The Wheel Responds to Budget 2010

A balanced assessment of Budget 2010 must conclude that while Government has attempted to protect vulnerable people, it has failed to ensure fairness in the effort to put Ireland on the path to recovery. 

Poor people will be made poorer by the 4.1% cut in welfare rates, by prescription charges for medical-card holders, and by the increased cost of fuel.  

Newly unemployed young people have been singled out for particularly harsh treatment: existing benefits will be reduced by 25% (to €150 per week) for people under 25 years and by 50% (to €100 per week) for people between 20 and 22 years.

Below is a quick outline of some of the key points from the Budget:

  • Government fails to achieve a fair “adjustment” in Budget 2010 – the tax take should have been increased to share the burden of recovery.
  • Unfair tax breaks that benefit the wealthy remain in place.
  • Welfare rates have been cut, child benefit rates have been cut and Budget 2010 is particularly tough on unemployed young people.
  • Deep cuts to service budgets – many community and voluntary organisations and the people they serve will be negatively affected.
  • There are cuts of €25m to the overseas aid budget. The latest cuts mean the total spend for 2010 will be €671m - coming after a 24pc cut of
  •  €224m in 2009.
  • Insufficient stimulus for the economy and no plan for jobs.

      BUT

  • Minimum wage unaffected.
  • Pensions remain as they were (for the moment!).
  • Welfare beneficiaries are to be compensated for cuts in child benefit and to a lesser extent for the effects of the new carbon tax.
  • Many draconian recommendations contained in the McCarthy Report have not been implemented.
  • The 0.5% reduction in the VAT rate will benefit charitable organisations
  • Community and voluntary sector support-programmes funded through the Department of Community, Rural and Gaeltacht Affairs will continue, but at reduced levels of support.
  • A start – albeit completely insufficient – has been made in taxing the wealthy and taxing wealthy tax exile

While Government has failed to achieve a fair outcome in Budget 2010...

In our pre-budget submission, The Wheel and our colleagues in the Community and Voluntary Pillar argued that to achieve a fair adjustment in Budget 2010, Government should deliver an Integrated Social and Economic Recovery Strategy consisting of a combination of:

  1. Increasing the tax take
  2. Securing better value for money in the delivery of our public services
  3. Reforming the public sector
  4. Targeting expenditure cuts where required but ensuring that vulnerable people are protected  
  5. Focusing expenditure on the common good to provide required infrastructure and public services.

In focusing overwhelmingly on achieving the adjustment through expenditure cuts (point 4 above), Government has failed to adequately address these requirements.  

The tax take has not been sufficiently increased (although Government has committed to using the proceeds of the Carbon Tax to support rural transport and to address fuel poverty), there appears to be no strategic approach outlined to achieving better value for money or public sector reform (now perhaps made even more difficult by the unions stance to the pay cuts).  

Government did however signal its intention to introduce a property tax, water charges and has begun the process of ensuring that wealthy people who benefit from tax breaks  - and tax exiles - will have to pay a minimum amount of tax in future.

...at least the more draconian recommendations in the McCarthy Report were not implemented.

The McCarthy Report contained a string of recommendations that would have  - if implemented – devastated the community and voluntary sector and the people we serve.  The funding programmes operated by the Department of Community, Rural and Gaeltacht Affairs remain in place – albeit with significantly decreased budgets in many cases – and the Family Support Agency and its programmes continue in existence (contrary to the McCarthy recommendations).

There are no new developments in the budget specifically affecting those organisations that have CHY numbers, other than an as-yet-to-be-clarified amendment to the tax relief scheme for donations from very high earners who make significant Major Gifts to charities.  All charities will however benefit from the 0.5% reduction in the VAT rate.

In addition to public sector pay cuts and social welfare rate cuts, almost all Government expenditure headers have been reduced...

Community and voluntary organisations in receipt of funding from Government should examine the Governments estimates (available at www.budget.gov.ie) and make contact with the relevant department to ascertain whether the plethora of expenditure cuts (averaging between 5 to 10%, but in some cases much larger) will have implications for them. Over €400million of service reductions have been announced in the HSE budget.

There is also no evidence that Government has examined the effects that the cumulative impact that the many cuts to services budgets will have on the people who are dependent on public services.  We will need to keep a close eye on how the myriad cuts to services budgets (amounting to €980Bn) cumulatively affect vulnerable people.

....but the Department of Community Rural and Gaeltacht Affairs has stated that while gross funding is reduced by 13%:

“our primary concern is to make every effort to ensure that the daily front line services provided through the Department are protected – especially those focused on the needs of the most socially deprived communities”.  

The Wheel has been informed that the Department expects to continue funding programmes where commitments exist, albeit at reduced levels which will be communicated in due course (see DCRGA press-release as appendix). That said:

  • The Scheme for National Organisations budget has been reduced by 10% (a reduction of €1.6 million)
  • The Community Services Programme budget has been reduced by 9% (a reduction of €4.65 million)
  • The Local and Community Development programme budget reduced by 10% (a reduction of €7.1 million)
  • The RAPID and CLAR programmes have been reduced by 24% and 53% respectively.

The Family Support Agency’s budget also remains (although reduced by €3.1million or 9% it was an organisation recommended for abolition in the McCarthy Report).  This is good news for the many family resource centres funded by the Agency

Conclusion

Community and voluntary organisations are now facing into very testing times, providing for the needs of vulnerable people - who have seen their already meagre incomes reduced – and trying to do this with reduced organisational incomes themselves.

Government must ensure that funds and supports remain available to support community and voluntary organisations in their vital work at this most critical time for vulnerable people.

Government must also continue to work with community and voluntary organisations in meeting the needs of disadvantaged people in Ireland, with a view to making Budget 2011 a fairer budget for vulnerable people

For further information on the content of this report, please contact:

Ivan Cooper, Director of Advocacy, The Wheel
Tel: 01 4548727 (mobile – 086 8093083)
Email: ivan@wheel.ie
www.wheel.ie