Republican News · Thursday 31 January 2002

People's needs a low priority

BY ROBBIE MacGABHANN

After months of denial and confusion from coalition government spokespersons, it all became clear last week. Finance minister Charlie McCreevy's budget estimates showed up not just the dire state of government finances but a battery of cutbacks that struck at the weak, those on low income, and the least powerful in society.

"Lower priority areas" was the term used by McCreevy used to justify his cutting of first time buyers' grants, reneging on commitments to replace damp rodent infested school buildings and cutting the grants available to Irish small businesses.

The double standard of rewarding one group while penalising another runs all the way through the estimates. For example, Progressive Democrat leader Mary Harney promised that corporation taxes on business profits will decrease, while workers' PAYE tax remains unchanged. However, workers will still have to accommodate higher gas, ESB and VHI bills as double-digit price hikes bite into disposable income and with two weeks to the actual budget day, we wonder what type of other stealth taxes Charlie McCreevy has in store for us.

For now we can only marvel at the audacity of McCreevy and the scale of cutbacks he has proposed in spending. McCreevy's strategy is a simple one. Day to day spending will increase by 4% next year, barely in line with the current rate of inflation, so there will be no real change in services provided. If you add in a higher rate of inflation and increasing wages, it will probably mean a real reduction in public services.

The next plank in the McCreevy strategy is to cut capital spending by 7%. This is an extremely dangerous gamble. By cutting capital spending, many important infrastructural projects will either not be started in 2003 or will only be rolled out in a piecemeal way. McCreevy is hoping, it seems, that the current dip in tax revenue is a one year blip and that in coming years the economy will grow again and generate increased revenue. Then capital spending will increased again, or maybe not.

This would be an interesting plan, except that it overlooks the reality of years of underfunding in government capital spending, otherwise we wouldn't have to be shelling out hundreds of millions of euro on transport infrastructure. We wouldn't have 54,000 households waiting for homes, an acute lack of hospital beds and adequate schools and a western seaboard systematically starved of vital resources.

The 7% cut in capital spending is a slap in the face to all of those who are waiting for simple things like a school with a toilet, a house, an old people's home, a health service in their local area, not a six-month wait to be treated in Dublin.

McCreevy's 'lower priorities' are among the weakest and least powerful in society. For example, much has been said about the abolition of the first time buyers grant which in a calendar year will cost the exchequer €40 million. Last year, Minister McCreevy reinstated the mortgage relief for purchasers of second homes, giving an estimated €50 million tax break to house speculators.

It is clear that these estimates are budgeting to protect the rich and the wealthy while penalising average workers and their families.

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Where the cuts will fall

First time buyers grants - cut completely

Enterprise Ireland - down 18%,

Shannon Development - down 30%

County Enterprise Boards - down 13%

Arts Council - down 8%

Office of the Ombudsman - down 14%

Non national roads - down 27%

Local authority and social housing - down 5%

Environment - down 9%

Building primary schools - down 4%

Building secondary school - down 10%

Third level building - down 24%

Marine Emergency - down 8%

Harbour improvements - down 39%

Forestry - down 22%

TG4 - down 11%

Teagasc - down 13%

Bord Bia - down 13%

Bord Glas - down 32%

LUAS - down 9%

FáS training - down 41%