THERE WAS precious little clapping from the Government backbenches as the Minister for Finance Michael Noonan commended his Budget to the Dáil and little wonder. The Governments TDs will have searched hard for positive signals to bring back to their constituents and, for the most part, they will have searched in vain.
This second part of the budget is unimaginative, discouraging and, in places, downright heartless. That the Government should target items such as the disability allowance, widows’ eligibility and the fuel allowance, the recipients of which are the most marginalised and vulnerable, is shameful.
The most commendable measure is the increase in the threshold for the universal social charge which is more than doubled to €10,036 per annum. The principal beneficiary of this budget however is Nama, the largest property-owning organisation in the State. The reduction of the stamp duty on commercial property transactions is designed to stimulate interest in commercial property and give Nama a better chance of offloading its enormous domestic portfolio without suffering large losses.
The increase in VAT to 23 per cent on so-called luxury items (many are nothing of the kind) is regressive and unfair. As Fianna Fáil spokesman Michael McGrath pointed out, rather than hurt the well-off the greatest effect it will have will be on the lowest-income groups.
This Government has had nine months in power and not a lot to show for it. The Taoiseach made great play in his television address about how he wants to retrieve Ireland’s economic sovereignty. But the appalling economic policies adopted by previous governments, where spending was let rip, were not greatly opposed at the time by either Fine Gael or the Labour Party who often complained that spending should be higher still.
This Government has an unenviable agenda but it has an overwhelming majority. It needs to match its achievements to its “national government” status. It needs to be radical and it needs to be courageous. It should start by revisiting the Croke Park agreement. While the Government cuts and slashes, public sector workers will receive pay increases at a cost of over €300 million. Public sector wages and pensions are approximately 50 per cent higher than in comparable European countries and pitched at a level that the State simply cannot afford. The numbers in the public service are not out of line but the salary levels and pensions are. Rather than tackle the real problem, the Government is reducing the numbers in the public service. So, the State will have to do with thousands fewer nurses, teachers, gardaí and whatever so that the existing public sector salaries and pensions can remain untouched. There is no way front-line services will not be adversely affected.
Mr Howlin talks a lot about the benefits that public sector reform will bring. But the unashamed lack of departmental co-operation with his comprehensive review of expenditure is indicative of the hill that has to be climbed. Meaningful reform – of work practices and pay – is urgently needed. Has this Government, with its thumping majority, got the courage to insist on it?