Minister for Finance Brian Lenihan said today social welfare payments reached unsustainable levels in the last decade and that reductions were necessary for the stabilisation and rejuvenation of the economy.
Speaking on RTÉ's Today with Pat Kenny,Mr Lenihan strongly defended his Budget int the face of attacks from by a number of callers, many of whom were incensed by cutbacks to social services.
One caller, a disabled woman who provides care for her elderly mother in the latter stages of kidney failure, claimed the 4 per cent cut in social welfare would have a disproportionate effect on those with disabilities because of the higher cost of living involved.
“Minister, I hope you are proud of yourself. If you measure a society by how it treats its most vulnerable, its people with disabilities, its sickest, well then you measure up very poorly. Shame on you,” she said.
“Look this isn’t easy for anyone,” Mr Lenihan said. “This country could have become insolvent in the last year, and we all have to recognise that there was a 3.5 per cent increase in social welfare introduced by me last autumn, but the cost of living dropped by 6 cent in the meantime, so the real value of social welfare payments actually went up by almost 10 per cent.
“Over the past years the disability allowance rose by 129 per cent, the carer’s allowance by 147 per cent, and in that same 10 to12 year period, the cost of living increased by only 40 per cent,” he argued. “The Government is not in the position to keep paying at nominal rates when for everyone else the cost of living has fallen.”
“The Government is not in the position to keep paying at nominal rates when for everyone else the cost of living has fallen,” he added.
Mr Lenihan also said the reductions in social welfare had been comparatively low when assessed against national and international factors. “If you look at the statistics for the different groups like the public sector workers and the people who are working in the private sector; the reduction they have taken in the last year is far, far bigger in percentage terms than what social welfare recipients have had to take,” he said.
“I accept is difficult to live on any low salary or any low transfer of money from the State but the increases to welfare in this country were enormous in recent years and our rates are far in excess of our neighbouring country, the United Kingdom,” he said.
The caller, identified as Caroline, said she was happy to do her bit for the country, but in an increasingly heated exchange she expressed her dismay at the introduction of prescription charges for medical card holders, which she said was a further burden on those reliant on large amounts of medication.
“What would like me to do instead Minister, would you just like me to shoot my mother and have done with it?” she asked.
Listener Pat Cremins queried why there was an increase of 20 per cent in the cost of the drugs payment scheme while deflation had reached 5 per cent.
“No place in the country has there been an increase of 20 per cent in anything, so it hit the poor, hit the sick: the unfortunate people who need medicines, they are a captive audience so squeeze them” he said.
Mr Lenihan again stressed that increases in the threshold of the drugs payment scheme had to be taken in the context of the last decade, which he said made the 20 per cent raise relatively modest.
Caller Ann Collins pressed Mr Lenihan on whether it was disingenuous for Ministers to suggest they has taken a 15 per cent pay cut, given that ten percent of the reduction had been in place since last year.
Mr Lenihan, said that too much had been made of the declaration of a 15 per cent cut by the Opposition. “I recall last year when Ministers gave up ten per cent of their salary, and nobody else did, or very few others did other than the President. We were criticised then because it didn’t affect our pensions, well now it does affect our pensions. It is a permanent reduction.
“The reality is that Ministers have taken a 15 per cent pay cut permanently, and in relation to the issue about the earlier voluntary cut, you have to look at the factors in the last year as one package, to draw the whole picture together,” he said.
Mr Lenihan also rejected suggestions from the same caller that tTaoiseach Brian Cowen’s pay compares favourably with leaders in other countries, and highlighted the fact that he must go without a housekeeper in his official capacity.
“The Taoiseach has taken a reduction in his salary of 30 per cent in the last year. The Taoiseach doesn’t have Number 10, he doesn’t have Chequers, and he doesn’t have the many perks which Gordon Brown has. In fact, he is one the only prime ministers in Europe not to be provided with a permanent residence and housekeeper,” he said.
“I don’t think we’re going to make progress as a country by simply undermining the Taoiseach the whole time. He’s a man who is working night and day for a fraction of the cost that those in the private sector in similar positions work for,” Mr Lenihan said.
Peter, a caller from the Border region, called on Mr Lenihan to reduce the VAT rate to 15 per cent in order to stave a crisis in the retail industry. He said that the country was in the midst of an economic war and a bold step by the Minster for Finance could secure €2 billion in income which he said was lost to the North.
Mr Lenihan replied that each 1 per cent reduction in VAT equated to a loss of €350 million to the Exchequer and that the loss in trade was largely due to a weak pound, which was a factor beyond the control of the Government.