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THE FOLLOWING IS  our text coverage of proceedings from Dáil Éireann where the Minister for Public Expenditure and Reform, Brendan Howlin, announced the first part of the 2012 Budget.

Good afternoon, and thanks for joining our live coverage as we bring you news and analysis from the first day of Budget 2012. Brendan Howlin is in the Dáil from 2:30pm to announce the public expenditure leg of the €3.8bn Budget.

Howlin’s section of the Budget is arguably the more difficult – as the minister in charge of spending, he has to trim €2.2bn from the government’s spending. Compare that to Michael Noonan, whose Finance brief means he has to raise €1.6bn.

So – what do we know is going into the Budget? Well, this afternoon the government finally published details of the household charge being brought in from January 1. My colleague Hugh O’Connell has been looking at some of the details, which includes a waiver for people living on ghost estates. His full report is here.

The Evening Herald – as it tends to – has this lunchtime come out with some reports of what’s going into the Budget; it says child benefit is being cut to a standard €140 per child, with maintenance grants for postgraduate students also set to be scrapped.

Another interesting aspect of the Herald’s reports – it says the social welfare budget is being cut by between €500m and €600m a year (via a thread over on Politics.ie). This, it is supposed, is the reason why child benefit and other welfare payments may have to be cut.

But you may recall that three months ago Joan Burton announced plans to cut down on welfare fraud – which she said could save €625m next year. So why the need to cut further? Michael Taft’s column for us a while back may shed some light on that.

It’s also been reported – both on the News at One by RTÉ’s Brian Dowling, and by his RTÉ colleague Philip Boucher-Hayes – that the registration charge for third-level students is to be increased by €250 this year (to €2250), with no increases in 2012 or 2013. We’ve already spoken to the Union of Students in Ireland, who are perplexed at this idea – because they estimate it will only bring in around €16m for the government, while simultaneously squeezing more people out of college.

Good news for the gamblers amongst you. We just got a press release in from Betfair, who are giving away 200 Christmas trees (value €60) at the former veterinary college site in Ballsbridge – now owned by NAMA! – next Tuesday at 11am.

As we tick ever closer to 2:30pm, we’ve put together a quick list of what we know so far. We’ll be updating that story as the afternoon continues, with the main points of today’s big announcements.

Right – some more from the Evening Herald’s reports: between €350m and €400m being cut from health (contrast this to RTÉ’s report of €550m), cuts in fuel allowance from 32 to 26 weeks; and a rise in the pupil-teacher radio in private schools.

The Herald also tells us that the Budget will include the closure of 40 Garda stations – the majority of them in Dublin – while the €200 back-to-school allowance for children aged 2 and 3 years old is also to be cut.

RTÉ’s live broadcast has kicked off, with Bryan Dobson sat in front of an image of Leinster House – with the yellow-on-blue stars of the European Union transparently laid over the image. A telling metaphor?

This may be of interest to some of you – yesterday, while Enda Kenny was giving his address to the nation, Italy’s new government was also announcing new austerity measurs. Here’s Elsa Fornero, the new welfare minister, announcing some of the cuts. As you’ll notice, she breaks down in tears while doing so – forcing Mario Monti to step in and continue the statement for her.


(Video credit: telegraphtv on YouTube)

…and there’s the live stream from Dáil Éireann kicking in. As you can see, there’s a healthy – but by no means comprehensive – smattering of TDs already in situ ahead of Howlin’s announcements, which are due… well, now, actually.

Right. The Ceann Comhairle, Seán Barrett, is in situ – time to get this show on the road.

Brendan Howlin: Starts by saying he’s conscious that the last minister to stand in my place was Brian Lenihan – and he want to acknowledge his contribution here today. He thanks TDs for attending and says Ireland’s budgetary process is “about to change fundamentally”.

BH: We’re going through painful adjustments and public anger is acute. Twelve months on from the arrival of the Troika, we’ve improved – we have stabilised. A year ago we were Europe’s problem – now, in effect, Europe is our problem.

BH: Our deficit needs to be closed and right now we’re dependant on the EU and IMF to pay our way. This economic crisis is the greatest in memory… tax revenues have fallen by a third in three years. We’re now rebuilding our revenue base but we don’t have the resources to fund everything we’d like to.

Worth noting, by the way – BH has gone for a red necktie. Our stylist Alanna Gallagher will be surprised – earlier she told us:

Although red symbolises power, wealth, strength and passion, it also has connotations of red-letter days. And the irony is, of course, that we’re so in the red – that the media would have a field day.

BH: Despite the difficult Budget, we’re committing to €17bn in capital spending for the next five years.

Howlin says the contribution to this amount, from current spending, is being taken down by €300m so as to alleviate the pressures of this Budget.

BH: The government can’t abandon those dependant on it. We’re delivering more financial supports and servies for our people. The pressures on welfare are enormous – for example, the dole now costs us three times what it did in 2006. Health, too, has also seen pressure: there are 500,000 more medical card holders now than just a few years ago.

BH: Pensions will cost €4.7bn this year, up from €3.7bn a few years ago. Our “demographic profile” means this will have to keep rising. Despite this, government spending needs to fall every year up to 2015.

BH: “Everything was looked at” for this spending review, with every department submitting a report. Today is not the end of spending cuts, he, but rather the first step of a constant review. A fresh spending review should be held every year, he says. The next one will be in 2013-2014 to inform another phase of financial planning.

BH: We can’t make the savings we need to without touching sensitive policy areas. Difficult decisions were made on three guiding principles: “fairness, jobs and reform.” We must make sure the burden is shared fairly, with the most vulnerable protected as far as is possible.

BH: Depsite falling income and revenue, the government wants to build a socially inclusive and fair society. Central to all of this is jobs – we need to get people working. That’s a focus of this Budget, he says. The government’s multi-year action plan will include a group to monitor its action plan.

BH announces seven aspects of this plan: (i) Improved competitiveness; (ii) focussing on indigenous startups; (iii) indigenous growth; (iv) nurturing entrepreneurial spirit; (v) deepening the impact of FDI; (vi) developing employment opportunities in the community; (vii) exploring sectoral opportunities.

He announces a new ‘Springboard’ initiative and a new €20m investment in training facilities.

BH: We’ve taken reform as an agenda – cutting ministerial pay, cutting transport arrangements, reducing Oireachtas committees, cutting special advisors’ pay (the Dail laughs at this…), cancelled some parts of decentralisation…

BH: Public service pay bill will fall by €400m by next year, with workforce reduced by a further 6,000. “This is a significant reform which poses enormous challenges,” he says.

BH announces a relaxation of the public service recruitment embargo, with limited “targeted recruitment” in the public service next year…

BH: “The Croke Park Agreement simply has to deliver. We’ve made a good start, but we’ve a long way to travel yet.”

Next year, public service bodies will have to cut overtime payments by 10% and premium payments by 5%.

BH now turns to public service pensions. A new single scheme will cut 35% – or €1.8bn – from the public service pension bill by next year.

BH on social welfare: We have a duty to protect the most vulnerable… we must also get people back to work… the reality we have now is that our social welfare spending cannot be sustained.

BH: I can confirm that the government has not cut any weekly rate of social welfare payment, protected child benefit, and will save €475m in social welfare next year. (This is €190m than was set out in the last government’s four-year plan.)

The dole will be paid on a five-day week rather than a six-day week. From 2013, working on a Sunday will be taken into account.

The government will save €31m by cutting fuel allowance from 32 weeks to 26.

BH: Government will save €55m in rent supplement cutbacks… Joan Burton to elaborate further on these later.

BH on Health: Health spending will make up 26% of current spending next year… the ageing population is already placing demands on essential health and social services…

BH: €13.644 billion Health budget for next year – allowing it to meet demands for next year. Includes €35m in extra funds for community mental health, €15m for long-term illness scheme.

Worth noting: the HSE got €10.6bn last year. Howlin’s just announced a sum which is around €3bn higher than this.

BH: Introducing reference pricing for drugs, increasing monthly threshold for drug payment scheme from €120 to €132 per month; new efficiency on procurement of drugs; improving collection of private income into hospitals to raise €143… saving €50m with efficiency from mental health and children’s services.

BH on Education: €8.604 billion (17%) of spending next year. A full programme of training through Solas and VECs will continue. These will actively focus on helping unemployed return to labour force.

BH: Student contribution will have to increase. New post-grads won’t get a grant, but government will contribute to postgrad fees for those from low-income backgrounds.

BH: Education savings of €132.3m next year… allows minister to have resources to pursue policy initiatives like Junior Cert reforms and implementing literacy and numeracy.

Some disadvantaged schools – predating current DEIS system – will lose status. Higher education core funding to be cut by €23.6bn; student contribution will be raised by €250 to raise €18m+.

BH: These measures are significant. Public spending will be cut to €55.8bn compared to €57.7bn this year.

Minister also announces a “spending ceiling” of €54bn for 2013 year, and €52bn in 2014.

BH: Social protection, health and education will collectively save €1bn next year. Most departments will receive reductions; selected measures include Dept of Ag which will save €105m; Transport, saving €45m; Environment, saving €34m.

BH: “Ireland’s traditional system of budgeting no longer works for us.” It’s been “secretive and opaque”, he says. This government will bring about a “major transformation” of this “old-fashioned” system.

Today BH announces expenditure reform measures including: planning for sustainable public expenditure; a modern, multi-annual expenditure framework; evidence-based expenditure policy and a “tough new value-for-money code”; and including “performance information” in annual estimates, which allows people to gauge performance while agreeing funding.

Oireachtas will also have a greater role, allowing committees to engage “earlier and more fully” in setting spending targets.

BH: This “national government” won’t resolve the problems overnight… no government wants to be the bearer of bad news, but its options are limited. The public know that, and it’s wary of those who offer simplistic options.

BH: “Today and tomorrow are significant days of the reform process but our work is ongoing.” The government will divert its scarce resources into areas where they are most needed. Despite the tough decisions, we’ve been able to maintain core social welfare like the dole and pensions; support for SNAs in schools and pupil-teacher ratio in primary schools.

BH: We’ve already endured hardship but we’re coming through it… “with clear and determined leadership this nation will prosper again.”

Seán Fleming from FF, to respond, amid some hefty Dáil jeering…

SF: Starts by noting that Joan Burton has already left the chamber (she has a press event at 3:15pm; we’ll have live coverage of that too…). FF supports the process, but some of today’s measures are “unfair and unjust”, he says.

SF has a go at the “well-fed friends and cronies”, prompting some more Dáil jeering (including loud interjections from Mattie McGrath) and an intervention from the Ceann Comhairle.

SF mentions the cuts to fuel allowance, saying the government has cut that in order to keep its friends happy. He also says the government had voted down proposals with many of these proposals in the past, and yet has proceeded with them today.

SF: Ajai Chopra told us we wouldn’t get hung up on individual choices as long as the government met its spending targets… government cannot blame EU-IMF for the nature of the changes it’s made.

SF: Fianna Fail believes some of the cuts to health spending could be reversed if the government made small investments to bring nursing homes up to HIQA standards.

Response on Twitter: USI’s Gary Redmond:

Government must apologise and hang heads in shame for lying to families over fees and grants

Here’s a table out of the government’s Budget documents showing how each Government department will have its spending cut over the next three years. Click the image to load in high-res.

SF is continuing his attacks… in the meantime, we’ve knocked together a word cloud of Brendan Howlin’s speech.

SF on the issue of fairness: “You’ve failed on jobs. You’ve recycled the microfinance thing you’ve been talking about for 12 months.” FF proposed last week to bring down salaries of CEOs of semi-states… the government voted down that proposal, Fleming says.

SF points out the high salaries earned by people in academia, and says government has “deceived the students and parents of Ireland” by asking them to pay an increased registration fee in order to cover those wages.

SF: “You got your spin over substance”, he asserts, going through each individual department. In Finance, he says, salaries are being increased by 15 per cent; travel and subsistence is being increased in that Department by 34 per cent. Howlin’s own department is increasing consultancy charges by 42 per cent.

Burton is also increasing expenses in her own department, SF says, then going on to echo Michael Noonan’s line from last year: “What have you got against the third child?” Cuts to child benefit could hit large families by €1,000 a year, he says – so much, he quips, for “a red line issue”.

Some more Dáil jeering follows, with the Ceann Comhairle wryly remarking that Fleming is bringing much of the jeering on himself. (A controversial remark, one might think.)

SF: “Your spin doctors did win… the cuts are not that obvious until you read the small print.” Some families will simply have to skip going to the chemist, he says. “That’s the sort of society you’re building here.”

Continuing his offensive, SF says there’s “not a single thing” to create jobs in the government’s plans. He mentions the FÁS report from last week – where 40,000 people on the Dole turned down FÁS interviews – and complains that the government seems not to have done anything about this.

Another interesting nugget on Twitter, from the Irish Times’ Mary Minihan, on the Dáil’s reaction to Howlin’s speech:

Wow smattering of applause from FG TDs following Howlin speech; nothing from Labour backbenchers…

To clarify, incidentally, child benefit is not being “cut”, so to speak, but the government is equalising the payments for each individual child rather than paying higher rates for third and subsequent children.

This, it should be noted, will be a particularly large blow for the parents of twins and triplets. The parents of twins receive 1.5 times the usual payment for their children; triplets and subsequent children prompt double payments.

SF wraps up by accusing the government of doing nothing to attack the most comfortable in society. Sinn Féin’s Mary Lou McDonald (MLM) says the government is making the poorest “carry the can”.

MLM: The government is making the government carry the burden… does the government remember how it “railed against austerity” while in opposition? “Well, that was then,” she quips. Nothing in today’s announcement is new; except to “consign to the dustbin” the hopes of those who needed it most. The new government is going on the same road as the previous coalition, ar sise, as Gaeilge.

MLM: “Today is a sad day for this State… a sad day for the economy…” Reading from last year’s Dáil transcripts and programme for government, she notes how FG and Labour had attacked the Fianna Fáil methods of austerity – and, she believes, has simply proceeded to follow the same path of austerity.

MLM: Austerity measures and emigration “all stand testimony to failed policy”.

Someone from the Labour benches, just behind MLM, is making some pretty aggressive hand gestures to the Sinn Fein contingent sat behind MLM.

Some pretty strong stuff from MLM: “There are choices to be made… and you persist with the brazen lie that you have no option but to target low and middle-income families, and to cut back on vital public services.” Government has “ruthlessly” chosen to target those who are already struggling from years of cuts.

The government is even so proud of this austerity, she says, that the government decided to set aside a special day in the Dáil where Howlin’s cuts could take centre stage.

MLM, continuing her offensive:  ”You could do it differently… you could ask high earners to shoulder the burden… but you choose not to do this, because you’re not really up for the tough choices.”

MLM: We can’t fix our finances until we tackle unemployment… there’s no easy way out of this, but there’s a fair way – and that’s to tax wealth, instead of cutting welfare as the government has done, or making education “the preserve of the elite”. Those are the things the government said it wouldn’t do, but today it has chosen to do so.

MLM returns to the Ciaran Conlon debacle from yesterday… “The Taoiseach is not prepared to protect the vulnerable, but he’ll fight tooth and nail” to sort his political friends.

She also mentions the former taoisigh and ministers who retain big pensions – “no chance of you giving them the ‘times are tough’ pep-talk. Have you told them the State is insolvent?”

MLM: It may seem that the cuts are marginal… but if you’re already living to the pin of your collar, these cuts are the difference between warmth and cold, between light and darkness.

Today’s measures would ensure economic contraction and job losses, MLM says. She wonders why the government could understand this point when in opposition, but can’t really fathom it now.

Joan Burton is taking journalists’ questions over at the government press centre… you’ll find our live stream, and text coverage, over here.

Continuing in the Dáil, MLM says today’s Budget does “more harm than good” in respect of jobs. Today’s cuts to child benefit – she says they’re cuts, anyway – is the third in succession. This could have been avoided by instead taxing financial assets, she says. A family of four children will be down €432 in 2012, and by €768 in 2013.

MLM: “Your jobs initiative has been a spectacular flop.”

A statement in from Fianna Fáil’s Barry Cowen – brother of former taoiseach Brian – who is FF’s spokesman on social protection:

The government’s announcement of reductions in the six day week for Job Seekers Benefit calculation is a cynical smoke and mirrors exercise to cover up a major cutback. In reality it is a cutback in the rate for part time workers.

[Changing the Dole week from six days to five] is a direct attack on the welfare rights of part time workers and is another straightforward broken promise by the Government.

MLM: “Where is Ruairí Quinn? Is he in this chamber? Shame on him,” referring to the education minister’s absence from the chamber after the government confirmed a €250 hike in the registration fee.

The camera cuts to Michael Noonan, who is now virtually isolated in the government benches as back-benchers and other ministers have left to deal with other business. He cuts, it must be said, a lonely figure.

MLM now moves on to what she says is a €1bn cut in health services. There are savings that can be made, she says, such as in generic drugs (“It’s in there!”, roar the government TDs).

MLM: Today boils down to a political choice. “In the north of the country, since our colleagues are so interest, my colleagues are fighting with the British government…” …and the Dáil breaks into predictable laughter.

MLM: “… my colleagues are arguing for the devolution of fiscal powers, so the people of the six counties can make their own tax and spending decisions. As it stands, the Assembly is at the mercy of a block grant.” More interruptions. ”And so the administration is faced with hard choices.”

SF has protected the most vulnerable in the North, she says. And, again, more interruptions. “You’re not in Eyre Square in Galway,” quips Seán Barrett.

MLM: Despite the finances in the North, Sinn Féin has been able to safeguard the most vulnerable… “You might care to take a leaf from their book.” She says the coalition is following a deal brokered by Fianna Fail and imposing the same type and level of cuts. “Why do you protect the status quo?”

MLM: “Is it that Labour’s negotiating powers are so God-damn bad that they couldn’t even get Fine Gael to meet them half-way?” The coalition, ar sise, are pursuing the politics of failure. They’ve made their choice, and are worsening our country’s economic crisis.

The government has shown its hand… “You are all the same after all.” Has any Dáil deputy put cardboard in their child’s shoes to keep the wet out?, she asks.

MLM in conclusion: “The people make the tough decisions and calls. You’ve shown that you can’t take tough decisions. You won’t lead from the front, you won’t cut from the top. This is a bad day’s work, and shame on you.”

Stephen Donnelly for the technical group: If I was lone parent watching today’s proceedings at home, I’d be very angry and scared about the future of our country.

SD: Only one country has ever cut its way out of recession, he says. Can we be the second? Not if our largest trading partner, the UK, is falling back into recession. We have an overinflated currency, he says, saying Ireland is left to “bet the house” on the UK, US and European economies growing.

SD accepts that we have to correct the Budget… but in January we’re paying €1.25bn to unguaranteed senior Anglo bondholders, debtors of “an ex-criminal bank”. That would cover almost the entire cut in operational expenditure for next year, he says.

SD: If we increased income tax on a time-limited period for incomes over €100,000, the people it hits wouldn’t move abroad. Currently, we’re pursuing – by definition – a regressive tax.

SD: We know that under FF, for years, generous public sector pensions were generously increased. The staggered budgetary approach is to be welcomed, but we’re looking at a tax-to-spending cut ratio of €1.6bn to €2.2bn. We don’t know why.

SD points out that there’s been no analysis to show why we’re pursuing the particular targets we are.

SD: The Taoiseach stated that he wanted “stronger governance in Europe” so that we could avoid the mistakes of the past… That logic says, ‘We will continue to make mistakes of the past, and therefore we’ll hand over oversight of our finances to a central power.’

SD quoting Noonan from last year: “This is the Budget of a puppet government… doing what it has been told to do”. The new government can escape this fate, but this Budget does precisely what it condemned FF for doing last year.

Clare Daly (Socialist Party): “Austerity is not working,” she bluntly opens. The principles of this Budget were “fairness, jobs and reform” – which is ironic, she contends, because these are the areas it has fallen down in. At least, she observes, the government’s choice to continue with austerity mean it can’t blame its ills on Fianna Fáil any more.

CD with the line of the day so far: ”We now know that Minister Howlin is an equal opportunities butcher.”

CD: The United Left Alliance agrees that the public is not responsible for the crisis – but it follows that logic to its conclusion, she says, by not forcing the public to pay the price for it.

CD: “There can be no economic recovery without putting people to work… the only concrete proposals in relation to jobs are about job losses.” She’s referring to the government’s plan to cut €104m in rebates for redundancy payments; this, she says, means the government must be expecting some hefty job losses.

CD: The Rotunda already has one midwife for every 47 patients. The recommended maximum is one per 33 patients. How will the government’s €500m health cuts impact on this, she wonders.

Health minister James Reilly, on that note, has just begun a press conference: you’ll find our live stream, and text commentary, over here.

CD: “The reality is that the only way out of this crisis is a state-led programme of public works that would immediately put 150,000 people to work.” The government has instead axed the capital budget and hit “viable projects” like Metro North.

CD: Will this Budget make Ireland a better place? No – it’ll stand over the further transfer of wealth to those who are best off.

CD in conclusion: The Labour Party was never meant to be ‘practical’ – it wasn’t meant to prop up Fine Gael time and time again. James Connolly said never to be practical in politics, she says. “That’s effectively what the Labour Party has done here today. It’s an absolute scandal and James Connolly would be turning in his grave.”

Catherine Murphy (Ind, Kildare North): We agreed last year that you couldn’t cut your way out of recession – but there’s no stimulus in today’s measures.

For those looking to catch up, by the way, we’ve been continually updating our page with what we know so far.

CM: Proposals here today are about “blunt cutting” – there is no nuanced approach to cutting public services… there are already Gardai and public servants who can’t pay their mortgages. “I don’t see any vision in this document today, or what’s been said, apart from cuts.”

CM: Many going for early retirement are doing so simply because they don’t think the government plans for the public service will ever work. The government trumpets its “ambitious programme for public sector reform – but where is it? All that’s in this document is cuts.”

CM: School capitation grants have always been inadequate. A cut of 2% in capitation grants is actually a tax on parents, she says, who will now be asked to do more to fundraise in their schools.

CM: The €250 increase in the student registration fee will raise €18m, while the cuts to postgraduate grants will save €12m… but both will have an impact forcing bright students out of education.

CM: The cuts in fuel allowances are “the most cynical of them all” – that means people will face the choice between putting food on the table and heating the home.

CM: We must stop and ask ourselves, what is Ireland going to look like in four years’ time? Will the austerity deliver jobs for people in the numbers we need? Will health services be slashed and burned? What will our education services look like? How many people will be denied going to college because they’re only just getting by at the moment?

CM: This document speaks of a vision… I want us to be enthusiastic about the country we can create, but I just don’t see that in this document.

And with that, the Dáil is adjourned (though not before Micheál Martin complains that backbenchers don’t get a chance to contribute today.) Never fear, Micheál: there’s ten hours of time allotted tomorrow for Budget statements.

And so the Dáil wraps up – to resume tomorrow at 2pm, with Leaders’ Questions. Michael Noonan’s big speech is at 3:45pm.

And so that’s where our liveblog from the Dáil wraps up for today. We’ll have more tomorrow, as Michael Noonan delivers his half of the picture. The ministers will continue their press conferences – and we’ll keep liveblogging from there – but for now, thanks for reading.

About the author:

Gavan Reilly

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