2014 is last of the difficult budgets, Gilmore says
Tánaiste says plan focuses on increasing jobs
Tánaiste Eamon Gilmore: ‘This is the last of the difficult budgets. This achieves about 95 per cent of the total adjustment which is required to meet our targets.’ Photograph: Eric Luke/The Irish Times
Budget 2014 which is designed to save €2.5 billion next year will be “the last of the difficult budgets,” according to Tánaiste Eamon Gilmore.
Mr Gilmore said the budget achieved most of the adjustments required for the Government to meet its deficit target of 3 per cent by 2015.
“This is the last of the difficult budgets. This achieves about 95 per cent of the total adjustment which is required to meet our targets. We have provided in this budget for a deficit target of 4.8 per cent which gets us much closer to the 3 per cent which is what we have to achieve by 2015,” Mr Gilmore said this morning.
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“We are providing for a primary surplus which will give a lot of confidence to the international markets. The projection for growth next year is that it will go up to 2 per cent.”
Mr Gilmore said this budget was the one that would take the State out of the bailout programme in December.
“This budget is the budget that takes us out of the bailout. It is a budget that is focused on increasing employment,” he said.
The budget included a wide range of spending cuts and revenue-raising measures rather than any major change in the tax or welfare system.
Mr Gilmore added that Ireland’s economy was showing signs of recovery.
“Happily we are seeing jobs being created. We will see, I hope this week, that for the first time since 2009 the live register of unemployment going down below 400,000. When we came into office 2 1/2 years ago it was heading for over 500,000,” he said.
The Labour Party leader defended budget measures which have been criticised by lobby groups for the impact that they will have on the young, the old and mothers-to-be.
Those most likely to cause political difficulty for the Government involve a tightening of eligibility limits for medical card holders, a €1 increase in prescription charges and a cut in maternity benefit.
A reduction in the income threshold for medical cards for the over-70s, the ending of the telephone allowance and the abolition of the bereavement grant are also likely to prove controversial.
The continuation of a levy on private sector pension funds, most of which are already in serious financial difficulty, and restrictions in the tax allowance for medical insurance could also be problematic.
Mr Gilmore said decisions taken over the last 2 1/2 years meant the budget was reduced by about €600 million thereby taking “some of the pressure off hard-pressed families.”
On the decision to scrap an estimated 100,000 medical cards, Mr Gilmore said surveys indicated some medical cards were no longer in use but that doctors continue to be paid for medical cards belonging to people who no longer use them.
Mr Gilmore said the Government believed it is possible to reduce the number of medical cards in circulation by 6 per cent.
He said the provision made in the budget was a “conservative estimate”.
He said he believed this to be “a fairer way” to reducing the cost of the medical card bill than changing eligibility criteria.
“This is an exercise to reduce payment for medical cards that are no longer in use,” he told RTE’s Morning Ireland.
Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin are taking questions from the public on RTE radio’s Sean O’Rourke programme this morning.
The “old reliables” were hit, with beer, spirits and cigarettes going up by 10 cent from midnight last night, while the price of a bottle of wine will increase by 50 cent.
Last night the Government had a comfortable majority in the first budget vote in the Dail when the alcohol price increases were approved by 103 votes to 53.
Responding to Opposition criticism of the increases, Taoiseach Enda Kenny said they were not an alternative strategy for dealing with problems created by alcohol, adding it was an issue that would require considerable discussion at Cabinet and in the Dail.
On the stimulus side, the budget saw the retention of the reduced 9 per cent VAT rate for tourism-related services.
A tax incentive for home improvements worth between €5,000 and €30,000 was introduced, the air travel tax was scrapped and a range of incentives for business and innovation were outlined.
As widely anticipated, free GP care for all children aged five and under will be introduced at cost of €37 million.
While tax rates, pensions and child benefit have not been cut, payments for 22- to 24- year-old jobseekers will fall from €144 to €100 a week while 25-year-olds will get €144 instead of €188.
The budget also outlined public investments that would be made from the €400 million obtained through the awarding of the National Lottery Licence.
Fianna Fáil finance spokesman Michael McGrath said it was the third budget in succession that had placed a disproportionate share of the burden on those least able to carry it.
Sinn Féin finance spokesman Pearse Doherty said the Government was “pitting grandparent against grandchild” by ending the telephone allowance for pensioners and introducing free GP care for the under-fives.