Ireland today introduced a "slash and burn" budget aimed at cutting €4bn (£3.6bn) in public spending, including pay cuts for public servants and lower unemployment benefits. The government has to plug a €12bn hole in public finances over the next three years. Brian Lenihan, the finance minister, said his budget would "send a signal to the rest of the world that we are able to put our house in order". Lenihan said his main objectives were to "stabilise the deficit in a fair way, safeguard those worst hit by recession and stimulate jobs".
He told the Dáil that the "worst was over" and Ireland's economy was well placed to recover. In the past 12 months, Ireland's GDP fell by 7.5% to around €191 billion eurosbn.
The €1bn reduction in public sector pay includes a 5% salary cut for those on €30,000, and 15% for higher-paid civil servants.
Unemployment benefit for those aged 20 and 21 will be reduced from €204 to €100 per week. Those aged 22 to 24 will now receive €150 per week. The reminder of the unemployed would only have a €17 per week reduction. The Irish government will also cut €16 from child benefit, although families on social welfare will be excluded from the cuts.
Irish ministers will also take a 15% pay cut, while the taioseach, Brian Cowen, will take a 20% reduction in his salary – a cut of €57,117 to €228,466.
One group exempt from one of the most draconian budgets in the republic's history were pensioners. Lenihan announced that the pension would not be changed.
Lenihan also revealed that €1bn would be cut from government capital spending projects.
In order to stem the flow of southern consumers shopping in the cheaper sterling zone in Northern Ireland, Lenihan said there would be a reduction in excise duty on alcohol. The price of beer and cider would be reduced by 12%, and 16% was cut from the price of a bottle of wine.
Border towns in the north have been flourishing in 2009 thanks to the inflow of southern shoppers seeking bargains. Most of the cross-border trade has been southerners buying cheaper alcohol in the north.
To placate Fianna Fáil's junior partner in the ruling coalition, the Greens, Lenihan introduced a carbon tax of €50 per tonne, with the price of petrol and diesel rising overnight. The tax on home heating oil, coal and peat would be imposed in 2010.
Ireland's main opposition party, Fine Gael, denounced the measures as a "joyless and jobless budget".
Sources in the ruling Fianna Fáil party told the Guardian they were confident the budget would narrowly pass through the Dáil despite misgivings from some party backbenchers and a number of independents.
Copyright Speakers Corner 2016