Press Release

Government drive to a balanced budget is premature and damaging to economy

Date Released: 12 October 2021

SIPTU economist, Michael Taft, has criticised government plans to achieve a balanced budget by 2024 as ‘premature, unnecessary and potentially damaging’ to the economy.

“This plan, revealed in Budget 2022, to rush to a balanced budget by 2024 is premature, unnecessary and potentially damaging to the country’s social infrastructure. It will undermine the economy’s ability to maximise sustainable growth, increase incomes and support a strong economic and social infrastructure. It is fiscally irresponsible and economically damaging,” Michael Taft said. He said that Budget 2022 will also fuel higher inequality and degrade public services as the economy emerges from the pandemic crisis. 

“The Government projects that spending on public services will, at best, flat-line out to 2025. This puts the introduction of Sláintecare in serious question while education expenditure will continue to fall well behind the level of our peer group in Europe. The failure to increase real spending on public services will degrade living standards. With low pay rampant throughout the economy and rising levels of deprivation, even among those at work, the gap between higher and lower income groups is likely to widen, with those on average incomes continuing to be squeezed. The failure to address the defects in the Government’s Housing for All plan means that house prices will remain unsustainably high and homes will continue to be unaffordable for most working families. The budget has nothing to offer those forced to endure ever increasing rents while the extension of the Help-to-Buy scheme is likely to worsen the situation,” Michael Taft said.

He continued: “The minimal increases in the minimum wage and social protection payments will do little to protect households from rising inflation and energy costs. The nearly 400,000 workers on low pay still have no mechanisms such as the right to collective bargaining to improve their incomes. The social protection and pension increases of €5 per week fall well short of what is required and the gap between pensions and wages will widen further.  The Government failed to signal the necessary increases in capital taxation and employers’ social insurance that will be necessary to fund strong public services, in-work benefits, pensions and social protection payments.  Without such increases, the economy will struggle to provide the resources necessary to enhance our weak social security system.

“The reduction in public transport fares for young people, while welcome, does not make up for the fact that ‘Just Transition’ has been pushed back to the back of the queue again. With the need to move away from fossil-fuels and address the oncoming revolution in automation, we are in urgent need of concrete policies and spending commitments to protect communities from the negative impact of climate and technological change. We need action to identify and develop new employment opportunities. Budget 2022 makes no contribution to that process.


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