase.
The Fine Gael-Labour coalition has pledged not to hit the nation's workforce, promising to leave income tax untouched.
But a moderate rise in a special VAT rate for leisure goods and services is expected, as the Government attempts to scrape the barrel to make savings.
Funding for health and social welfare faces the all-round biggest chop, but one area Social Protection Minister Joan Burton has refused to cut is child benefit.
With budgetary pressures in health causing the department to swallow up much more funds than expected, there will be knock-on effects in both that department and others.
Mr McGrath warned there would be sacrifices to fund the free GP care for under-fives and urged caution.
"The question we will be asking tomorrow will be 'at whose expense will this be introduced?'," he said.
"For example, at the expense of children over the age of five who have autism, who might have Down's syndrome? At the expense of adults who might have life-long debilitating illnesses such as motor-neurone disease, such as MS, people who are profoundly disabled?"
The Government had originally intended to make savings of €3.1bn - as recommended by the European Commission, the European Central Bank and the Economic and Social Research Institute (ESRI).
Much lobbying from junior coalition partner Labour and favourable figures in the latest Exchequer returns prompted a downward revision.
The Government insisted that the revised adjustment of €2.5bn will enable it to exceed its deficit target of 5.1% of GDP in 2014 - reaching 4.8%.
According to its bailout agreement with debt masters the Troika, Ireland must reduce its deficit to below 3% of GDP by the end of 2015.
Its original plan for Budget 2014 and Budget 2015 was to make cumulative savings of €5.1bn - €3.1bn this coming year and €2bn for the next.
The International Monetary Fund urged the Government to compensate for this year's reduced adjustment next year.
When the tax hikes and spending cuts outlined in tomorrow's budget take effect, the Government will have sucked around €30bn from the Irish economy over a five-year period.