Revealed: cuts that will make budget worst ever

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Shane Coleman, Political Editor

Brian Cowen: 20% cut

Hospital A&E: €10 hike

Dole payments: 4% drop

Cabinet ministers: 15% pay cut

Prescriptions: 50c charge

Child benefit: 9% decrease

Professional fees: down 5%

Public sector: 5-6% decrease

Government ministers are to take a 15% reduction in pay, bringing their salaries to €191,417 a year, in the toughest budget since the foundation of the state.

Taoiseach Brian Cowen will take a hit of almost €60,000, or 20%, to €228,466, which actually represents a 30% reduction in his salary when the pension levy is factored in. This includes the voluntary 10% pay cut taken by ministers last year.

He will still be one of the highest paid leaders in the world, coming in ahead of Gordon Brown (€216,270) and Angela Merkel (€228,000).

Top civil servants and university bosses will also take a cut of 15%, while the salary of county managers will be reduced from €150,000 to €138,000 in finance minister Brian Lenihan's much speculated plan to be presented next Wednesday.

Following the breakdown in talks with the unions last Friday, the government will introduce an average 5% to 6% cut in pay across the public sector, although high earners will be hit harder as the pay cuts will be introduced on a sliding scale.

Although a small number of final decisions have yet to be made, including the idea of an additional tax levy on big earners, agreement has been reached on most of the major decisions. These include:

* A reduction of €8.40 in the basic dole payment and an equivalent 4% cut in all social-welfare payments, with the exception of the old age pension which will remain untouched.

* A €15/€16 (or 9% plus) per month reduction per child in children's allowance, with a claw-back provision for social-welfare recipients.

* A cut of €44 or 20% in the dole payments for under-23s who do not agree to participate in training courses.

* A reduction in the €490m rent allowance budget with some changes to eligibility.

* A&E charges to increase by €10 to €110.

* The cost of private beds in public hospitals to rise by 10-15%.

* A prescription charge of 50c for medical cards holders per transaction.

* A rise in the monthly threshold beyond which taxpayers don't have to pay for
prescription drugs from €100 to €120/€125.

* A 5% cut in professional fees paid by the state to GPs, dentists, lawyers and consultants, on top of the 8% cut in April's mini-budget.

* An increase in the minimum effective tax rate on the wealthy from 20% to 30%.

* Major cuts of up to 20% in politicians' and senior public servants' pay.

Based on the recommendations of the as yet unpublished report of the review body on higher remuneration, ministers will see their pay cut by almost €34,000 or 15% to €191,417, meaning their pay will have been cut by a quarter (including the pension levy) since the economic crisis began.

A number of ministers, including the two Green ministers, would still like to see the introduction of a new tax or levy on big earners over €150,000 or €200,000. While they accept the take from this measure would be limited, they argue that, with social welfare being cut, there is a need for a "demonstration effect" to show those at the top are also taking the pain.

However, there is serious concern in the Department of Finance that this "demonstration effect" could work the other way.

Its argument is that a high rate of marginal tax for top earners will deter multinationals from investing here because they will find it difficult to attract senior management to their Irish operations.

The possibility of an additional levy being introduced in the next two days cannot be ruled out but informed sources say "it is not as likely to happen as it was a week ago".

However, finance minister Brian Lenihan will target the seriously wealthy with a series of measures restricting their ability to access tax reliefs, exemptions and loopholes. This will push up the minimum effective rate at which they pay tax from the current level of 20% to 30%.

There will also be new taxes in the form of carbon taxes, which are likely to raise €350m-€500m. The Commission of Taxation report suggested an increase of 5c to 8c on a litre of petrol, 50c on a bale of briquettes and €60 on a tonne of coal.

Calls for a cut in vat rates will be resisted but fears of adding to the trend of shoppers heading north means alcohol will escape an increase in excise duty but there may be an increase in the price of cigarettes.

Nor will he change the current system of tax relief for pensions. However, this will happen in a future budget.

The budget will also include a cut of €1bn in the capital budget, although senior sources say a good percentage of this can be accounted for in falling input prices.

The breakdown of the €4bn in spending cuts is roughly €1.2bn from public sector pay reductions, €900m from social welfare, €1bn from capital spending, €350m from carbon taxes and the remainder coming from cuts in programmes across all government departments.

December 6, 2009

Comments

#1 c carroll commented, on December 6, 2009 at 9:44 p.m.:

are we supposed to be grateful that mr.cowen is reducing his still lotto size salary?. its too little too late, the waste continues as we see today in another publication that the heating bill for all depts. is over e13 million a year, not a word about the co2 emissions on this from "the conscience wrestler" paul gogarty, but then i forgot that rubbish only applies to the ordinary people.

#2 Chris commented, on December 7, 2009 at 12:39 a.m.:

I am not the biggest fan of Brian Cowan, but please let us give credit where it is due. He is leading by example. Are we turning into a nation of begrudger's. I cannot see for the life of me why Pat Kenny and the head of the ESB receive an annual salary that is three times more than the head of the country. Not to mention our shamed bankers and their Monopoly style salaries.
Give the man a break for God's sake

#3 FARRELL commented, on December 7, 2009 at 1:32 a.m.:

The Taoiseach takes a pay cut which is three times the amount an unemployed family is expected to live on and is still on a lot more than the Prime Minister of Australia which is a lot richer than Ireland. How much longer longer are you people going to put up with these gangsters? Get out on the streets, become more vocal and aggressively so. Withhold the means by which they need to continue this farce.If change is going to come it has to come by getting rid of this shower of wasters completely. Then start again. After all what's another hundred years? Jaysus Wept.

#4 Mark commented, on December 7, 2009 at 10:11 a.m.:

Brian Cowen needs a break. He took over at the worst possible time. This entire mess is Berties fault. We need to start looking at Cowen as the head of the country and not just the head of Fianna Fail. If we resist the changes that are necessary to get us out of this mess we could end up having a lost decade like Japan.

#5 enlightened commented, on December 7, 2009 at 10:40 a.m.:

The salaries are still way too high, ridiculously high when 30% of the population in every town and village is dreading Christmas and on the breadline, unemployed, short time, part time,lying low or worse. Look to Drogheda as an example. Their local newpaper ran a terrible article about the poverty there and these PS at senior level are on colossal salaries. They should be taking 60% pay cuts if they are serious and set a proper example.

#6 Arnaud commented, on December 7, 2009 at 2:15 p.m.:

I don't mind having a head of a 4 million people country on this kind of money as it is still a head of country and has the same level of responsibilities. However I DO mind having so many TDs on an average 120,000 let alone their expenses to run a country of 4 million people. Here is your massing saving but eh they won't put themselves out of a job unless Brian has the guts to call for a referendum.

#7 seamus commented, on December 7, 2009 at 5:51 p.m.:

This man will still be paid more than Gordon Brown or Sarkozy in France. Is he worth it. Bear in mind that people on the average industrial wage are going to have a pay cut next wednesday. We are in a sad state thanks to Bertie, McCreevy and Mr. Cowen.

#8 John commented, on December 7, 2009 at 7:27 p.m.:

I do not agree with the pay cut's he should have led by example and took at least 50% of a cut considering the expenses he also gets. its too little too late, the waste continues as we see today in another publication that the heating bill for all depts. is over €13 million a year, not a word about the co2 emissions on this front "the conscience wrestler" Paul Gogarty, but then I forgot that rubbish only applies to ordinary people. The FF party learned well from the British Empire, Divide the Public service and the Private sector and do nothing themselves.
I suggest 50% of a cut in all TD's wages and reduce the numbers by 100 to 66 (which is still to many)
Abolish the Senate an expensive rest home for failed TD's and only allow an ex minister to stay on in the Dail provided his pension cannot be drawn until he retires like any other sector of society.
Wishfull thinking I fear as they are all really only looking out for themselves. How much longer longer are we the Public and Private Sector workers (Tax Payers) going to put up with these gangsters?
call for an election and vote them out for good.

#9 brian commented, on December 7, 2009 at 7:36 p.m.:

Chris, it is nonsense to say he is leading by example. The man will still be earning well over 200 grand, not to mention the thousands in expenses he gets.

He will continue to live a lavish and extravagant lifestyle unlike those low income workers and welfare recipients who cowen is so intent to target in order to bail out the banks and pay for Fianna Fáils incompetence

If these cuts go through, poverty levels will skyrocket as will poverty related illnesses and deaths.

#10 David commented, on December 7, 2009 at 9:13 p.m.:

The man is taking a 20% pay cut. Had already taken a 10% voluntary cut. Paid 9%(?) pension levy like other public sector workers. Plus the income levy like all other workers. Would ye all stop pissing & moaning about his salary - how is that going to fix the country's finances?? Comparing his salary to other prime ministers too is a waste of time; by the time he retires his wealth will be nothing compared to the amounts they can make from books, lectures, after dinner speeches etc. Irish people have no problem when our average wages were near the top of salary tables in europe, or public sector pay being so far ahead of the UK too, but can sit on their bar stool giving out about Cowen's salary. The hypocrisy makes me want to vomit.

#11 Paddy McGinty commented, on December 7, 2009 at 11:23 p.m.:

I called for the Government to lead by example and Cowen listened- unfortunately Brian still wants to be one of the best paid political leaders in the World. Ireland's Economy is not in the same league as France, Germany or the UK- so why does Brian think his pay should be bigger than the leaders of those respective countries?
Whilst many have started to play a blame game- the answer is simple as the blame rests with the People- blindly following party politics- deluded with a Celtic boom- riding the pig's back...
And you know when you fall off the pig's back- God knows where you'll end up...

#12 tony commented, on December 7, 2009 at 11:53 p.m.:

The contention that the Taoiseach has nothing to do with the state the country is in and its all down to Bertie's fault is risible. The government of which both played powerful and prominent parts was in power for 12 years. Both themselves, the banks and the media moguls ran the show over that period. No one else had access to that type of power. Scapegoating everyone else, as government cheer leaders are doing, is just an attempt at distracting from the fact that people who are elected to high office have to accountable in a democracy. The fact that the headlines in three sunday newspapers and rte news highlighted the proposed cut in the Taoiseach's salary to the exclusion of more fundamental issues shows how close to a one party state we have become.

#13 Ray walsh commented, on December 8, 2009 at 1:46 a.m.:

Did Mr.Cowen and his advisers not see how his wage reduction was automaticaly going to be compared to our closest neighbours. He is earning 12,000 more than Gordon Brown. Why not cut his wage by 25% and come in under Gordon Brown's salary.

#14 John commented, on December 8, 2009 at 12:20 p.m.:

It will be a bleak Christmas in many ministers households. Remember that they are on even less than Cowen, and they have to take these harsh paycuts also. I believe that after these cuts they will be on less that 200K per annum. How are they expected to survive?

I've asked my children to forego Christmas presents this year, and I am going to send the money that I would have spent to Mary Hanafin, the least she deserves is a decent Christmas. I also think she should apply to the Vincent de Paul. They'll surely be able to help.

It truly shows - we're all in this together.

#15 JackMeskill commented, on December 8, 2009 at 7:32 p.m.:

Politicians caused this crisis.We all know that. They let the church abuse our children and then make the taxpayer and the poor foot 95% of the compensation bills. They let the banks lend billions to their friends and family members and when the gambles failed, they make the taxpayer and the poor foot 80% of the bill. They enjoy obscene salaries, expenses and perks wildly beyond our means and make the taxpayer and the poor pay 100% of it all.
Why do we vote to re-elect any politician for a second term? Ever? Our experience shows that the only advantage political experience gives to a politician is better knowledge of how to screw us and adds years to their own inflated pension rights.
Will anyone join me in launching a campaign to only ever vote for virgin candidates, for all local, Dail and European elections, for ever ? My e-mail is

#16 phil commented, on December 9, 2009 at 2:38 p.m.:

Dont think so Jack and I'll tell you why.I have been reading your comments and it's just the usual tired old stuff that we all know already.Guys like you never get anything done,you just like to think you do!You even answer your own pathetic questions:the politicians did NOT cause this crisis..you and people like you did!

#17 Jaker commented, on December 10, 2009 at 3:33 a.m.:

Re; the "Budget"!

Scrooge is alive & well in the modern era...oh & he is the Finance Minister Brian Lenihan...but in the new era he has a partner called Cowen who whisper's to him after all his cruel dirty mean work, "Well done"!

#18 David commented, on December 10, 2009 at 4:44 a.m.:

The country is in debt to the tune of over 2,000,000,000,000 Euro and we're making a fuss over the 12,000 Euro in salary that Cowen gets compared to Gordon Brown. It's a pointless discussion the 5% differential that appears to be there between No.10 and wherever Cowen lives, could easily get cancelled out by changes in the value of sterling/euro.

#19 Tom commented, on December 10, 2009 at 9:03 a.m.:

Right on Phil. the politicians were elected and reelected by the people. The voters knew or should have known FF had "form"
Why should they change. Why should a bank robber stop robbin banks if they are never caught,

#20 Gary commented, on December 10, 2009 at 11:59 a.m.:

I agree, lets bench mark Cowans salary to Gordon Brown (Its only out by about 5%) - and while we are at it bring the public sector pay across the board in line with the pay rates in the UK.
Whats good for the goose is good for the gander. Stop slagging off the Cowan/Lenihan, the PS union leaders get paid crazy money and don't work near as hard as OUR country.

#21 Jaker commented, on December 10, 2009 at 1:41 p.m.:

Oh David, Fianna FAILURE supporter, make all the excuses for Brian & Brian (looking after themselves, their cronies & the "Bankster's" first) but they don't hold. Also, how is it they found money for Michael Lowry & Jackie Healy Reay, etc? By doing hula hoops & magic, "Yea Right"!

Wait till you see there'll be rioting on the streets in the not too distant future...& that's no threat...its fact!

#22 v.gerrard commented, on December 10, 2009 at 5:49 p.m.:

David! What changes in the value of sterling/euro...a few penny's of so...& then there's his expense's which are extraordinarily abhorrent, so what's that you were saying again that you wanted us to know?

#23 Jaker commented, on December 10, 2009 at 6:11 p.m.:

I demand now that Cowen & Company PUT A TAX ON BANKER'S BONUSES, just like our neighbour's Britain & now Germany have done. And that Cowen stops giving bribes to Jackie Healy Reay & Michael Lowry & other Independent's. This is one time when this obnoxious too long in power government should fall on its "Sword". Greece has debts/deficit of 300 billion euro & now the EU are going to help them. Just goes to show the more you owe the more help you get from Europe/EU!

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