Budget’s blend of austerity and stimulus no surprise
Stephen Collins: Good dollop of luck every bit as important as various elements of package
Minister for Finance Michael Noonan and cabinet colleague Minister for Public Expenditure and Reform Brendan Howlin at Government Buildings for the traditional Budget photocall yesterday. Photograph: Bryan O’Brien / THE IRISH TIMES
After an extensive leaking exercise to soften up the public over the past week, there were few surprises left in Budget 2014 - apart from the extent of the stimulus package designed to dull the impact of another round of spending cuts and tax increases.
As with every budget, the big question is whether there is some measure that will jump out from the rest to cause serious embarrassment for the Government.
Lobby groups for the elderly are the most adept at getting any reduction in their entitlements accepted as the most unfair element of recent budgets, despite incontrovertible evidence that they have suffered less in the recession than any other group.
This budget contains some further curtailment in entitlements for the elderly. Among the most significant are abolition of the telephone allowance and reduction in the income threshold for the over-70s medical card to €900 a week for a couple and €500 for an individual.
The elderly are not being singled out for special treatment. Young people claiming job seekers’ allowance suffered a significant reduction in their payments last year, and the age limit for the new €100 weekly payment has now been increased to 24, with some reductions also applying to those aged up to 25.
A further tightening of the entitlement to medical cards, a rise of €1 to €2.50 for prescription charges, an increase in the waiting period for illness benefit from three to six days, a standardising of maternity benefit at €230 a week and the abolition of the bereavement grant are all measures bound to raise some hackles.
The extension of the levy on private pensions, albeit at a lower rate than currently being applied, a squeeze on the tax relief for private health insurance and an increase in Dirt tax to 41 per cent are other elements of the budget that will not be popular with those who will suffer further cuts in their income as a result.
Whether any of these individual items, or some as yet more obscure element of the budget package, has the capacity to become a serious embarrassment for the Coalition will become clear over the next few days.
The extension of free GP care to all children aged five or under provided some counterpoint to the squeeze on the elderly and the unemployed. There is a question, though, as to whether extending GP care for middle-income families will have anything like the political impact that will arise from reducing the entitlements of other groups.
The return to the revenue-raising formula of increasing the excise on beer, spirits and cigarettes, with another hike in the price of a bottle of wine, will hardly be popular, but will not provoke the kind of negative reaction that comes from the reduction in State entitlements.
On the positive side, by contrast with the succession of swingeing budgets since 2008, Michael Noonan and Brendan Howlin have been able to temper the latest round of cuts and tax hikes with measures which should provide a genuine stimulus to job creation next year.