OPINION:Brian Lenihan inflicted plenty of pain yesterday - and promised that there will be yet more of the same in the years to come, writes Mark Hennessey
HEAVY RAINS fell upon Leinster House yesterday morning. The rain matched the mood as Brian Lenihan put the final touches to his Budget preparations.
TDs - and the nation - had been prepared for pain, and Lenihan delivered it in spades: a 1 per cent income levy, increased charges and new ones.
Faced with declining tax revenues, rising spending and a ballooning deficit, Lenihan yesterday had to slow down the spread of the economic illness.
Next year, he warned, will be worse. The remaining years of the Government's terms will not be much better, and even that depends on the world's economy improving.
In 2009, even after yesterday's cuts, Ireland will borrow for day-to-day spending and cut down on infrastructural spending - while the national debt will double by 2011.
And the situation next year would be even more bleak bar the Minister's decision to pull forward the payment of €500 million worth of corporation taxes.
Given the scale of the problems, it was unrealistic ever to expect - if anyone did - that a cure could be delivered in one Budget.
Yet, when the Minister sat down shortly before 5pm, Fianna Fáil TDs stood in unison to cheer enthusiastically, and continued to voice belief in him late last night.
"Ye'll not be saying that after you get home," quipped Fine Gael's Michael Ring, conscious that Lenihan has placed scores of landmines in front of the party's TDs.
Fianna Fáil TDs have clung to the belief that while a recovery would take longer than first hoped, it would still come in time for the next Dáil elections.
Lenihan has offered them little reason to continue believing that; even if they appeared to be rather slow to absorb the message last night.
Meanwhile, Fianna Fáil councillors may despair about the impact of Mr Lenihan's first Budget on their own election chances next June.
While the public will face higher prices on petrol, cigarettes and alcohol immediately, the real pain will not become evident until the new tax year begins in January.
And then the middle-class wrath may become only too visible, as they face the 1 per cent levy, cuts in tax reliefs on medical bills and higher VAT and Dirt bills.
Audible, too, will be the opinions of the elderly, particularly those over 70 who will lose, or not qualify for a medical card, which will instead be awarded by means test.
The decision to curb the numbers qualifying, though it will cause ire, was, perhaps, inevitable, given the escalating costs of the scheme.
Under current rules, doctors get four times more to treat a patient who did not have a medical card before they were 70 than those who had one all the time.
Some of the Minister's targets will cause exquisite pain far beyond the revenue raised: notably the decision to let councils levy a €200 bill on holiday home owners.
Once upon a time, such a move would have affected a tiny number of households. Today, after a decade of prosperity, the pool is much larger.
Such a tax - though there is much to say in its favour - will only ever go upwards afterwards. Lenihan has, perhaps, roused a powerful and vocal enemy.
Pensions, up by €7 a week, will not match likely inflation, while the €2 increase in the free fuel allowance is meagre at a time of accelerating fuel bills.
The 1 per cent income levy on all earners will yield more than €1 billion and Lenihan made no pretence of saying that it is a short-term measure.
Clearly, it is not.
Levies are not new tactics for governments. Taxpayers already pay a health contribution, while Bertie Ahern imposed a general levy in 1993.
Interestingly, however, Ahern was more cautious back then than Lenihan, since the former exempted the lower-paid, which did not happen yesterday.
Lenihan's decision not to set a lower threshold, though he defended it last night, is dangerous politics given the enthusiasm with which the Opposition has seized upon it.
Levies by their nature are regressive, while the effect is accentuated by the Cabinet's decision to raise the top rate of VAT by 0.5 per cent. The tightening of qualifying rules for unemployment benefits appear designed to encourage foreign unemployed to return home, even if that will be, no doubt, denied.
Last night, Fianna Fáil TDs' confidence that the Budget, however unpalatable, could be sold to voters rested largely on the fact that higher earners will pay most.
Mr Lenihan has ordered that those earning more than €100,000 will face a 2 per cent levy, plus pension contributions curbs and higher capital gains taxes.
In reality, it is middle Ireland that will pay; and this group will have little interest in knowing that higher earners are paying more.
Some of the decisions create a fairer tax system, particularly the decision to allow tax relief for medical expenses at the standard, rather than top rate.
However, fair does not mean popular, and this one has become an increasingly-used measure by middle-income earners to cut their tax bills.
Despite a welter of speculation, Lenihan has, however, not abolished, or, indeed, even significantly increased the PRSI ceiling, raising it only from €51,000 to €52,000.
The sharp jumps in hospital charges, however, will again hurt middle earners most, particularly the doubling of the accident and emergency department call-in fee.
The Government's withdrawal from approximately half of its decentralisation plans will cause its TDs grief in rural constituencies.
And it will leave some departments in a messy half-way house, with some advance parties of officials in danger of being left stranded.
The pre-Budget declarations to cull State agencies have been honoured in numbers terms, if not in terms of the importance of the organisations affected.
And Mr Lenihan has talked, but not yet delivered, on talk to cut the State's payroll, apart from going ahead with a commitment to retire surplus Health Service Executive staff.
However, a serious voluntary redundancy scheme for the wider public service now seems to be an inevitability if he is to be judged by his words.
For now, Lenihan has chosen to wrap the global financial misery around him like a cloak - and to call upon the public's patriotism.
Much of it will be needed. Ireland's situation has been dramatically worsened by the global crisis. But the cause is home-grown.
Up to now, large elements of the public have wanted tough action from the Government. Now that they have got it, they may not like it.