Preparing Budget 2015 - Inequities on pay must be confronted

The weekend suggestion from Simon Harris, the junior finance minister, that income tax should be cut adds momentum to statements made by senior cabinet ministers Michael Noonan and Simon Coveney. If that expectation is not met, then the political consequences will be severe.

CSO yesterday show that public sector pay is 48%, (an average of €919 as against €622) ahead of rates in the private sector. Earlier, European data showed Irish public sector average pay, despite all of the cuts and our huge borrowings, is higher than most other countries. That this disparity exists, despite all of the reform promises, all of the one-way benchmarking, does not auger well for social cohesion. This issue, no matter how difficult, must be confronted and resolved.

That obligation will not be made any easier by making unsustainable tax cuts which would have an impact on everyone, not just the incumbents in Government Buildings. And there’s the rub; one man’s sustainable is another man’s catastrophic indiscipline; one man’s austerity is another man’s way of balancing the books. This never-changing reality played out in Paris again yesterday when prime minister Manuel Valls presented his government’s resignation, a day after economy minister Arnaud Montebourg called for new economic policies and questioned Germany’s “obsession” with budgetary rigour.