Ireland Budget 2012 (Part 1)

Minister for Public Expenditure Brendan Howlin was handed the Budget baton for today and shortly after 2.30pm this afternoon, he outlined the spending cuts and reform proposals that form the basis of Budget 2012 (Part 1). While Minister Howlin pledged to ensure that ‘the most vulnerable in our society are protected as far as possible’, he also said that the Government aims to reduce expenditure by €1.4 billion. Tax revenues fell from €47¼ billion in 2007 to €31¾ billion in 2010, a fall of one-third in just three years. Minister Howlin said that this ‘significant fiscal deficit needs to be closed’.

Today’s announcement didn’t bring too many surprises after the plethora of leaks throughout the last few weeks. Some of the measures to reduce the Government deficit are outlined below. Minister for Finance Michael Noonan will outline the tax proposals and revenue measures tomorrow. We’ll keep you informed minute by minute in our Twitter feed and we’ll also be unveiling our Budget 2012 calculator tomorrow night.

Social:

• Weekly social welfare payments are unchanged

• Child Benefit – The rate of payment for the first and second child is unchanged but the entitlement to higher rates of payment for the third and subsequent child is to be phased out over the next 2 years. For 2012 this means that the rate of payment for the first and second child is unchanged while the monthly payment in respect of the third child is reduced from €167 to €148. The monthly payment in respect of the fourth and subsequent child is redu ced from €177 to €160

• Back to School Clothing Allowance for 2 and 3 year olds is abolished and the payment rates for the over 4s has been reduced from €305 to €250 and €200 to €150

• The payment for jobseekers will be based on a five-day week rather than the existing six-day week basis where an individual is working for part of a week and from 2013 employment on a Sunday is to be taken into account when determining the level of entitlement

• The disability allowance for claimants aged 18 to 24 are to be reduced and aligned to the Jobseeker’s Allowance

• The one-parent family payment will undergo a number of changes to include a restriction in the entitlement in cases where the youngest child is under 7 and a reduction in the earnings disregard from €146.50 to €60 per week

• The employer rebate in cases of redundancy will be reduced from 60% to 15%

• The fuel season will be reduced from 32 to 26 weeks meaning that anyone who currently qualifies for a fuel allowance will get it for 26 weeks, not 32 weeks

The rent supplement and mortgage interest supplement will be restricted

Health:

• The Drug Payment Scheme threshold will be increased from €120 to €132  per month

• Additional charges will be applied in respect of private beds in public hospitals

• Measures will be introduced to reduce the price of drugs and services

• Improvements in efficiencies in procurement will result in further savings

• Cuts in disability, mental health and children’s services will achieve further savings

Education:

• The student contribution of €2,000 is to be increased by€250

• The primary school transport charge will be doubld from €50 to €100 with the maxilum family payment increased to €220

• New post graduate students will experience changes in respect of fees and maintenance grants

• Core funding for higher eduction bodies will be reduced by 2%

• Funding in schools will be reduced in relation to the capitation grants, the supervision/substitution scheme and the abolishment of the modern languages in primary schools initiative

The minimum number of pupils required for allocation of teaching posts will be increased in primary schools

• Reduction to apprenticeship and training scheme costs

Other:

• Savings of €105 million in the Department of Agriculture, Marine and Food

• Savings of €45 million in the Department of Transpoprt, Tourism and Sport

• Savings of €34 million in the Department of the Environment, Community and Local Government

• €79million savings in spending for An Garda Siochana

• A reform of the transport arrangements for ministers

• A reduction in allowances for former Taoisigh