Spending on health, education and agriculture are to fall significantly next year but weekly social welfare payments are to be protected, Minister for Public Expenditure Brendan Howlin has announced.
In a speech to the Dáil this afternoon, Mr Howlin said the student contribution charge would increase by €250; the public sector pay bill would fall by €400 million; and that the fuel allowance season would be shortened by six weeks as the Government attempts to reduce expenditure by €1.4 billion (2.7 per cent) next year.
The three highest spending departments - health (down €543 million), social protection (down €475) and education (down €132 million) - are to absorb the brunt of the cuts with the votes for agriculture (down €105 million), transport (down €45 million) and environment (down €34 million) also effected.
Mr Howlin said the Government was taking “very difficult decisions” that were required to protect the “long-term and strategic interests of the State and its citizens”.
“We have been forced to make difficult and unpalatable decisions,” he said, “but we, as a Government, are committed to being honest and upfront with people in the hard choices that we must make.”
Among the measures announced are:
-The standardisation of the rates of payments of child benefit for all children to save €43 million next year
- An increase of €250 in the third level student contribution to secure savings of €18.5 million
- Fuel season to be reduced from 32 to 26 weeks to save €51 million next year
- Changes to the one-parent family payment to save €20.7 million
- Changes to the redundancy and insolvency scheme reducing employer rebate from 60 per cent to 15 per cent to save €81 million
- A review of rent supplement limits to yield savings of €55 million
- Reduce numbers and contain pay costs, to save €145 million
- Measures to reduce the price of drugs, such as reference pricing and generic drugs, and reduced fees for services to save €112 million
- An increase in the monthly threshold from €120 to €132 under the Drug Payment Scheme to save €12 million
- A reduction in capitation grants to schools by 2 per cent to generate savings of €7 million
- Reduction of costs associated with trainee and apprenticeship schemes will yield €19.2 million savings
- A 2 per cent reduction in core funding for higher education will secure savings of €23.6 million
- The closure of 31 Garda stations across the State and reduced hours at 10 others
Mr Howlin said the Government had decided not to reduce any weekly social welfare payments but that the "sharp reality that the Government is facing is that the level of social welfare expenditure now in place cannot be sustained from the funding base now available".
He said the payment week for jobseekers' benefit would in future be based on a five rather than the existing six-day week, generating savings of €5.9 million, and that from January 2013 employment on a Sunday would be taken into account when determining entitlement. Social welfare payments to part-time workers could fall by 20 per cent as a result.
The expenditure cuts, Mr Howlin said, reflected “the need to prioritise” and that decisions made were based on three guiding principles of fairness, jobs and reform.
He said the Government was committed to creating jobs and helping the long-term unemployed and that a Government Action Plan for Jobs would seek to help indigenous businesses to grow, attract foreign direct investment and improve competitiveness.
An allocation of €20 million for a new Labour Market Activation Fund - that was specifically targeted at the long-term unemployed - would deliver “upward of 6,500 places next year”, Mr Howlin added.
Elsewhere, the Department of Foreign Affairs spend on Overseas Development Aid is to be reduced by €52.9 million in 2012 and spending on the Garda is to fall by €79 million as a result of payroll and pension measures and the concentration of resources in some areas.
At a press conference this evening, Minister for Health James Reilly said the real cut in health service funding could be as high as €853 million. He said it was unavoidable that there would be cuts in services next year and that some community nursing units would be closed in 2012.
Fianna Fáil spokesman on public expenditure Seán Fleming said the Budget announcements were a "triumph of spin over substance" and that the proposals did not include "a single initiative to create a job".
Sinn Féin spokeswoman on public expenditure Mary Lou McDonald said Labour was "ripping up" a number of pre-election promises by supporting the proposals.
The Government is seeking to reduce the gap between expenditure and spending by €3.8 billion in the budget in an attempt to bring the general government deficit down to 8.6 per cent next year. The €1.4 billion of measures announced today coupled with reductions to capital spending of €755 million will generate savings of some €2.2 million.
Minister for Finance Michael Noonan will tomorrow unveil a range of tax proposals and revenue measures designed to raise a further €1 billion – with measures introduced in last year’s budget expected to generate the remaining €600 million when applied over a full year.
A 2 per cent increase to the higher VAT rate; a higher carbon tax charge; increased road tax; and the introduction of a property tax are expected to be among the major revenue raising initiatives but income taxes are to be left untouched.
Mr Noonan will outline the measures in a speech to the Dail at 3.45pm tomorrow.
