Fine Gael would cut jobs tax and stop duplication of policy

Sat, Dec 5, 2009, 00:00

THE DEPARTMENT of the Taoiseach would be the driving-force in a Fine Gael-led government but it would be “smaller and leaner” and cease to duplicate the work of other departments and agencies.

This was one of a number of pledges made by Opposition leader Enda Kenny at a pre-budget press conference in Dublin yesterday.

As taoiseach in a future administration, Mr Kenny said he would ensure the Department of the Taoiseach was the “enforcer” of government policies and programmes.

Duplication of the work and resources of the Department of Foreign Affairs on European issues and Northern Ireland would cease.

Fine Gael deputy leader and finance spokesman Richard Bruton said the party’s “jobs budget” would take 50,000 people off the live register in 2010 and more than 175,000 by 2013.

The main proposals include:

1) A major cut in the “jobs tax” (pay-related social insurance on employment);

2) The roll-out of Fine Gael’s €18 billion “NewERA” (Economy and Recovery Authority) stimulus plan;

3) Targeted youth unemployment initiatives;

4) Abolition of the airport tax, and

5) Reversal of the recent value-added tax increase and short-term reduction in the 13.5 per cent VAT rate to 10 per cent.

Fine Gael would generate a net deficit reduction of more than €4 billion, broadly as follows: €1.7 billion reduction in the public sector pay bill through pay cuts and redundancies (€1.2 billion payroll cuts plus €500 million redundancies); €1.1 billion reduction in current spending programmes; €400 million reduction in social welfare costs (net of job activation measures); €400 million from tax broadening  (net of jobs stimulus package); €500 million from transfer of capital spending to NewERA.

Savings of €1.1 billion could be made on current spending by:

1) Cutting back on the big bureaucracies like HSE, Fás and CIÉ: €386 million;

2) Eliminating or merging 150 quangos: €88 million;

3) Cutting payments of professionals plus third-party procurement savings: €431 million, and

4) Programme reductions: €199 million.

A new budgeting system would be introduced whereby agencies would have to bid for State money. “I have used the acronym,  Bart, in other words, people who are looking for money will have to ‘bid’ for it, they will have to be ‘accountable’, they will have to ‘report’ performance and they will be given the ‘tools’ to deliver the change,” Mr Bruton said.

On the public sector pay bill, he said Fine Gael had identified €1.7 billion that could be saved in 2010 through a combination of freezing of increments, graduated reductions above earnings of €30,000, local payroll savings of 2 per cent and through 10,000 redundancies.

The reduction in pay would only affect those earning more than €30,000 and only applied to income earned above that limit.Core pay would be reduced by 3.2 per cent on average on a sliding scale.

Net of job-activation measures, Fine Gael envisaged a saving of the order of €400 million in the social welfare budget.

Fine Gael’s deficit plan

  • Payroll savings from cuts in public sector pay, overtime etc: €1.2 billion.
  • Payroll savings from 10,000 public sector redundancies: €500 million.
  • Reduction in current spending programmes: €1.1 billion.
  • Reduction in social welfare costs (net of job-activation measures): €400 million.
  • Tax broadening (net of jobs stimulus package): €400 million Transfer of capital spending to Fine Gael’s “NewERA” plan: €500 million.
  • Total (approx): €4.1 billion.