ANALYSIS:Social welfare cuts hit many areas, including child benefit – but older people avoided the hit, writes DEAGLAN DE BREADUN
AS WITH most other aspects of the Budget, there were few surprises in the measures on social welfare.
At a news conference afterwards in Government Buildings, Minister for Social and Family Affairs Mary Hanafin noted that, whereas the McCarthy report on public expenditure had urged a 20 per cent reduction in child benefit, the Government was imposing a cut of 10 per cent, or half that amount.
This means that, instead of McCarthy’s suggested cut of approximately €30, the payment for the first and second child will go down by €16, or from €166 to €150.
The reduction to €187 from €203 for the third and subsequent children is less than 8 per cent. Families on social welfare or the family income supplement will be fully compensated by other payments.
Nevertheless, as the Children’s Rights Alliance pointed out, these cuts will put further pressure on families outside the social welfare or family income supplement brackets, who are already struggling to make ends meet.
Although there have been many complaints about the fact that even the highest earners are eligible for child benefit, Hanafin suggested that means-testing was out of the question because the taxation system could not identify cohabiting couples.
She also said she was “never a great advocate of taxing child benefit” because the payment was made directly to the mother and was in many cases “the only payment they get in their own right”.
Besides, imposing a 41 per cent tax rate on a payment of €166 would reduce it below €100.
In addition, high earners had been hit by other aspects of the Budget.
The decision to exempt those on the State pension from the cuts was explained by Hanafin as a recognition “that older people have made their contribution to Irish society” and would not have the opportunity in most cases of taking a job in the future.
A more cynical explanation might be found in the extraordinary furore aroused by the decision in last year’s budget to means-test medical cards for those over 70.
But whatever other criticisms the Government may have brought upon its head, it has at least avoided repeating the much-criticised decision of Free State minister for finance Ernest Blythe in the 1920s when he cut the old-age pension by 10 per cent from 10 shillings down to nine shillings a week.
In his Budget speech, Lenihan said the Opposition had the “luxury” of urging public expenditure cuts in the abstract whereas the Government had the “duty” of deciding where the cuts would fall in reality.
In announcing cuts of 3.5 to 4.2 per cent in the dole and other payments to persons under 66 years of age, he noted the overall cost of living had fallen by “about 6.5 per cent” over the past 12 months.
Whether the recipients of reduced payments will take a similarly holistic view remains to be seen.
The cuts in jobseeker’s allowance for new claimants in the 20-24 age group has incurred the ire of the National Youth Council, which said the move would push young people who were already struggling further into debt and poverty.
It added that, “The only incentive given to young people in his Budget is to emigrate.”
Lenihan justified the move on the basis that the present arrangement was acting as a poverty trap for young people.
In what must have been one of the more difficult days of her political career, Hanafin declared she was “glad” that, in response to many requests from lobby groups, the Government had refrained from cutting the half-rate carer’s allowance for full-time carers but receiving another welfare payment and the annual respite care grant of €1,700 for each care recipient.
It was also good politics because, if anything was likely to exercise the listeners to Joe Duffy’s Liveline programme, surely this was it.