€6bn: Scale of budget’s cuts and taxation

“WE’RE halfway there” – that was the message the Government desperately sought to spin after confirming that next month’s budget will impose a savage €6 billion of cutbacks and tax hikes.

The €6bn adjustment – which will hit the sick, the poor and every other sector of society – will be just the beginning of a four-year process that will seek to cut Government spending by €15bn.

Investor confidence that Ireland could pull off such a massive correction and fend off an IMF bailout appeared to decrease further, with the cost of state borrowing reaching record highs.

Despite this, both Taoiseach Brian Cowen and Finance Minister Brian Lenihan sought to portray the situation as positive, with both men insisting that half of the work was done.

They based their claim on the fact the Government has cut €14.5bn since the economic crisis began in 2008 – roughly the same amount as will be cut over the next four years.

But the opposition once again warned the Government was lacking a jobs strategy and that economic recovery would be impossible without one.

Some Fianna Fáil backbenchers betrayed their own nervousness by debating whether a general election would be preferable to pushing through the budget on December 7.

It came as the Government reluctantly confirmed the Donegal South West by-election would be held on November 25, which could see its majority reduced to just two.

The €6bn target was confirmed by the Department of Finance after Mr Lenihan had met with opposition finance spokespersons.

Officials said they would operate on a 3:1 ratio of spending cuts to tax hikes – meaning €3 in cuts for every €1 in new taxes.

Even though the €6bn adjustment will act as a drag on economic recovery, they still predicted growth of 1.75% next year. They also predicted unemployment would fall to 13.25% in 2011, but said part of this would be net outward migration of 45,000 people.

Exports would continue to recover strongly, lending a boost to the economy, but the officials warned Ireland would ultimately remain dependent on global economic growth continuing.

Mr Cowen insisted: “We can manage this if we’re prepared to recognise that we are halfway through the adjustment.”

Mr Lenihan echoed those comments, but admitted on Today FM that the state had been hoping since 2008 that “something will turn up”.

“Nothing has turned up so we have a deeper correction to start bridging that gap (between state income and expenditure).”

Meanwhile, Mr Cowen rejected criticisms of the 17-month delay in scheduling the by-election. “My view is that the people of Donegal have not been in any way put at a disadvantage because of the fact that there wasn’t a by-election held.”

MOTHER ASKED SVP TO LOOK AFTER BABY

A MOTHER was so impoverished she asked a volunteer to look after her baby, the St Vincent De Paul has revealed.

Warning of the human impact of budget cuts, the charity confirmed the African woman, based in the south-east, was not entitled to any welfare payments and handed the three-week-old child to a volunteer.

Other tragic cases their volunteers have dealt with include:

- A mother going to sell her wedding ring to get €200 to pay for her daughter’s school uniform.

- A woman whose husband lost his job went to the local shop to buy food and pretended she had forgotten her purse, knowing they would tell her to drop money in the next day.

- An unemployed couple with four children had €11 to keep them going until the following week.

SVP national vice-president also admitted the charity had spent “a fortune” last September helping families cover third-level college registration fees, which could double in the upcoming budget.

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