Burton clashed with troika on extent of cuts

‘They had a one-line approach to social welfare - and that was the word ‘cut’ ’

“We did recognise that social welfare spending was the most important stimulus in an economy when the rest of the economy was failing,” Minister for Social Protection Joan Burton has said.  Photograph: Cyril Byrne/The Irish Times

“We did recognise that social welfare spending was the most important stimulus in an economy when the rest of the economy was failing,” Minister for Social Protection Joan Burton has said. Photograph: Cyril Byrne/The Irish Times

Fri, Dec 13, 2013, 11:48

Minister for Social Protection Joan Burton has said her dealings with the troika during Ireland’s three-year bailout programme, like any relationship, had their “ups and downs”.

In a press briefing this morning to mark Ireland’s exit from the bailout, Ms Burton said that when officials from the European Commission, European Central Bank and International Monetary Fund came into Ireland, their priority was to reduce significantly the social welfare budget without implementing reforms.

There were frequent reports of tensions between Ms Burton and the troika in relation to her department, and she clashed with the three international bodies in relation to the extent of cuts and where they should be applied.

“When they came into Ireland they had a one-line approach to social welfare - and that was the three-letter word ‘cut’. We were focused on reforming the system.”

She said that with the rapid spike in unemployment, there was a huge number of people claiming from the system.

“We did recognise that social welfare spending was the most important stimulus in an economy when the rest of the economy was failing,” she added.

She said she agreed from the start with the analysis of the original IMF head of mission AJ Chopra, that the welfare system was passive and more was needed to activate unemployed people to get back into the jobs market. He had argued that more evidence-based policy was required.

She said one of the first things the Government had done in early 2011 was restore the cut in the minimum wage made by the former government.

She said the troika were not huge fans of that. She had had a “heated discussion” with troika officials on that issue, and pointed out the high costs of visiting a GP for a person on low income in Ireland who did not qualify for a medical card.

“We had a couple of moments. The most difficult was before we went into Government. I do recall one official asking me were we prepared in Ireland to give up everything. I said ‘No’.”

Ms Burton said most difficult decision she was faced with were big demands to cut the social welfare spend. “Social welfare has big numbers and a spend of €20 billion, but all of the numbers mean individual people. “I don’t think any decisions in social welfare are easy.”

Ms Burton said the trend was going in the right direction at the moment with unemployment numbers falling, although the number of long-term unemployed people remains high.

The best thing about the bailout was that Ireland was now in a position to re-enter the markets and make its own decisions in the context of the economy and other key policy areas.

Signalling that tensions between her and troika officials may have been overstated in the media and by Government colleagues, she said: “The troika have been quite complimentary to the department.

“What they would like to see, and I agree with them, is even more activation. What we have been able to do so far has had significant outcomes.”