Friday, December 4, 2009

FG Alternative Budget Proposals December 4, 2009

FG Alternative Budget Proposals 09

The Fine Gael ’Jobs Budget’ would take 50,000 people off the Live Register in 2010 and more than 175,000 by 2013. The Fine Gael plan is driven by a determination to get people off dole queues and back to work, to improve our competitiveness and to correct the fiscal crisis in a fair and balanced manner.
Jobs are the focus of Fine Gael’s Budget perspective for 2010. We have to fix our budgetary crisis in a fair and balanced way and we have to restore our competitiveness as a nation, but the top priority for Fine Gael is to get our country back to work. If we don’t get our people back to work we won’t fix our budgetary crisis – it’s as simple as that. That is why Fine Gael has relentlessly pursued pro jobs policies over the last 12 months culminating in the policies and proposals announced in the run-up to this Budget.
Fine Gael’s Budget proposals would see 50,000 people taken off the Live Register in 2010 and 175,000 by 2013. This is based on a combination of the impact of:
• A major cut in the jobs tax (PRSI on employment);
• The roll out of our €18bn NewERA stimulus plan;
• Targeted youth unemployment initiatives;
• Abolition of the airport tax;
• Reversal of the recent VAT increase and short term reduction in the 13.5% VAT rate to 10%.
Fine Gael faces up to the challenge of correcting the crisis in our national finances by making tough choices to generate a net deficit reduction of €4bn whilst allowing for the above pro jobs proposals.
The €4bn in deficit reduction for 2010 under the Fine Gael plan is broken down broadly as follows:

€4bn Deficit Reduction Summary

Reduction in public sector pay bill through pay cuts and redundancies; €1.7bn
(€1.2bn payroll cuts + €500m redundancies)
Reduction in current spending programmes; €1.1bn
Reduction in social welfare costs (net of job activation measures) €0.4bn
Tax broadening (net of jobs stimulus package) €0.4bn
Transfer of Capital Spending to NewERA €0.5bn
(*numbers rounded to first decimal place)

Public Sector Pay Bill

Fine Gael have identified €1.7bn that can be saved from the public sector pay bill in 2010 through a combination of freezing of increments, graduated reductions above earnings of €30,000, local payroll savings of 2% and through 10,000 redundancies.The reduction in pay only affects those earning more than €30,000 and only applies to that income earned ABOVE that limit.On the basis of Fine Gael’s plans the effect on incomes would be as follows:

Income Reduction %(after tax)Reduction %(Before tax)
€40,000 0.7% 1.3%
€220,0006.5% 13.9%

Social Welfare

Net of job activation measures Fine Gael envisage a saving of the order of €400m in the Social Welfare Budget. Fine Gael does not propose any cuts to the Old Age Pension nor does it propose any cuts in the Child Benefit Allowance. Given the reduction in the consumer price index we do see scope for a 3% cut to adult working age payments, excluding carers, the disabled and the blind. In addition, we are proposing a weekly €50 cut for under 25s that refuse offers of work or training after six months on the dole. These measures would raise €257 million in one year.

Current Spending

There is huge scope to reduce or eliminate ineffective programmes or agencies that are not delivering for the taxpayer. We envisage savings of the order of €1.1bn in this area.

The primary drivers of these savings will be;

• Cutting back on the BIG bureaucracies like HSE, FÁS and CIE: €386m
• Eliminating or merging 150 quangos: €88m
• Cutting payments of professionals + 3rd party procurement savings: €431m
• Programme reductions (McCarthy Report): €199m

Wasteful spending on programmes and bodies that don’t deliver are the scourge of the taxpayer. It was unacceptable when our finances were in a healthy condition, it is bordering on criminal to waste such money when vital frontline services are under threat.

Fine Gael is determined to provide an alternative approach to the failed policies of high taxation and frontline service cuts of the last two budgets. We are focused on job protection and job creation and will continue to seek ways to support business, give job seekers some hope and always look to protect those most vulnerable in our society who rely on the State for support.

Fairness has been at the core of our approach to the Budget, getting our country back to work its ultimate objective.

The presentation can be accessed here
The financial breakdown can be accessed here
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