CUTS OF €1.4 billion across a range of State services have been unveiled by Minister for Public Expenditure and Reform Brendan Howlin in the first leg of Budget 2012.
Mr Howlin has avoided some of the major cuts that featured in pre-budget speculation and required savings will be made instead through a series of smaller adjustments across a wide range of services mainly in health, social welfare and education.
The Department of Health is taking the biggest cut of €543 million, followed by social protection with an adjustment of €475 million and education with €132 million.
The cuts in social welfare are less than anticipated, and the €475 million figure is some €190 million less than that projected in last year’s National Development Plan.
The outcome reflects a victory for Minister for Social Protection Joan Burton whose department was initially expected to produce cuts of €750 million.
However, following a series of leaks from her department about the likely impact of a range of potential cuts, that figure ended up being considerably lower.
Basic social welfare rates have not been touched but a number of changes have been made to eligibility limits for individual schemes.
Minister for Health James Reilly has also avoided some of the spectacular cuts which he told the Fine Gael and Labour parliamentary parties could be on the agenda but his department has still ended up with the biggest cuts of all.
Health insurance premiums are expected to rise by a substantial amount as a result of the decision to charge for private patients of beds in public hospitals. It is also expected that 650 long-stay beds will close as a result of cuts.
Minister for Education Ruairí Quinn has increased registration fees for third-level students by €250 despite an election pledge not to do so but he has protected the pupil teacher ratio in primary and secondary education, with the exception of private schools.
He also announced plans to target farmers and the self-employed by introducing a new capital assets test for student maintenance grants from 2013 which will take account of the value of certain capital assets as well as income. Minister for Justice Alan Shatter has announced the closure of 31 Garda stations and cuts of €79 million in Garda overtime.
At the beginning of his speech to the Dáil yesterday Mr Howlin said he was conscious that the last Minister who stood up in the chamber to announce spending cuts was the late Brian Lenihan.
“I believe that it is appropriate that his commitment to his country and the public interest should be acknowledged here today,” added the Minister. He went on to say that there was no hiding from the fact that Government must take very difficult decisions but they had to be taken in the long-term and strategic interests of the State and its citizens.
“As a Labour Minister I never expected that I would be making the type of announcements I am making today. We have been forced to make difficult and unpalatable decisions. But we, as a Government, are committed to being honest and upfront with people in the hard choices that we must make.”
Mr Howlin said the country had suffered the greatest economic crisis in living memory leading to a large fall in exchequer revenues.
Fianna Fáil spokesman on public expenditure and reform Seán Fleming expressed support for the overall financial parameters of the package but he criticised a number of the specific cuts, arguing that they would cost the economy more jobs.
“From the Minister’s perspective, a positive point is that his spin-doctors won, in that the cuts are not that obvious until one reads the small print and the Minister has been very clever in ensuring it will be difficult to see them immediately.”
Mr Fleming said the Minister had introduced a number of swingeing cuts but the biggest cut of all was a cut in employment. “For example, the changes relating to the redundancy scheme will force employers to make people redundant tonight before the new rates come in, in order that they can claim back the payments.”
He said that when taken in conjunction with the VAT increases to be announced today, the only outcome would be to cut jobs. “While I understand the Government is obliged to make savings, the biggest loser should not be the 450,000 people in receipt of unemployment benefit.”
Sinn Féin spokeswoman on public expenditure and reform Mary Lou McDonald accused Mr Howlin of targeting the vulnerable and low and middle income families with the same failed austerity budgetary measures as pursued by Fianna Fáil.
The second leg of the budget will be announced today when Minister for Finance Michael Noonan outlines how he will raise the €1.6 billion required in additional tax revenue.
MAIN CUTS
CHILD BENEFIT
Saving: €43m
Reduction in benefit for third and subsequent children to standard rate of €140 a month
FUEL ALLOWANCE €51m
Availability of scheme cut from
32 to 26 weeks
RENT ALLOWANCE €55m
Overhaul of scheme
JOB SEEKERS €5.9m
Changes to eligibility for part-time workers
DRUGS PAYMENT €12m
Increase in the monthly threshold from €120 to €132
HEALTH INSURANCE €143m
Big rise in premiums to follow new charging arrangements for use of private beds in public hospitals
HOUSEHOLD CHARGE €160m
€100 per home
THIRD-LEVEL FEES €18.5m
Fees increase by €250
GARDA €79m
Cuts to overall budget, including closure of 31 stations
SCHOOL TRANSPORT
Primary school bus charges doubled from €50 to €100