The Government has today indicated it may make further cuts in social welfare payments next year in a bid to tackle the soaring budget deficit.
Speaking in the Dáil today during a debate on the Social Welfare Bill, Minister for Finance Brian Lenihan said a reduction in the cost of living as interest rates and energy costs drop would make it potentially easier to cut social welfare payments.
"When you take the 3 per cent increase [in social welfare payments] provided for this year together with a 5 per cent drop in the cost of living that we may have, [that's] a real increase in social welfare provision of 8 per cent," Mr Lenihan said.
Economists have said there was too much emphasis on tax increases in the recent emergency Budget, but Mr Lenihan said spending cuts would be the focus from next year.
"In future the work will have to focus on expenditure because there is a limit to the amount of taxation which can be exacted in any economy and there is a limit to the amount of borrowing any economy can undertake," he said.
"Welfare accounts for 21.5 billion [euros] of our total expenditure; that is a very substantial sum of money," Mr Lenihan said during the debate on scrapping a Christmas welfare bonus.
The Minister also said it was a "misconception" that the majority of the fiscal adjustment had come from increased taxes up to now.
Minister for Social and Family Affairs Mary Hanafin yesterday defended the cancellation of the double welfare payment. Ms Hanafin said the choice was to cut the bonus payment or make cuts across the board in social welfare.
However, Labour leader Eamon Gilmore accused the Government of targeting the vulnerable by cancelling the Christmas social welfare payment rather than targeting developers.
He said the only people happy with the recent Budget were "the big speculators, whose worthless land and half-derelict apartment blocks will be bought back off them by An Bórd Bail-out, and moneylenders".
"Listening to the Minister for Finance ask for solidarity in our national crisis before cancelling the Christmas payment for pensioners, single parents, carers and the unemployed moneylenders must have thought that their Christmas had come early.
"No contribution from the tax exiles . . . No contribution from the big developers, who were able to write off their taxes against investment through a suite of property-related tax shelters," the Labour leader said.
"Yet the Minister for Finance instead chose to deprive families dependent on dole payments; old age pensioners; carers; single parents; and people who cannot work because of a disability, of money to pay for Christmas. He chose to look to them for the €156 million he needed, instead of to the people who used the property bubble to build up vast property portfolios, and minimise their tax bill," Mr Gilmore said.
"This is Fianna Fáil's idea of solidarity: go straight for the soft targets, and spare the donors, the influential friends, and the Galway Tent. And the irony is, they are being supported faithfully throughout by the Green Party.
Mr Gilmore said the unwillingness of the Government to regulate the banks and its greed as the "unsustainable construction boom soaked up investment" was to blame for the huge increase in the numbers dependent on social welfare.
"But the solution to this economic crisis is not going to be found by raiding the empty pockets of people who are long-term recipients of social welfare. . . . The solution is to get people back to work, not take even more spending power out of the economy at Christmas."
Sinn Féin social and family affairs spokesman Arthur Morgan TD said the recent emergency budget was "another example of the Government targeting the most vulnerable sections of society".
Raising the issues of cutbacks in rent supplement and early childcare supplement, Mr Morgan said: “The Social Welfare Bill before us is yet another example of the Government placing the burden of the economic crisis on to low income families for the Government’s mistakes and for the mistakes of the Government’s fat cat friends."
