Labour proposals include €5.8bn spending cuts and €1.15bn for jobs

THE LABOUR Party says it is proposing a €5.8 billion adjustment in Government spending and a €1.15 billion jobs creation programme as part of its pre-budget proposals.

Labour leader Eamon Gilmore said revenue could be raised through a carbon levy, targeting tax exiles and introducing a third rate of tax at 48 per cent for those earning more than €100,000.

“The problem in the public finances has got to be faced up to now, it can’t be postponed, but it has to be done in a way that is aimed at getting people back to work,” he said.

Mr Gilmore said a negotiated reduction of €1.3 billion in the public sector pay bill should be based on reforms to ensure a more effective public service, as well as pay caps for those on the highest salaries. “Our budget statement would say that there will be a €1.3 billion reduction in the pay bill. The estimates that we would present for each department would reflect that by way of a 6¾ per cent reduction on the pay bill for each department and agency.”

Launching the party’s proposals yesterday, Mr Gilmore stressed the need for significant flexibility in staff deployment between departments and agencies. He said Labour accepted there was surplus in some public service areas.

Among the measures Labour is suggesting to bring about the €5.8 billion full-year adjustment are savings of €1.3 billion on pay and €899 million on other current spending. It also proposes €1.246 billion on capital savings through lower tender prices and €2.3 billion through “revenue-enhancing measures”.

The proposals include bringing in €500 million from a carbon levy; €330 million from reduction in pension reliefs; €100 million from tax exiles’ contributions, and €79 million by charging PRSI on share-based remuneration and capital gains. The proposal to introduce a third rate of tax on earnings over €100,000 (€200,000 for combined incomes) would raise €355 million, the party claims.

Labour is calling for the abolition of all property tax reliefs and the abolition of a number of minor reliefs, such as on trade union subscriptions. Mr Gilmore said he had not seen the Fine Gael pre-budget document, also published yesterday.

Labour’s finance spokeswoman Joan Burton called for a “Cabinet-level jobs task force” which she said would operate outside the normal estimates process. She said the Government had predicted employment levels would fall by 75,000 next year.

“We have the capacity to get people back into work, back into training. We have the capacity to get tens of thousands of people into internships and work experience so as to provide a bridge to full employment when the economy recovers, probably at the beginning of 2011.” She said a €1.15 billion fund would include €500,000 for “labour-intensive capital projects”.

The fund would provide 60,000 extra training and work experience places, and would support businesses with measures such as PRSI relief for jobs created.

Labour is also proposing no cuts in basic social welfare, the maintenance of child benefit and the restoration of the Christmas bonus.

Labour budget proposals

• A job-creation programme costing €1.15 billion, with an additional 60,000 training and work experience places.

• A third rate of tax, at 48 per cent, for individuals earning more than €100,000.

• Savings of €1.3 billion in pay and €899 million in other current spending.

• Savings of 17 per cent (€1.246 million) in tender prices on capital spending.

• The immediate abolition of all property reliefs.

• A contribution of not less than €100 million to be sought from tax exiles.

• Curtailing tax expenditure on pension reliefs and minor reliefs.

• Spending of €300 million on "social solidarity" measures such as the Christmas bonus for welfare recipients and combating fuel poverty.

• A negotiated cut in the public sector pay bill of €1.3 billion.

• Flexibility in public sector staff deployment to combat surplus staffing in some areas.