Everybody takes a hit


IT SAYS something for the shell-shocked state of our politicians that yesterday’s Budget, certainly the most savage in living memory, was spelled out to a Dáil chamber that, for the most part, was resigned and subdued rather than angry and boisterous. The public was waiting for the hit that will determine their living standards, not just for Christmas but for the next couple of years or so. At least there is some certainty about the expectations we can have about our living standards now.

Given his predicament, Minister for Finance Brian Lenihan acquitted himself as well as could be expected, apologising for mistakes but accusing the Opposition benches (with some justification) of complicity in letting public expenditure get out of control. But only Mr Lenihan and his supporters can take responsibility for the Budget. It is they who must defend accusations that it is unfair and overly injurious to economic recovery.

There can be little doubt that persons on the lowest rung of the income ladder stand to take the greatest pain. The cut in the level of dole payments was expected. Once the Government committed itself to lowering the minimum wage, leaving the dole untouched would simply have made it less attractive to work. But it will cut no ice with the tens of thousands thrown out of work who want, but cannot get, employment. To rub salt into the wounds, they and their families, undoubtedly struggling to make ends meet, are now being told to live on less. The higher income tax on the lower paid is a tax on labour. The timing and effect of the Budget provisions on job creation could have been better.

The Government’s decision to reduce payments for child benefit (without any means-testing), disability payments and carer’s allowance indicates either naked fear of our international rescuers or an indifference to poverty and hardship that is shameful.

The reduction in stamp duty must be welcomed, although the property market is so comatose that it will make precious little difference in the short term. The U-turn on travel tax is a triumph for common sense; would that it had never been introduced. No one would argue with the fuel allowance provision.

On the other hand, few will be impressed with the proposal to reduce the salaries of government Ministers. It is not a lot of money and it is very late in the day. Indeed the Coalition Ministers can cheerfully vote it through, secure in the knowledge that, after the election, it is unlikely to apply to them. The alterations to public sector pensions just tinker at the edges; the colossal pension liability is a time bomb. The Croke Park agreement remains untouched.

The Government’s prediction that the measures will reduce GDP growth by 1.5 per cent may be correct. But the original forecast of just over 3 per cent smacked of optimism so to say that the economy, post-Budget, will now grow by 1.7 per cent is unlikely to convince the lenders or the electorate. Only time will tell if the missed opportunities of this Budget will come to haunt the next government. At least this day, which was long coming, has passed and households know their fate.