Think-tank's budget plans 'protect rich'

The leader of the country’s biggest union today accused a top government think-tank of trying to protect the rich from the burden of swingeing budget cuts.

As the Economic and Social Research Institute called for child benefit to be slashed by a fifth, SIPTU’s Jack O’Connor warned any savings would hurt middle and lower income families the worst.

Mr O’Connor said the state body was “at least opposing the obscenity of cutting welfare rates” but called for a tax on those who can pay.

He said: “The Institute is nevertheless continuing its dutiful role as a cheerleader for the government policy of imposing the entire burden of fiscal adjustment on working people and the less well-off.”

The SIPTU chief, who is also president of umbrella trade union group Congress, added: “The wealthy are insulated from any requirement to contribute at all.”

The ESRI advised against calls in the McCarthy report for all welfare payments to be cut by 5% to save money.

But in its quarterly economic bulletin experts warned the Government must make €4bn in savings, with the focus on public spending.

Mr O’Connor hit back: “Cutting child benefit will impact most severely on middle and lower income families.

“This should be tackled by a progressive tax on those who can afford to contribute.”

The ESRI’s Dr Alan Barrett said: “While tax increases will have to form part of the Budget package, the balance of adjustment should be made on current expenditure.”

But he gave a more upbeat prediction on the country’s job prospects with unemployment forecast to peak at 15% next year.

“Underlying these annual forecasts is a quarterly profile in which we expect growth to return in the latter part of 2010, although at a very modest pace,” Dr Barrett said.

“On employment, we are somewhat more optimistic now than when writing in July.”

Latest official figures reveal the numbers applying for unemployment benefits fell last month for the first time in almost two years, with the rate at 12.6%.

Dr Barrett said the numbers in work would average 1.85 million next year, up from 1.82 million forecast in the ESRI’s summer commentary.

He said the economy would shrink 7.2% this year and 1.1% next year.

The top economist also forecast the general government debt would hit 76% of Gross Domestic Product in 2010.