National Recovery Plan - They can’t afford to be wrong again

The National Recovery Plan, 2011-2014, published yesterday, outlines details of how the Government proposes to make €15 billion in savings.

The details of many of the cuts have not yet been spelled out, but there are grounds for suspecting ordinary people may be asked to shoulder an unfair share of the burden.

In recent days it has become increasingly obvious that it is critical — not just in the national interest, but also in the interest of the European Union — this four-year plan gets things right. The gyrations on the international markets yesterday were indicative of the importance of the plan, along with the ongoing bailout negotiations taking place between Government officials and representatives of the IMF/EU/ECB.

Those in the international community who were responsible for the reckless lending — as well as the reckless borrowers in this country during the Celtic Tiger years — must bear their share of culpability. Mistakes were also made two years ago when the Government was bounced into decisions that no longer seem as prudent as when they were first made. It is now necessary to reassess those decisions and get them right this time, or else Ireland may be facing into even darker days.

Portugal is currently being rocked by a general strike as workers there resist austerity measures. France witnessed similar scenes in recent weeks with protests against increasing the retirement age from 60 to 62 years, whereas in 2004 the minimum pension age in this country was increased from 60 to 65 years for new entrants to the Public Service.

Other changes mentioned in yesterday’s plan include increasing the pension age to 67 in 2021, and to 68 in 2028. Those changes were already outlined in the National Pensions Framework announced recently. Yet there is no mention of at what age, or how many years politicians must serve before they can claim their pensions. Some of the most glaring inequities are apparent in this area. Politicians should be showing leadership by example.

After two years of bluff, bluster, lies and prevarication, it is imperative the Government comes clean with everyone. People will bear their fair share of the burden if the Government implements the plan impartially, without any sweetheart deals for special interest groups.

Defending the plan, the Government insists its intention is to reform the welfare system so as to “incentivise work and eliminate unemployment traps”.

The minimum wage would be cut by €1 to €7.65 an hour as this has been seen as a barrier to job creation. This would be welcomed if the benefits were passed on to society in general.

Spending on social welfare is to be reduced by 14% over the four-year period, with cuts of around 5% next year, but the details of those cuts are being left until Budget day.

We should recognise that there have been any number of anecdotal stories of abuse of the welfare system, in some instances by people working outside the country but travelling here to sign on. Many stories may well be apocryphal, but they have been given credence by real abuses that the system has not tackled over recent years.

There is no economic incentive for a man with a wife and two children to work, if he is earning less than €450 a week, because if he signs on he can avail of payments for himself and his wife, along with a medical card for his family, books and clothing allowances for his children, and a rent allowance. People in such circumstances have been better off signing on. Everyone should welcome changes that eliminated such abuses and which incentivise work. But, of course, it is now necessary to create the jobs.

There are still many vague areas in the plan, such as the proposed health cuts. Are those cuts going to be in areas where there are superfluous administrative posts that should have been eliminated when the health boards were amalgamated? Or will they be in frontline services?

People will find many aspects of the plan unpalatable, such as the introduction of a site tax on primary dwellings, or the lowering of the tax net by €3,000 to €15,300 by 2014. The details of such changes are to be announced in coming budgets.

“Those who can pay the most will pay most, but no group can be sheltered,” the Taoiseach Brian Cowen said at a press briefing in Government Buildings after the publication of the plan. Of course, no group that can pay should be exempt, but it is not possible to get blood out of a stone. The Government should acknowledge that there are elderly or infirm individuals who are not capable of fending for themselves, much less paying for the extravagance and gross ineptitude of this Government extending over years.

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Wednesday, January 19, 2022

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