Unfair and Cynical Budget Again Hits Hard-Pressed Families the Most

Once again the Taoiseach has delivered a budget speech full of empty self-praise and political sound bites which completely ignore the reality of what his government has just proposed.

This is a bad and damaging Budget.  Within tight constraints there were still choices to be made – and once again this government chose a mean-spirited and regressive approach.

Groups already feeling the most pressure are being targeted again and the government has failed to produce any credible approach to job creation.  The health sector is to be driven deeper into crisis because of a mixture of chaotic policies and increased cuts – while older people are to lose supports which they need at their most vulnerable moments, when they are sick, bereaved or living alone.

The presentation and content of this budget is a powerful demonstration of a government which politics first in everything it does.  It sees its main task as working to claim credit for recovery rather than actually doing anything to deliver it.

It has delivered regressive budgets which have cut growth, cut employment and increased unfairness.  It is only hitting overall fiscal targets because of developments in Europe.

From the very beginning this has been a government obsessed with public relations.  It puts immense amount of time into spinning every issue.  No effort is spared when it comes to trying to manipulate headlines.  Ministers are going around Leinster House in search of opportunities to present themselves as national heroes.

While those who are willing to live within the bubble may not have seen through this yet, the public have long since understood that nothing this government says can be taken at face value.

You cannot accept on good faith any claim members of this government make because when you look at the facts a very different reality always appears.

This has happened yet again with this Budget.

Yesterday the two ministers stood up and, in short gaps between long passages praising themselves, they claimed that they had put together a fair budget.  A budget which would create jobs. A budget that would leave people’s incomes intact. A budget which would actually deliver new and better public services.

It was one of the most cynical presentations of a budget in our history as well as the most leaked.

The tradition of the Irish Budget day is that Ministers are willing to take the good with the bad.  They accept the responsibility to show people exactly what they can expect next year and they present the figures in a straight way.

Yesterday the government decided to abandon this approach and to try to hide the facts of this budget behind bluster and misleading statements.  The leaflets distributed in support of the Budget are designed to misrepresent the impact of the Budget not explain it.

In area after area claims have been made about improving things when the detail buried within the hundreds of pages published yesterday shows the opposite.

Most areas where ministers claim to be expanding support are in fact being cut. Third level funding for example is being cut yet the Minister failed to mention this in his speech.

Families who were told that their incomes will be intact are actually being hammered.

Every single area where an increased allocation is claimed is being funded because of an equal or greater cut in a related area.

This should be no surprise to anyone because it is by now an iron law of this government that when it is on shaky ground it goes on the attack – and both Minister Noonan and Minister Howlin included partisan political attacks in the first paragraphs of their speeches.

When your main message of the day is to compare your opponents to the Famine and Oliver Cromwell it shows that you know you have no real story to tell.

If this government believed its own claims about the Budget and its record you can be assured it would be spending a lot less time talking about Fianna Fáil.

Overall Adjustment

Unlike members of the government when they were in opposition, we have been consistent in supporting reasonable fiscal consolidation.

Our proposal for next year was for a slightly smaller overall reduction.  However we proposed a significantly different approach to reaching the overall target.  It was absolutely possible to produce a budget which his essential social supports less and was substantially more progressive.

The government’s choice has been to give primacy not to the needs of the public but to the needs of Labour and Fine Gael’s next election campaigns.

Fine Gael in particular has decided that it wants to claim to have not raised income tax – even on the very wealthiest in society.

This has forced an approach where the only way to achieve agreed targets is to raise money through taxes and charges which take no account of a person’s ability to pay.

This budget has marked a new development in relation to the issue of fairness and the overall programme of fiscal consolidation.

Firstly, the budget documentation goes to great lengths to hide the impact of measures on individuals and their families.  Nowhere is it shown what the impact of doubling the property tax, or cutting reliefs and supports will be on their financial situation.

You are falsely claiming that with the sole exception of a family with two children, a stay at home father and self-employed mother earning over €150,000 and the reduction of their health insurance relief, every other family type presented is due to sail happily through next year with their income unchanged.

We heard more of this from the Tánaiste this morning when he claimed to have delivered a budget the Labour Party could be proud of.  He has steadfastly refused to acknowledge what anyone can see – this government has a 100% record in delivering unfair and regressive budgets.

You can massage the budget documentation all you want, the public are not being fooled.

Even more cynically than trying to hide the detail, the government has now started including measures adopted before they were in office in their own list of claimed achievements.

Starting at the Fine Gael Conference on Saturday and continuing through a mounting number of media appearances, speeches and briefings, the government is praising itself for bringing the budget under control.  Even for this government, which puts self-praise into every minor press release, this is shameless.

At the end of next year 70% of the total fiscal adjustment will trace solely to budgets passed by this House before March 2011.

It takes some special level of cynicism to claim credit for measures you voted and campaigned against.

This exact same approach is also found in the Ministers’ approach to taxation.

The Budget leaflets and briefing notes produced yesterday say that the government is delivering a “fair and progressive system” which is actually “one of the most progressive in the developed world”.

What they hope is that nobody gets around to looking at the details of budgets over the last six years to see where this progressivity comes from.

Every single improvement in the progressivity of our tax system was put in place before this government took up office.

The three previous budgets were weighted heavily towards making those who earn the most pay more – and the three Fine Gael/Labour budgets have reversed the trend by implementing all new taxes on a regressive basis.

The government says that the net tax being paid by the top 1% is up significantly – which is a welcome fact – what it doesn’t say is that this is solely because of measures put in place a few years ago.

Yesterday they claimed to be hitting the highest earners while the reality shows that in three budgets out of three Labour and Fine Gael have gone out of their way to protect the highest earners.

In the realm of rewriting history the government is now trying the unique strategy of both claiming things it voted against and attacking things it supported.  Minister Noonan’s comments concerning the bank guarantee sit ill with the fact that he and his party sought outside advice before coming in here and voting for it.  Equally both Fine Gael and Labour like to ignore the fact that one of the first things they did in government was to renew it.

The House should also note how the government last week sent lawyers into the High Court to argue that the promissory note deal was “essential to protect the financial stability of the country”.  When the “Gilmore for Taoiseach” posters were only settling in to their new home in Minister Burton’s garden shed, Labour liked to talk about how they would refuse to pay the notes.

Now that the party is in government it calls them “essential” and has paid them in full.

Economic Growth

The key to sustainable growth in employment and secure public finances is a return to strong growth.  So far the government has missed every one of its growth targets.

Two years after the Taoiseach went on national television to declare that his government had already restored confidence and growth the economy is 5% smaller than he and his colleagues claimed it would be.  The practical impact of this is fewer jobs and over €1.5 billion less in public revenue – equivalent to 80% of the spending cuts and tax increases announced yesterday.

The most important reason why these damaging budgets have not stopped us reaching the overall fiscal target is that the European Union and its institutions have adopted a range of dramatic changes to their policies.  The interest rate changes negotiated for Greece and extended automatically to Ireland and Portugal have been vital.

As is acknowledged by everyone except the government, the availability of these policies in 2010 would have prevented wither Ireland or Portugal from needing any bailout.

In their private briefings for journalists ministers love to talk about how they implemented complex strategies to secure these interest rate reductions.  Of course they ignore the embarrassing fact they were looking for less than was given – and it was other governments which drove agreements.

The promissory note changes implemented by the Central Bank and noted by the ECB have helped significantly in this budget.  Those gains are not fully secured yet.  If the ECB wishes it can ask the Central Bank to sell the bonds it has acquired.

This would immediately remove any benefit from the deal, because the interest we pay on these bonds comes straight back to the Exchequer.  This is worth €1 billion per annum and it should be made more certain.

We also need to start demanding that we get equal treatment with Greece in relation to ECB holdings of our bonds.  Greece has all ECB profits on its bonds returned to it.  If this happened here it would be worth over €1/2 billion a year.

This would cover over 80% of the cuts planned next year for the health sector.

Instead of wasting time on self-congratulation the government should start addressing this unfinished business which means that Ireland is not yet receiving fair treatment.

Each of the government’s budgets has undermined growth far beyond the direct impact of the overall fiscal consolidation.  For example the levy on pension funds has removed billions from private sector investment.

While we’ve heard ministers loudly claiming the return of growth as the result of their leadership, the same people were silent when the growth evident in 2011 was turned back into recession earlier this year.

I hope that the new growth targets are met – it is also possible that with the right policies they could be exceeded.  They are slightly above the consensus of forecasts both national and international, though well below what was predicted by the government last year and the year before.

Elderly

This Budget will be remembered for the mean spirited way in which it has targeted particular groups and social services.  As is now undeniably clear, the elderly will bear a major brunt of the government’s choices.

The list of cuts appears designed to make mush worse the very moments when an elderly person is most vulnerable.

A government which is delivering leaflets talking about universal care for all has decided to take universal care from at least 35,000 people over 70. They are also faced now with a fivefold increase in prescription charges since 2011.

In their homes they will lose support for being able to keep in contact with family or have personal security alarms.

When their partner dies, the state will no longer be there to help them to hold a decent funeral.

The government is now reversing over forty years of progressive policy – and it is doing so in order to protect the very wealthiest in our society.

We’ve just been through a campaign where the Taoiseach talked about how important keeping promises are to him.  If he could put aside the empty spin of his speech for a moment he might remember the solemn promises he gave the elderly that if elected he would always give them priority.

Protesting against cuts significantly less severe than these, and in a much tougher budget than this, he joined demonstrations on Kildare Street to reinforce his commitment to the elderly.

Health

As communities throughout the country have found out within weeks of the election, the solemn promises of the Taoiseach and his colleagues to their local health services counted for nothing.

Since then Minister Reilly has spearheaded a health policy which is steadily dragging the sector into a deeper and deeper crisis.

This Budget threatens to turn 2014 into a year of chaos and declining service in the health system.

The cynicism of yesterday’s speeches was on full display in the failure of Minister Howlin to state to the House that he was imposing cuts of €666 million on the health system.

He talked about a little extra here and a little less there, but covered up the reality which can only be found buried in the background documents.

In the lead up to the Budget journalists were told that Health was getting some extra flexibility and that there would even be good news.  Minister Reilly, with the ever-present personal backing of the Taoiseach, was said to be one of the winners of the process.

With a €666 million spending cut and € 127 million to be taken out of health insurance – this is about as bad an outcome as Minister Reilly could have achieved.

Since his first day in office Minister Reilly has claimed to be delivering improved health services.  No matter what evidence has piled-up around him he has kept to the mantra that we shouldn’t believe the facts we should just listen to him.

Well no one is listening any more – they are just shocked at how much damage can be done in so short a period.  And let no one be in any doubt – this Budget and the structural changes proposed for next year mean that for the health system the worst is yet to come.

The profoundly cynical attempt to cover up the massive heath cut with the announcement of GP cards for under-5s was stroke too far even for this government.

They were expecting praise for allocating €37 million to new scheme.  While no implementation details are available and cost are actually unknown, it was something we were supposed to welcome as the first step towards universal GP care.

And let’s be clear, free GP care for under 5’s is in no way a “first instalment” of a new universal provision.  It involves a fraction of the system, is not insurance-based as the government says the whole system will be, and it is being funded through ending current provision for an even larger group of people.

Now we know the truth – this minor but welcome improvement is to be accompanied by the largest ever assault on support for primary healthcare in this country. Over 100,000 people are to lose access to a medical card and everyone is to face steep increases in Prescription Charges and have access to fewer treatments.

The Prescription Charges increase is not just another broken promise from before the election – Minister Reilly’s public announcement in office was to say that he was actually about to abolish all Prescription Charges.

In total, €236 million is to be taken out of primary care.  To produce leaflets looking for thanks for giving a small portion of that to a new scheme shows just how out of touch and cynical this government is.  It’s obviously this mentality that had Minister Noonan stating last night that there really isn’t a problem at all for needy people who want medical cards.

Yesterday’s claim by Minister Howlin that he is protecting frontline services is obvious nonsense.  These services are already in crisis and this is due to get worse because of policies to be rolled out next year.

The new funding model which the government has announced means that many hospitals will begin to see a major fall in their revenue.  This will immediately lead to services being under pressure to close.

577,000 people will also have to deal with more expensive health insurance.  Many just won’t be able to pay and will add to pressures on public funding.

Employment

In no way can this be described as a ‘Budget for Jobs’.  The likely impact of all of the specific employment measures announced yesterday is not enough to merit any change whatsoever to the existing employment projections for next year.  €1 million for a Start Your Own Business scheme is more about claiming to be doing something than actually having an impact.

The government has now got strong form in terms of talking about job creation while actually costing jobs.  The “Jobs Budget” of two years ago had so little impact that ministers stopped talking about it within months.  In fact it cost jobs because it took investment money out of the economy and it failed to deliver key schemes.

This Budget does the same.  It increases the jobs-destroying levy for next year and makes it permanent after that.

It also cuts €15 million from the capital allocation of the job creation agencies.  That means less support for investment projects and knowledge generation.

The Orwellian language of this government is now getting out of hand – with ministers yesterday presenting as investments programmes that are actually being cut.  The small investment in under-5 GP cards accompanied by a massive cut in medical cards is just one example of this.

We were told during the speeches that there would extra investment for roads coming from the National Lottery contract.  Hidden in the background documents was a much larger cut of €46.5 million in road funding.

We were also told about increased funding for sport – but no mention of the large cut to the Sports Council.

The Tourism sector was, we were told, to be given a huge boost as an engine for employment growth – again no mention of the almost €13 million cut for tourism support.

Helping people into work is, it is claimed, an absolute priority of this Budget – but benefits are being cut for people who move from unemployment into work.

2014 was presented as the year that education was being given priority – with its role in economic development being particularly noted.  What they were silent on was large and indiscriminate cut being imposed on the third-level sector and the entrenching of other regressive cuts.

This will not just add another €250 to the student charge Labour promised to abolish, it will lead to significant cutbacks throughout the sector.

Tax

The most consistent untruth in this Budget is the claim that it will leave people’s income intact.  It will do nothing of the sort.

The Budget pushes ahead with the doubling of the Property Tax.  How does this not reduce family incomes?

This continues to be a tax which is too indiscriminate and ignores the real and deepening pressures faced by many families.  It takes no account of ability to pay or even whether a family is caught in a debt crisis.

By failing to recognise this, or to provide any measures to help the over 120,000 households in major arrears, the government is making a tough situation even worse.

The claim to have left incomes intact will also be felt by the 577,000 families claiming relief for health insurance, by single-parent families and families paying into pension schemes.

A Dishonest and Damaging Budget

In area after area this is a Budget which tries to hide its teeth.  This is the Budget where ministers were ready to hang out the ‘Mission Accomplished’ banner and declare themselves the saviours of the nation.  They even wanted people to praise them for supposedly helping out “hard pressed families”.

The truth shows a government which has chosen yet again to over-spin and misrepresent a regressive and damaging budget.

Within a tight framework, made tighter by their consistent failure to meet their own growth projections, they still had many choices to make.  This is a Budget which weights these choices against the most vulnerable in society and will do nothing significant to increase employment.

Each positive measure is balanced by a greater negative measure – in the case of medical cards, taking over five times more out of primary care than is being returned to fund the Budget’s main supposed give-away.

This government is not shaping recovery, it is standing on the side-lines waiting to claim credit for whatever turns up.

It continues to display new levels of cynicism in claiming credit for measures it opposed and attacking those it supported.

It has not even put on the agenda full equity for Ireland for its bailout debts because it is spending so much time patting itself on the back for securing what was available to other countries.

By making these three out of three budgets which takes no account of people’s ability to pay, and by now going after supports which are at the core of our social contract with the most vulnerable, the government is further damaging public acceptance of necessary reductions in spending.

This is a PR Budget by a PR-obsessed government.  It will cause unnecessary pain and do little to help our country to return to strong growth.