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2009

BUDGET 2010 - CHRISTMAS BONANZA FOR THE RICH

Date Released: 11 Dec 2009

On budget day Minister for Finance, Brian Lenihan, and his colleagues in the Fianna Fail/PD, Green Party Government delivered a massive Christmas present for the rich which must have exceeded even their wildest expectations.

Certainly, it was a case of all their Christmases coming at once for  the five per cent of our population who own 40% of our national wealth. The budget savagely assaulted working people and those who have been paying PRSI all their lives who have lost their jobs due to the Government’s mismanagement of the economy while leaving the rich unscathed.

Low paid workers, people with disabilities, children, school leavers and those who recently lost their jobs were sacrificed on the altar of appeasing the financial markets and engendering “confidence” among the rich.

People who depend on social welfare, including hundreds of thousands who had earned the entitlement through their PRSI contributions, were hit for €760 million. Other public services, including in health and education, were cut by €976 million.

Those who work in the public service suffered another pay cut on top of the average 7% cut imposed last March. The lowest paid people earning less than €30,000 a year will suffer another 5% cut which will represent a higher percentage of their take home pay than that applying to the top earners.

The only tax measures in the budget will also affect working people most severely. The carbon tax is just another unfair indirect tax, camouflaged as an environmental initiative, which disproportionately attacks lower and middle income workers. Petrol will increase by 4.2 cents and diesel by 5 cents from today (December 10) while the cost  of home heating oil, coal and peat will rise from May.

The only token gesture, if it could be even described as that,  affecting the rich is the increase in the minimum effective rate of tax for those using tax avoidance schemes. The minimum tax rate for these rich people will increase from 20% to 30% while a worker on less than average industrial earnings pays at a marginal rate of 41%. This timid measure will raise a paltry €55 million euro – if it is ever collected.

Apart from the obvious cuts a number of other sly and insidious measures were inflicted including changes in medical benefits which  have dramatically increased treatment charges for dental, eye and other essential work. A new levy of 50 cents has been imposed on each  item of medicine prescribed to medical card holders.

Children’s allowance suffered an across the board cut of €16 a month.  No attempt was made to discriminate between wealthy beneficiaries and low paid workers for whom this monthly allowance means so much.

In a return to the well practiced Fianna Fáil formula of the 1930’s, 40’s and 50’s the exporting our young people has been re-introduced.  This is clearly reflected in the decision to cut job seekers allowance for young school leavers and unemployed youth. Instead of developing  job protection, training and back to education schemes to keep our youth at home as other countries are doing this budget is a direct message to young people to emigrate.

In an obvious attempt to undermine workers on the lowest levels of pay the Government cut unemployment assistance to €150 per week for anyone over 24 who refuses an offer of employment. This is designed to facilitate ruthless employers in driving down wages.

Vulnerable people will be offered work for little or nothing. If they refuse it their social welfare allowances will be cut. The objective is to herd the unemployed into the labour market to compete with low paid workers for their jobs thus creating an exploiters paradise.

This policy replicates the approach adopted when the government refused to improve Employment Protection legislation before opening our borders to workers from EU accession countries on May 1, 2004.  (Ironically, even the Minister for Finance himself has publicly  conceded that this policy exacerbated the bubble.)

These measures contrast with the absence of any initiative of substance to provide investment in the economy either in the form of capital works or the creation of an investment fund to assist in the launch of new businesses. (The public capital programme was cut by €961 million.)

All the eggs have been placed in the basket of the banks which were  central to the ruination of our economy in the first place. The Government has entered into a commitment of €54 billion of public money to rescue the shareholders and bondholders in the hope that the  banks will begin lending to business again. Ironically, these banks will almost certainly require more than the €4 billion which has been taken from working people and those who depend on public services in  this budget in order to keep them afloat next year. However, this did not merit any reference in the Minister’s budget speech.

The most significant feature of the budget speech was not in the  specific elements of the assault on working people at all. It was the Minister’s clear declaration of support for the pay cutting strategy affecting all workers across the economy which we in SIPTU and the  ICTU have been endeavouring to highlight for more than a year.

The entire trade union movement must respond to this attack in a  sustained and co-ordinated way.  We must avoid a knee jerk reaction  and high profile gimmicks which will burn out after a few days. We will be preparing initiatives which can be implemented in every location. These will entail political, civil and industrial  initiatives in the community and in the workplace and they must be  conducted relentlessly over the next twelve months commencing shortly after the budget measures begin to take effect.





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