FINANCE Minister Brian Lenihan insisted the Croke Park deal would stand – but could only guarantee it for 12 months.
As the Cabinet put the finishing touches to its four year “recovery” plan, deep welfare cuts were signalled.
More than €2.5bn is expected to be slashed off the benefits budget annually, with 5% cuts looming in the December 7 budget.
The minimum wage is set for reduction with Mr Lenihan insisting it rose “far above inflation” between 2002 and 2008 and would have needed to have been reviewed even without the IMF emergency intervention. Public sector job losses will rise from the 14,000 under the Croke Park deal to 20,000 with further pension levies for state sector workers.
A universal social charge will be the main tax raising measure with new levies taking up €2bn of the €6bn of “restructuring” in the December budget.
Revenue raising measures will see a flat tax of at least €100 a year per household and student fees rising from €1,500 per year to €2,200.
Mr Lenihan rejected calls for a general election as speculation again centred on a leadership challenge to Brian Cowen after the budget. Cowen supporters pointed to a “spirited” speech by the Taoiseach to party faithful in Donegal as proof he was determined to face down any opposition.
“I take responsibility for all my decisions. I have never abdicated responsibility for any of my decisions. Circumstances change. We were hit by a financial and economic crisis in this country. I have always said I take my share of responsibility,” Mr Cowen said after announcing the country had applied for the EU/IMF bailout after a week of denials and accusations the Government had deliberately mislead the country.
A Red C opinion poll saw Fianna Fáil hit an all-time low of 17% support – just six points ahead of Sinn Féin, which climbed to 11%. Fine Gael rose by a point to 33% while Labour stayed level at 27%.
Fine Gael finance spokesman Michael Noonan predicted the IMF would use their new-found power over Ireland to make a “dramatic” opening move in the next few weeks.
He said they would demand “fundamental restructuring of expenditure” in return for the bailout.
“They’ll be looking for the dropping of programmes and a totally new way of delivering services to the public which will cost less with fewer people,” he told RTÉ.
SIPTU president Jack O’Connor warned any minimum wage cut would amount to the “crucifixion of the poor to redeem the profligacy of the rich”.
Labour spokeswoman for finance Joan Burton said the IMF bailout marked “the final epitaph for a Fianna Fáil Government that has plunged the country into the financial abyss and that has consistently and deliberately lied to the Irish people”.
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