Taoiseach Brian Cowen has defended the tax hikes and spending cuts announced in yesterday’s Budget, saying the measures were necessary to provide a sustainable financial position for the country.
Speaking during Leaders’ Questions in the Dáil this morning, Mr Cowen acknowledged that there were sacrifices being asked of people.
But he insisted the approach had "to be sufficient to restore stability, yet measured such that it does not accelerate the economic slowdown".
“If we don’t make these decisions to cut services, as unpalatable as they are, then we put at risk not only the provision of those services but other services," he told the House.
“By beginning this process of correction now and sticking with it in the years ahead, we provide ourselves with the best means of protecting our prosperity in the years ahead,” he said.
But Opposition leaders criticised Mr Cowen for what they described as a “shameless” Budget which left the most vulnerable in society worse off.
Fine Gael leader Enda Kenny said the Budget revealed no plan and fixed no fundamental problems. “It was all pain and no gain,” he said.
Instead of imposing a levy on the banks which have caused enormous problems to the economy, he said the Government slapped "a levy on the mortgaged poor".
“The Government rewards initiative, commitment and hard word by a crude and open theft of the worker’s hard-earned cash,” he said.
Mr Kenny also said the decision to increase class sizes in schools was "a declaration of war" on middle-income families.
The move had driven a stake through Government promises to reduce class sizes and was completely contrary to its pledges to build a knowledge economy, he said.
He also said uncertainty over tax relief on medical expenses was causing consternation among people whose family members were in nursing homes.
Labour leader Eamon Gilmore said the Budget measures represented "a vicious assault on working and middle-income families".
Mr Gilmore said: "The budget is full of taxes, charges and levies targeted at middle Ireland, while nothing has been done to ask the high rollers to pay their fair share".
He said Minister for Finance Brian Lenihan’s Budget speech was “full of high minded waffle about patriotic action, but when you looked at the small print, that’s where you see the taxes and charges".
“The treacherous thirty cuts,” he called the measures.
Mr Gilmore said decision to abolish the automatic entitlement to medical cards for all over-70s would leave many elderly people “marooned with no medical card and no health insurance.”
He said elderly people who had stopped paying their health insurance on receipt of the medical card would now find it difficult to get adequate cover from health insurers.
“We have a hard-necked Taoiseach leading a shameless Government,” he said.
In one of the toughest Budgets in decades, Mr Lenihan announced the introduction of a 1 per cent levy on all incomes and the abolition of the automatic entitlement to a medical card for the over 70s.
An unexpected 10 per cent pay cut by senior and junior ministers failed to take the sting out of the Budget.
To promote enterprise in the Budget, the Government increased tax credits for R&D and introduced three-year tax exemptions for start-up firms. Among the green measures, tax relief was provided to clean up polluted sites while commuters were encouraged to cycle to work with tax incentives.
Up to 41 state agencies were axed or merged and the remainder of the troubled decentralisation plan was deferred until 2011.
In his Budget forecast for 2009, Mr Lenihan predicted 7.3 per cent unemployment and inflation to average out at 2.5 per cent.
Government duty hikes on cigarettes, wine and petrol have already come into force since yesterday's announcement. Increases in motor tax apply from January 1st while the €10 airport departure tax comes into effect on March 30th next year.
Minister for the Environment John Gormley will present his carbon budget to the Dáil at 3.30 this afternoon.
Meanwhile, the Irish Congress of Trade Unions (Ictu) will outline unions' response to the Budget at a 3pm press conference.
