‘Bankers have no right to call for welfare cuts’

HIGHLY paid officials in the Central Bank and other financial institutions have no right to argue for social welfare cuts, according to Fr Sean Healy of Social Justice Ireland.

In a scathing criticism of the bank’s support of An Bord Snip Nua’s proposals for swingeing spending cuts in the next Budget, Fr Healy said social welfare increases in recent years have led directly to a reduction of the poverty level.

In its latest quarterly economic bulletin, the Bank said social welfare payments increased by 100%, child benefits quadrupled and public sector pay doubled from 2001 to 2007.

Nonetheless, 16% of Ireland’s population lives in poverty, Fr Healy stressed.

“This means they live with incomes less than €12,000 for a single person or less than €28,000 for a household of four. It ill-behoves officials in the Central Bank or any other institution who receive many multiples of this level of income that they argue for cuts in the paltry income of Ireland’s most vulnerable people,” Fr Healy added.

Social welfare cuts are unnecessary as the budget parameters set out by Government can be met by other means, he said.

“The Government’s own documentation states that cuts of €1,500m will be required in current expenditure.

“This requirement has been constantly misrepresented in public commentary in recent weeks when media reports and commentators have stated that cuts of €4,000m are required.

“This misrepresentation has been exacerbated by the statement from the Central Bank yesterday arguing that welfare had risen so much in the past decade it should be reduced,” Fr Healy said.

Meanwhile, the Cabinet has announced it will meet every Thursday between now and December to finalise the budget’s projected €4bn package of cuts.

A Government spokesman confirmed the Cabinet would continue to use the established Tuesday meetings to handle routine business and devote the Thursday meetings to budgetary matters.

Tom O’Connell, assistant director general of the Central Bank, said when looking at future government spending cuts “we have to bear in mind where we’re coming from” in those areas that grew so strongly during the boom, he said.

Mr O’Connell refused to go into specifics, but in its quarterly bulletin the bank said the Commission on Taxation’s call for a property tax, if implemented, would give the State a stable source of revenue and that such a tax would be “both equitable and practical”.

“It is important that the user pays principle becomes ingrained in Irish society, and in this context, the proposals for a carbon tax and for water charges appear reasonable”, the bank said.

The meltdown in the economy which will have declined by 14% in the three years to the end 2010 has put huge pressure on the need to cut public spending to stabilise the national debt. With the government having to borrow €20bn this year to run the country, savings have to be made to ease pressure on borrowing, it said. “This unavoidable process of adjustment will involve difficult choices, both in terms of revenue and expenditure decisions emphasising the importance of reducing the cost of providing public services and finding ways of delivering these services more efficiently”, said the bank.

Mr O’Connell also rejected the suggestion of ICTU that we should seek to have the five year period of financial adjustment extended beyond 2013.

That would give the wrong signals to the markets and result in the State being forced to pay more for its mounting debt burden, he said. Overall, the bank said the decline in the economy is moderating and it will be 2011 before the economy delivers a full year of growth.

Recovery will start next year, but the economy will decline by 2.3% next year while unemployment will peak at 14% lower than the previous estimate of 16%.

Dr Mary Murphy, spokeswoman for The Poor Can’t Pay campaign group, said the Central Bank was behaving entirely inappropriately and interfering in politics. Decisions about whether the rich or the poor carry the burden of the economic crisis is a political question,” she said.

“It is not the job of the Central Bank to say that the poor should pay for the failures of our banking system.”