Belfast Telegraph

€1,000 a year worse off: families in Republic of Ireland feels pain as cuts are unveiled

Families in the Republic will be as much as €1,000 (£858.15) a year worse off under massive austerity cutbacks.

In the first half of an unprecedented two-day Budget announcement, the Irish government slashed child benefits as well as winter fuel, disability and back-to-school allowances.

Student fees were hiked up along with medical and school transport costs while a flat-rate property tax was introduced in the €1.4bn (£1.2bn) package.

Brendan Howlin, Minister for Public Expenditure and Reform, warned there was no magic wand but claimed public support for the potentially crippling savings.

“It provides the stability necessary to plan and work our way out of this crisis. It won't be easy, and we will not resolve our problems overnight,” he said.

“No government, whatever its numbers, wants to be the bearer of bad news. But our options are extremely limited. The public knows this. It is wary of those who offer simplistic options.”

The hard-hitting cutbacks will be compounded today by a 2% VAT increase, fuel and motor tax hikes and new levies for employees holding property or stock investments.

A family of four can expect to suffer a €432 (£370.72) a year cut to their child benefit payments and soaring health insurance premiums as the state pulls out of private health subsidies — expected to force up insurance fees by about €500 (£429.08) a year.

The raft of other spending cutbacks — spread wide across allowances and government departments — will take more than €1,000 (£858.15) a year out of average family budgets.

Mr Howlin claimed weekly dole payments had been saved from the cuts but then revealed part-time workers will see their benefits targeted, ultimately falling by a fifth.

Some of the most hard-hitting measures — enforced as part of Ireland's €85bn (£72.94bn ) EU-IMF bailout loan programme — slashed disabled allowances by 60% in some cases, cut winter fuel payments by a fifth and forced students to pay €2,250 (£1,930.84) to register at college.

Fianna Fail spokesman Sean Fleming said: “There are a number of decisions that you have announced here that are simply unfair and unpalatable.”

Mary Lou McDonald, Sinn Fein public expenditure and reform spokeswoman, accused the Fine Gael-Labour coalition led by Enda Kenny (pictured) of smashing promises.

“There's no chance of this Government giving a ‘times are tough' pep talk to judges, hospital consultants and former failed Taoisigh on big buck pensions.”

Mr Howlin rejected accusations that he was targeting those on social welfare.

“We can only deal with the reality that we have. It's the real figures. That's the reality we are facing now,” he said.

Q & A

Q Did the Irish government have any real choices in the cuts?

A No. This is an EU/IMF budget. They don't have any choice, the name on the label is meaningless, this could have been a Fianna Fail or even a Sinn Fein announcement. It would have been exactly the same.

Q Who will be worst hit by these cuts?

A Just about every sector of society. We are talking about hundreds of thousands of people. But it's definitely hitting the less well off because it is the less well off who depend on welfare payments and publicly-financed schemes.

Q How can the Irish government say it is not cutting social welfare rates while changing the way jobseekers benefit is calculated?

AThis is a worry. It would be the most disingenuous statement by a minister in years to say I haven't cut the rates if the absolute value of the payment has dropped significantly.

Q And to declare child payments will be protected although rates will be “standardised” over the next two years?

A To standardise generally means a drop.

Q Has any section of society escaped unscathed?

A I think the elderly seem to have escaped slightly this time, the actual rates of entitlements for the likes of widow pensions haven't been cut. But fuel allowance cuts mean some people will have cold homes.

Q How would you sum up the thinking behind the spending cuts?

A The strategy has been to avoid controversy by reducing everything by 1, 2 or 3% across the board. It's a politically savvy approach. It's a bid to increase solidarity by making it harder for any one group to feel aggrieved.

Q What impact will these spending cuts have on the economy?

A We only have half the picture. We will need to wait for part two before we can start doing the full calculations.

Q And were there any |surprises?

A I was surprised not to see more cuts to the likes of military expenditure. I was amazed we didn't see more root and branch reform or extreme examples like phasing out some of the institutes of technology, or a review of some FAS or social welfare programmes.

Q How relevant are these cuts against the backdrop of the Eurozone crisis and international uncertainty?

A All this may be for nothing. Everything comes down to exports. If we don't have that, then these cuts won't matter.

Questions by Brian Hutton, answers by University of Limerick economist Stephen Kinsella

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