IMF proposals for 'medium term'

Suggestions from the IMF about child benefit and medical card cuts were “not specific recommendations” for next year’s budget, the Tánaiste told the Dáil this morning.

Eamon Gilmore said the IMF’s commentary, which suggested means-testing child benefit payments and cutting medical cards for the over 70s, were on a “medium to long-term” basis.

They were not “specific recommendations made in the context of next year’s budget or in the context of the [bailout] programme”, he said.

He was responding to Sinn Féin health spokesman Caoimhghín Ó Caoláin who urged the Tánaiste to rule out cuts to either payment in the budget.

Mr Gilmore said the quarterly review by the EU-ECB-IMF troika operated on a short-term basis while the IMF’s review was done on a separate basis.

The Tánaiste refused to be drawn when Mr O Caolain asked him when he had first heard about the resignation of HSE chief executive Cathal Magee.

Mr Ó Caoláin pointed to comments from Minister of State for Health Róisín Shortall who said she had only heard of his intention to resign from the media.

The Cavan-Monaghan TD had asked the relationship between the Minister for Health and the Minister of State and asked if it would be “Reilly’s way or Labour’s way”.

Yesterday, the International Monetary Fund suggested means-testing for child benefit payments and cutting the cost of medical cards as part of a “comprehensive targeting of spending”, which the agency says is needed to deliver immediate reductions in Government spending.

In its assessment of the Irish economy, the IMF said “maintaining expensive universal supports and subsidies is difficult to justify under present budgetary circumstances”.

The household benefits package and spending on non-means-tested pensions were also cited as potential targets that could “generate significant savings, while protecting the poor”.

The State pension paid to all retiring workers who have sufficient PRSI “stamps” paid over their working life is the main non-means-tested pension in the State, though there are other schemes, including accelerated pensions paid to politicians and judges, regardless of means.

“There are many options to help save budgetary resources while minimising the impact on the most vulnerable,” said Craig Beaumont, the IMF’s Ireland programme director, at a press conference yesterday concluding the fund’s consultation process – separate to last week’s bailout review by the troika.

“Child benefit has risen substantially in the last decade and there is no means-testing for it. We’re just laying out the option that you could target it at families who are less well off,” he said when pressed for further detail.

He also cited the possibility of cutting the cost of providing medical cards to those who were more than 70 years of age. “The population over 70 is going to rise over time so the cost of those cards is going to keep rising.”

The concluding statement also made reference to savings achieved under the Croke Park deal which, it said, had “facilitated personnel reductions and efficiency savings”.

However, continued monitoring of the pay and pension bill for the public service was also deemed necessary.

The fund also praised the Government’s decision to introduce the property tax, which it described as “a progressive measure”, adding the tax would “provide a progressive and stable source of revenue”.

But it counselled that “a suitably high level for this tax would maximise these benefits”.

Reform of social housing provisions was also highlighted, with the fund advocating the integration of the systems of social housing provision and rent supplement into a new, means-tested housing assistance payment.

Outside Ireland, the fund repeated its call for further support from Europe for Ireland as the country moves to re-enter the debt markets.

Speaking at the press conference, deputy director of the IMF’s European department Ajai Chopra described the euro group summit statement of June 29th, which committed to a reduction of Ireland’s debt burden, as “a welcome path forward”.

“What’s striking about the commitment was the point that similar cases will be treated equally as policy options are developed and applied in other possible country cases.

Asked how many billions of euro Ireland’s legacy bank debt would need to be reduced by to ensure economic growth and Ireland’s return to the sovereign debt markets, Mr Chopra said there was no “magic number” that could deliver the desired outcome without looking at “all the elements of that package”.

“That’s all I can say,” he added.

Director of Social Justice Ireland, Dr Seán Healy, said Ireland's support for children was "low by international standards".

"We acknowledge that Government must balance its Budget but we have shown on several occasions in recent years how Ireland can do this without victimising children. We will again illustrate how this can be done when we publish our policy briefing on budget choices in the autumn," he said.

Social Justice Ireland said it "strongly urged the IMF and other international agencies to propose fair and just solutions to Ireland's problems when they choose to provide advice".

"It is imperative that Government be seen to make choices and decisions that are just and fair. Means testing or taxing Child Benefit would be unjust and unfair."