Good old days of giveaway budgets a distant memory
What to watch for:In 1947 British chancellor of the exchequer Hugh Dalton had to resign after making an off-the-cuff remark about his budget to a journalist which then found its way into the evening papers minutes before he delivered his speech to the House of Commons.
If the same standards applied in 21st-century Ireland there’d scarcely be a Minister left standing this morning. There has been so much leaked in the run-up to the release of Austerity Budget No 6 (Revenge of the Troika) that the only surprise today will be the colour of Michael Noonan’s tie (sources close to the minister have indicated it will be blue).
It is hard to imagine it now, but back in the good old days we used to look forward to budgets. Every year during the boom we would turn on our radios and televisions shortly after 4pm on the big day to hear what treats the government had for us. There would be tax cuts, welfare increases, boosts to pensions and sometimes big bribes to encourage us to put money aside for a rainy day. Like a rainy day would ever happen.
A boom-time budget was like the Late Late Show and there was always something for everyone in the audience. Charlie McCreevy or Brian Cowen played Uncle Gaybo but Bertie Ahern was the real star. He would sit in the front row smiling at his (and our) good fortune and chuckling at the feeble catcalls of the opposition as his minister assured us that the good times would keep on rolling.
When Noonan delivers what will be one of the most painfully grim budgets in the history of the State there will be no smiles in the chamber or on the streets outside it.
The Government has been ordered by its international paymasters to take €3.5 billion out of the economy. And so it must act.
Children’s allowance will be cut by €10 to €130 a month. This will take €240 from the budget of a household where there are two qualifying children. The property tax will mean that household will be worse off by another €450 a year if their home is worth €250,000, while increases of 15 per cent to car tax are expected. With those three steps alone, the average Irish household will be worse off by €790 a year. That is health insurance for two children, six weeks’ worth of food shopping or 80 per cent of a cheap summer holiday.
That sounds bad but it could have been worse had it not been for Labour’s mansion tax wheeze. The rate on 3,000 properties worth more than €1 million will climb to 0.25 per cent while the rest of us will pay 0.18 per cent. This will save the average household €1 a week or enough to pay for just over half of one litre of petrol, which is also likely to rise by 5 cent a litre.
There will be an extension of PRSI to cover more income but while the social insurance net widens the level of protection it will offer to those who need it will be reduced as the Government plans to cut the period of time for non-means-tested jobseeker’s allowance from 12 months to just nine. This could mean some unemployed people’s income falls by more than €2,000 in the first year of their misfortune.
Irish governments have been terrified to touch the State pension since one got into a spot of bother for knocking a shilling off it in the 1920s and the basic rates will remain untouched again this year. This does not mean older people will escape. Income tax exemption limits for the over-65s will most likely be reduced to €18,000 for a single person and €32,000 for a married couple while there is also likely to be a reduction in the fuel and telephone allowances.
The Government may also reduce the €850 grant given to cover funeral expenses, although this cut looks to have been ruled out at the death.
This is the sixth austerity budget in five years and while its predecessors have been shocking, everyone suspects that the worst is yet to come.