Ministers and backbenchers braced for budget backlash

 

Public anger at the measures in next month’s budget is likely to be intense

WITH JUST 10 days to go, it is possible to piece together an initial picture of the likely headline features of next month’s budget. A survey of recent speeches and media interviews from Ministers, together with an examination of news pieces filed in the last week or so by a selection of usually authoritative political and economic correspondents, suggest that the following are likely to be the key features of the budget speech.

The Government appears set to introduce an across-the-board cut in the rate of child benefit. It seems this will be cushioned for lower-income households by compensation in child-related social welfare payments or in the Family Income Supplement. It seems that there will be an even more severe cut in child benefit for wealthier households, or at least those households identified by the Revenue Commissioners as earning more than €100,000 a year. Recent remarks by the Taoiseach suggest that in seeking further savings in the welfare budget the Government will exempt old age pensioners.

There is, it appears, some possibility of achieving savings by reducing the range and extent of ancillary entitlements of which welfare recipients can avail. If there are to be savings of the order required in the welfare budget, then cuts will have to come in the form of a cut in the basic rate paid to the unemployed and all other recipients other than those on the old age pension.

The Government has already indicated that it wants to save €1.3 billion on the public sector pay and pensions bill. The rush of retirements of teachers, gardaí, Revenue officials and other public servants suggests widespread belief that public sector severance packages will be cut or taxed in the budget. The general ban on public sector recruitment introduced more than a year ago, together with the non-renewal of temporary contractors, will also save money by containing and then cutting public sector numbers.

There will also be savings achieved by freezing increments or reducing or removing some allowances but, as of yet, it appears that no significant progress has been made in talks with the public sector unions on how the balance of the €1.3 billion could be achieved.

All of which suggests that notwithstanding this week’s public sector work stoppage or even a similar stoppage next week, the Government is going to cut the basic rate of public sector pay. Most of the media reports suggest this will be done by seeking a larger cut from better-paid public servants. However, a cut of some form from all public sector pay packets appears inevitable.

A cut in the order of half a billion in the capital budget has also been reported. The implementation of some of the cuts in funding for schemes and programmes and the abolition or amalgamation of others mentioned in the McCarthy report are likely to make up the balance of the €4 billion sought.

Taxation changes are likely to be confined to the introduction of a carbon tax. Most reports suggest the question of whether or not there would be an extension of the tax base by bringing more lower-paid workers into the tax net is still unresolved at Cabinet, with the majority view tending to be against such a change because it would only serve to narrow the gap between being on social welfare and working.

The fact that the likely shape of the budget has been so well-trailed in the public domain is an inevitable consequence of the wider circle of persons who have been involved in shaping this year’s budget. Of course this also arises because of the need to prepare public opinion for the severity of the cuts.

It would be an error, however, to assume that advance knowledge of how the budget is likely to impact on them will automatically engender anything approaching public acceptance of these proposals.

The details of The Irish Times/Behaviour Attitudes poll published this week can only have made the Government even more nervous about the political consequences of the actions it now looks set to take. More than two-thirds of those surveyed told the pollsters they were opposed to welfare cuts. Among lower-income respondents, the opposition to such cuts was as high as 80 per cent. The picture of attitudes to cuts in public sector pay cuts is more complex. Some 56 per cent say they oppose such pay cuts but, as one would expect, opposition among public sector earners is overwhelming.

There is a naive view in some quarters that the public have become resigned to the need for the harsh measures likely to be delivered in this budget. The public debate in recent weeks has been calmer and more rational than that which surrounded last April’s emergency budget and last December’s budget. However, the anger at this year’s budget is likely to be even more intense.

It is easy for economists, international agencies or domestic commentators to call for the implementation of necessary measures. Most of those calling for such steps are from sectors of society most likely to be insulated from the harshest of the cutbacks. It is politicians rather than commentators who are accountable to the electorate for implementing these measures.

It is Government Ministers and backbenchers who must face the further political backlash to which this budget will inevitably give rise. The compliments of future historians for addressing the economic crisis will be of little comfort. The plaudits of present-day commentators or editorial writers will be of even less assistance.