5 December 2002 Edition
Scrooge McCreevy robs the people
Coal, Gas, ESB all hit
BY ROBBIE MacGABHANN
Two weeks ago, Finance minister Charlie McCreevy announced massive cutbacks. They will reduce hospital services, stop school building programmes, deprive 200,000 people of a medical card and put 5,000 CE scheme workers back on the dole.
This week, in his Budget speech, McCreevy announced tax increases that will make coal, electricity, gas, heating oil, even a newspaper more expensive.
He will penalise those getting by on low wages and those enduring deprivation and poverty while at the same time taxes on business are to be cut, perhaps the only election promise not broken.
Worst of all the insults in this Budget was the claim by McCreevy that he was protecting the weakest in society while at the same time he merely tinkered with the €8.5 billion in tax reliefs open to the stud farm owners, the property developers and builders.
The super rich still have their loopholes and avoidance schemes, while the rest of the ordinary workers will over the next weeks have higher bills on top of the already announced increases in ESB, Gas and VHI.
Scrooge McCreevy has picked our pockets well.
Leinster House shaken
The chants of the protestors outside were clearly audible in the Sinn Féin offices in the most distant part of the Leinster House complex and echoed through halls full of scurrying government officials preparing for the so-called first chapter in McCreevy's second book. It was Budget Day 2003 and in advance of the expected cuts, the people had come to warn McCreevy.
The crowd was a mix of two different protests coming together. An anti-cuts demonstration of over 300 h people were addressed by left wing TDs including Sinn Féin's Martin Ferris, Joe Higgins and Seamus Healy as well as a representative of the Monaghan Hospital Action Group and the CPSU.
They were joined by a large group of students demanding that the government commit to not introducing fees during the lifetime of this government and looking for increased grant support for less well-off students.
Little did any of these groups know that not only would all of these demands be ignored by McCreevy, but his Budget would mean another year of inequality and injustice.
BY ROBBIE MacGABHANN
We knew there would be no more cuts in income tax in this Budget. We hoped that this would be the Budget where the government would wake up and start the process of introducing some equity into the tax code.
It would be a simple matter to end the tax exile status and announce a review of the €8.5 billion in tax reliefs allowed by the government to certain tax payers every year. We hoped that Fianna Fáil and the Progressive Democrats would fulfil just one election promise and take the low paid out of the tax net. None of this happened. In fact, it got worse.
Corporation tax on business profits was cut from 16% to 12.5%. Mortgage relief was increased for first time buyers, which makes some amends for the loss of the first time buyers grant, but it would take a new home owner ten years to realise the benefits.
So as workers saw their income tax demands virtually unchanged, businesses saw their profit margins rise. Then, McCreevy announced an increase in the basic rate of VAT from 12.5% to 13.5%. This VAT increase will make all home heating fuels more expensive and will drive up house prices, as the tax applies to building materials, especially concrete and concrete blocks.
McCreevy announced some cuts in the tax reliefs, but the promised review has not materialised. So, it's another year of property reliefs and still time to invest in racehorses, or move to sunnier climes and become a tax exile.
For those buying the second or third home, it's also another year of mortgage relief on your investment. McCreevy claimed in his budget that one of his key budget objectives was "investing in the future". It seems that this only means the future wealth of the already rich, while the vast majority of taxpayers are actually worse off this year. Now, wasn't that a surprise.
Protecting the weakest?
Over the lifetime of the past government the gap between the high and low earners widened to the point that now the top 10% of earners have a disposable income 13 times that of the lowest earners.
McCreevy hyped up the €530 million increase in social welfare spending. However the €6 a week increase in the basic social welfare payment was way below the €14 rise recommended by Combat Poverty. This increase would keep the government on target to meet their inflation linked target of €150 a week payment by 2007. The truth of McCreevy's €6 a week payment is that the poorest section of society is falling further and further behind the wealthy.
One promise McCreevy did admit that he had broken was that on child benefit. What was a promise to increase child benefit by €1.27 billion over three years will now be stretched to five years. What McCreevy completely forgot to mention was what has happened to the once promised childcare strategy.
So it will be another year where hundreds of thousands of workers, putting in long hours to meet high mortgage prices, will have no respite in the thousands of euro they spend annually on childcare costs. Another promise broken.
Apart from the slashing of corporation tax to 12.5% from 16%, business did well. Yes they will have to absorb the VAT increase but no doubt this increase will be passed quickly on to the final consumer, leaving the PAYE worker paying for the VAT increase twice.
However, the low rates of employers' PRSI will continue, giving business another year of one of the lowest payroll taxes in the world. McCreevy could have kept corporation tax at 16% and then allowed tax relief to businesses that invested in research and development or education and training for workers. This was not to be, as he handed another giveaway to business.
With road traffic gridlock, a creaking public transport system, hospital waiting lists, 54,000 households waiting for housing, hundreds of substandard school buildings and a electricity network desperately needing new power stations, we clearly have an infrastructural deficit in the 26 Counties.
McCreevy's budget speech spoke of "our vision for the development of the infrastructure required by a modern dynamic society". He then hyped up the €9 billion spent so far on the National Development plan. There was no mention that even though he had spent €1 billion more than originally budgeted for, there was still massive cost overruns and delays in projects. In short, the plan is in a mess.
McCreevy didn't mention the millions wasted on the now defunct national stadium plan that are part of the €9 billion. He did find another €209 million for road spending just a week after a National Economic and Social Council (NESC) report recommended that the government re-evaluate the road building projects.
It is clear to everyone that new roads will not solve the traffic gridlock all over the 26 Counties. We need to invest in public transport, yet McCreevy is willing to push back the LUAS in Dublin and the much need rail investment projects.
What McCreevy forgot
While Charlie McCreevy might have sought to be brazen in his claims that he was a prudent economic manager, there were some things he forgot. He forgot to mention housing in this Budget.
There has been amnesia about the housing crisis. With house prices still rising and some estimates putting the elimination of housing lists as taking another 40 years, the coalition government has actually cut spending on local authority and social housing.
There was, though, a mention of the need for environmental taxes. However that's all it was - a mention. We have to wait until 2004 for the government to pull out this particular finger.
Also forgotten is how McCreevy will develop business, given that the grant budgets for Enterprise Ireland, Shannon Development and the County Enterprise boards have all been cut. Again, silence from McCreevy.
McCreevy said that this Budget has "been developed within a three-year framework". If this was chapter one, it can only get worse.
Ó Caoláin attacks "government betrayal"
"With anger and shock," was how Caoimhghín Ó Caoláin said people across the 26 Counties would react to Charlie McCreevy's sixth budget as Finance Minister. "This Budget represents one of the greatest frauds and swindles ever perpetrated against an Irish electorate," he said.
The difficulties we face today he said are the "result of mismanagement and the squandering of the unique opportunities of the past five years", said the Sinn Féin TD. "Minister McCreevy looked after the wealthy in all his Budgets and he has done it again. Those on lower income have been left behind once more."
Ó Caoláin accused Fianna Fáil of reneging on pre-election commitments and promises in relation to health. "Before the General Election Fianna Fáil made two promises - to end hospital waiting lists in two years and to extend the Medical Card to a further 200,000 people - both were dumped as soon as the polls were closed."
The Cavan/Monaghan TD said that the health services need "resources and reform" and pointed out that "this Budget does not even keep the health services in line with medical inflation, thereby negating any positive elements of the National Health Strategy.
"It is a shame and a disgrace that in 2002, after the most prosperous period in the history of Ireland, it is still wealth that determines the standard of health and the standard of access to health services for our people."
Ó Caoláin contrasted the government's attitude towards those on low incomes against its pandering to the corporate sector. "While breaking its promise to parents who find themselves just over the income limit for the medical card and who must struggle to scrape together the money to bring their children to the doctor, the government has kept its promise to the big corporations, the multinationals and the financial institutions. In this Budget they are getting their promised cut in Corporation Tax from 16% to 12.5% - a massive reduction," he said.
On general taxation he said: "The minister has only tinkered with tax reform in this Budget. The wealthy still have their loopholes." He added that McCreevy had only made adjustments in tax reliefs because they had become an embarrassment to him.
"The government has failed to take the lower paid out of the tax net as promised. People on minimum wage are still taxed. Income tax changes in this Budget have again benefited the better off disproportionately."
Sneaky VAT clawback
He said the Minister's sweeping VAT changes to raise extra revenue will have a massive knock-on affect on those on lower incomes and will undermine the meagre social welfare increases announced. "How is anyone expected to live with dignity on €124 per week?" he demanded. "It is the low paid and those on social welfare who most feel the effect of real cost of living increases such as increase in public transport fares and local authority charges and the forthcoming TV licence fees."
He described as a "fraud" the government's announcement of increases in mortgage interest relief while at the same time increasing the VAT on new homes, saying "it is giving with one hand and taking away with the other".
On the government's own Social Housing Programme, Ó Caoláin said: "This Budget will do nothing to address the ongoing housing crisis. The estimates cut the Local Authority and Social Housing Programme by over €57 million. This Budget will make the situation even worse in the coming year."
On Education, he said the Budget compounded the government's "betrayal of children attempting to learn in sub-standard and often dilapidated and rat-infested schools".
Ó Caoláin finished with a call for change: "We have been living through a time when the effort and talent of Irish people turned around the economy, dramatically reduced unemployment and emigration and improved living standards. This coincided with the peace process and renewed hope for our future on this island. But the efforts and the talents of ordinary people who made progress possible, have not been matched by this government in its management of the economy.
"It is time to build a real alternative."
The seat of power!
By ROBBIE MacGABHANN
It was clear from early morning that this was not just another day in Leinster House. It wasn't just that the protestors outside were a bit more numerous and loud than usual or that the car park was even more bulging with 02 registrations from the length and breath of the statelet.
The corridors of Leinster House were bulging with visitors and TDs and even that rare breed of elected representative, the government minister, was casually loitering around the Dáil talking, laughing and eating. This wasn't a Budget. It was a day out.
None of the government deputies seemed at all interested in what provisions McCreevy was introducing or his reasoning for them. They were here for the craic, and by the time the division bells were ringing for votes on income tax changes, VAT and excise duties, particularly those on alcopops, it was clear that the craic was winning.
It was clear too that some government deputies and maybe even a minister had sampled too much of the same, probably in the rush to get them in before the tax increase.
Funny that there was no interest in the more technical details of the Budget, such as that by cutting the secret service spending we could double the amount of money available for funding the prorgrammes that tackle violence against women.
How many TDs were concerned that for the fifth year in a row the Overseas Development Aid targets won't be reached or that there will be a 63% cut in anti-racism awareness campaign funds?
That, though, would mean actually exercising power, and working your democratic mandate. For the vast amount of government TDs and indeed, some opposition ones, this was the wrong place and the wrong day.