Budget must be more than just a list of cutbacks

The one thing we already know about next Wednesday’s Budget is that it will be the most Draconian, savage set of economic proposals in the history of the State – at least until next year.

It will hit every single citizen in the pocket and drive many towards or below the poverty line, just to pay for the cost of bailing out the banks.

That’s the unfairness of it all but it’s also the reality – now what the Government has to do is to find the most equitable way of spreading the pain across the land.

Brian Cowen and Brian Lenihan have promised to spare those on Social Welfare or low wages the worst of the cuts, but even the smallest reduction in income when you’re on the breadline is a cut too far.

And the call to tax the rich to make up the deficit is both naive and simplistic, because the mega-rich either have creative accountants or foreign homes to protect them against the worst ravages of any Budget.

There is no underestimating the task that lies ahead for the two Brians next week – the tax take is back at 2003 levels, anticipated at €32 billion by year end, while current spending is up more than 70% since that time, leaving a forecasted Exchequer deficit of €26 billion by year end.

In his Pre-Budget Outlook, Minister Lenihan set out three preconditions for a return to sustainable economic growth.

They involved restoring order to the public finances over the coming years; regaining international competitiveness to copper-fasten a return to solid employment growth; and properly functioning banking system. That’s the basis of his Budget plan, where, despite the protests, public sector pay remains the focus – and the unions know it.

Their stance now appears to indicate a willingness to shoulder the cuts now once they are guaranteed to be temporary and up for review when the upturn materialises.

The greater task facing Brian Lenihan is ensuring that – if you take the public sector as a sub-section of the problem overall – he must spare the poorer paid the worst of the cutbacks.

The figures show Gardaí, for example, in receipt of allowances that are impossible to justify whereas the Clerical Officer within the Civil Service is already finding it impossible to live on their existing salary.

Social Welfare cuts must target those who can absorb them most – that’s why the weighting of Children’s Allowance in favour of those on low pay is essential too.

The Government has decided that there is no scope for a hike in income tax, although the removal of the PRSI ceiling qualifies as just that by another name.

So far, all of the speculation surrounding next Wednesday’s Budget has centred on the cuts – which is fair enough considering that the Government has made saving €4 billion its priority.

But cuts alone won’t save our economy and this budget must prioritise plans for job creation and job retention; otherwise the savings will be seriously diluted by increased social welfare costs for a start.

We need to see initiatives on jobs – both existing and new – and incentives for employers to retain or increase workforce levels. We need to see breaks on rates and levies for employers and investment in training for existing workers or those who have lost their jobs.

We have to continue the capital programme to ensure our infrastructure is ready for those better days ahead and we cannot afford any further slowdown in the schools building programme either.

The world may be watching to see how deeply we cut costs to bring more balance to the books, but this is a country first and an economy second.

The Government must keep that at the core of its announcements next Wednesday – even if it is still the harshest budget in history.