Ireland is bracing itself for the most feared budget in the state’s history today (Tuesday) as the Government put the final touches to the six billion euro cost-cutting plan.
Finance Minister Brian Lenihan is widely expected to wield the axe on social welfare, including jobseekers and child benefit, in a bid to cut public spending by 4.5 billion euro.
Speculation has mounted that public sector wages will be capped and Ministers’ salaries cut as the Government takes on a four-year battle to restore the state’s crippled finances.
Taoiseach Brian Cowen’s shaky coalition will try to impose the cuts with only a two-seat majority.
But the embattled Government has received a boost after an independent TD, whose support is crucial, said he would back the cuts.
Michael Lowry, Tipperary North TD, said he would put the country first despite a potential backlash from his constituents.
“This has been a difficult decision for me,” he said.
“This budget for the first time in 15 years is about not the distribution of surpluses, not the distribution of good news, this is about the distribution of pain.
“This budget is going to be harsh, it’s going to be extremely difficult, people will be angry and people will be annoyed that they have to pay the price for the recklessness in particular of our banking institutions.”
Mr Lowry said that if the country was to survive tough decisions would have to be made.
He said that after talks with the Government he was satisfied that the old-age pension would be protected, with free travel and electricity for the elderly.
The veteran TD said he also highlighted the potential impact of hiking third-level fees.
Mr Lowry said his fellow backbench independent, Kerry`s Jackie Healy-Rae, is also expected to back the budget, due to be unveiled in the Dail by Mr Lenihan tonight Australian-time.
The potentially savage package comes just over a week after the Government revealed it was taking an 85 billion euro bailout from the International Monetary Fund/Europe.
Mr Cowen’s crippled coalition Government has suffered widespread criticism for the move by a public angry at the perceived surrender of the state’s hard-won economic sovereignty.
The 6 billion euro package, containing 1.5 billion euro in new taxes and 4.5 billion euro in public spending cuts, is the first phase of a four-year budgetary roadmap to raise 15 billion euro and plug the gap in the beleaguered economy.
Opposition party Sinn Fein accused Mr Lowry and Mr Healy-Rae of engaging in the worst kind of parochial politics.
Pearse Doherty, the party`s finance spokesman, said: “At a time of national crisis this behaviour is ridiculously irresponsible.
“Some of the consequences of this budget, if it is passed, are that more children will go to school hungry, more families will have their homes repossessed and our sick and elderly will have less chance of survival.”
Potential excise and duty changes, including in the price of petrol and alcohol will come into force from midnight tomorrow and will have to be voted on in the Dail after the budget is unveiled.
The Social Welfare Bill, which gives legal effect to any budget changes in the dole or child benefit, is expected to be voted on by the end of the week while the finer details of the plan will be debated in the Finance Bill in the new year.
The Budget will be the fourth time since October 2008 that the Fianna Fail/Green Party coalition government has been forced to introduce harsh measures to tackle the black hole in the public finances.
Lobby groups made a last ditch plea to Mr Lenihan to either save or make specific cuts, with the Irish Heart Foundation calling for a hike in the price of cigarettes.
Michael O’Shea, IHF Chief Executive, said: “Ahead of the toughest budget in history, this is our final plea to Government to increase the price of tobacco products and not to be misled by the vested interest of the tobacco lobby.”
But businesses said any price jump would lead to a corresponding increase in smuggling and damage retailers.