Spreading the pain around
Michael Noonan talked about being “well on the road to recovery”. Brendan Howlin, who is seeking further savings from public sector unions, warned daunting challenges remained. These conflicting approaches failed to disguise a central truth: everybody will be worse off after this Budget but some will pay more than others.
Four years of special treatment came to an end for high-income pensioners when they were singled out for tax increases and cuts in services. They were not alone. Higher charges for wealthy individuals were introduced, even as traditional concessions disappeared. At the same time, the Oireachtas was asked to lead by example and reduce the cost of perks and allowances by 10 per cent.
Apart from job creation measures aimed at small and medium enterprises and no increases in employment costs, there was little comfort for any interest group in the package of measures announced by the Minister for Finance. As the domestic economy remained flat and Government spending continued to outstrip its income; measures demanded by the troika became inescapable. Signs of export growth and reviving business confidence were welcome but high unemployment and rising medical costs led to large supplementary budgets for health and social welfare.
Budgets are subjective affairs. Whatever about the needs of the economy or the demands of foreign lenders, their worth is measured in terms of personal impact. The harder pockets are hit, the more critical the response. Because of that, Mr Noonan is likely to receive a negative reaction to the sixth austerity budget since 2008. In that year protesting pensioners demanded – and received – concessions.
This time, care has been taken to target the better-off members of the “grey brigade” but protests can be expected. Welfare reductions and PRSI charges will make life more difficult for a great many citizens. A reduction in child benefit will hit vulnerable families while a range of lesser adjustments will impact on the disabled and older people and changes in the respite care grant are punitive for people already hit by cutbacks.
A fully-fledged property tax will be introduced from the middle of next year. Despite its two-tier nature – if reaction to the household charge is anything to go by – it will receive a torrid response from both ends of the political spectrum as people realise the scale of payment involved in a full year.
Much of the heavy lifting in this Budget will be done through imposition of higher excise duties on tobacco and alcohol. There again, emphasis was placed on social class and a bottle of wine went up by a euro. Taoiseach Enda Kenny and Tánaiste Eamon Gilmore promised fairness in this Budget. Fairness has been measured by a sliding scale of pain, though some cuts fall into the unfair category, coming on top of five other austerity budget measures. For worried citizens, the positive view is nonetheless that fiscal restructuring is almost finished.