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Column 'It is essential that we push ahead with the €3.1bn budget cut'

Fine Gael TD Pat Deering believes that current social welfare spending is unsustainable and has urged the government to pursue a €3.1 billion budget cut in order to remove the “shackles of the Troika”.

BEFORE WE START talking about the forthcoming Budget it is important to look back at where we were prior to the general election over two years ago.

Our economy was shattered, the country was bankrupt. In 2007, during the peak of the Celtic Tiger our gross expenditure was €63 billion and our gross receipts were €61 billion. This situation completely changed in the space of a three years to leave us with a deficit of €19 billion or 7 per cent of our national output.

As a result of mismanagement by the Fianna Fáil/Green coalition the country required an EU/IMF bailout that meant borrowing some €85 billion from these international lenders to fund our services such as doctors, nurses, emergency services, schools, the social welfare system and so on.

In return for that €85 billion there were terms and conditions that we had to and still have to abide by. There were targets to be reached by certain dates in order to exit the Troika agreement by the end of 2013. In order to do this there were strict budget adjustments that had to be made and reached every year and in the forthcoming budget, for 2014, that adjustment figure is €3.1billion.

There is much talk about where we can make savings and the three big departments that are spoken about are Health, Education and Social Welfare. In my opinion the €20 billion that is spent on social welfare year-on-year is not sustainable and needs to be addressed.

The best way of addressing this is getting people back to work as soon as possible. For every person in receipt of social welfare it is costing the state €20,000 and this is not sustainable.

The current unemployment rate is 13.7 per cent which for the first time in a long time has dropped to below 14 per cent. There must be incentives for returning to work, people must not be afraid to work in fear of losing their benefits. The gap between social welfare payments and wages must be widened so that it pays to work.

‘Essential’ to cut €3.1bn

There has been much talk about the €1 billion savings made by as a result of the promissory note deal earlier in the year. Fortunately at present we are ahead of our targets and it is very important to continue to push ahead with the €3.1 billion specified adjustment.

Why? Because the sooner we can pay back the money we owe, the sooner we will have the opportunity to rebuild our economy in a more fair and equitable way. I believe it is essential to push ahead with the proposed target of €3.1 billion because the higher the deficit remains, the more exposed we are to international financial events beyond our own control.

We could then use our improved position to borrow for a once-off, modest stimulus package. This money could be used for shovel-ready projects or tax relief schemes, reinvigorating the construction industry where 250,000 people approximately have lost their jobs in the post-Celtic Tiger years. The projects could include development of schools, roads, and upgrading the structures and resources already in place.

For the approximately 1.8 million people working in this country it has to be noted that they are not in a position to pay any more tax. These people have made their contribution to society and the rebuilding of our economy.

Next year will be the first full year of the property tax, with water rates following in 2015 and I feel there is no more room for taxes. These people have to be able to see light at the end of the tunnel.

As the Chinese proverb states: “the journey of a thousand miles starts with a single step”. We have taken the first steps but let us not lose sight.  We have set our goals and we cannot stop until they are achieved.

We must continue this difficult journey until we reach our goal: to regain our economic sovereignty and remove ourselves from the shackles of the Troika.

Pat Deering is a Fine Gael TD for Carlow-Kilkenny

Read: No cuts to primary spending, taxes for wealthy and a €4.5 billion stimulus – ICTU publishes budget plan

Howlin: We want to ensure a ‘basic threshold of decency’ in Budget 2014

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