The dust is now beginning to settle from the two-day Budget 2012 and the first visible contours of the ensuing social and economic landscape are beginning to be discernable.
Once again it is clear that poor and vulnerable people and those dependent on our social protection and public health systems are paying a completely disproportionate share of the adjustment. While government protected headline rates in benefits and stuck to commitments not to increase income taxes, the VAT increase will massively and completely disproportionately impact the incomes of poor people (many of whom are in full-time work) while the better off (who could afford to pay more) will be much less affected.
The Government missed a big opportunity to place the burden of its first budget where it belongs by delivering a 2:1 ratio between tax increases and expenditure cuts. It could have done this by increasing the tax take through broadening the tax base fairly and eliminating tax breaks that benefit mostly the better off. Instead it did the opposite and placed the majority of the burden of the adjustment on direct and indirect cuts on the level of income of poor and vulnerable people and on the services that they depend on.
Meanwhile, essential public services continue to be reduced to such an extent that the health and well-being of citizens is being put at risk. The essential infrastructure that supports the delivery of public services continues to be eroded with very serious long-term implications.
The Community and Voluntary sector, often the place of last resort for many vulnerable people, has seen a huge increase in demand for its services and this budget, in line with the seven austerity budgets since the crisis began in 2008, contains a very wide range of reductions to important budget headers that will have significant negative effects on the continued ability of community and voluntary organisations to provide support and services for vulnerable people.
This briefing has been prepared to highlight the key issues from the perspective of the community and voluntary sector. It focusses especially on the key funding lines in the Government’s Estimates and the Comprehensive Review of Expenditure underpinning Budget 2012, funding lines that effect the work of cv organisations and the people and communities they support and serve
In summary, the following are the key issues emerging from Budget 2012:
Although social welfare levels have been protected, the many smaller cuts elsewhere will impose, in a cumulative way, substantial hardship on people dependent on welfare and on low incomes
The increase of 2% in the top rate of VAT will have a completely disproportionate effect on the living standards of households with low incomes.
The VAT increase will also result in a very considerable loss of income to charitable organisations that cannot recover VAT and must pay it out of charitable income donated from members of the public
The headline reductions of those budget headings of most importance for the funding of voluntary and community organizations are as follows:
- Health, between -4% and -12%
- Community and Rural Development, -4%, with the Local and Community Development Programme -12.6%
- Family Resource Centres, -5%
- Community Employment, -11.8%
- Social housing, -23%
- Children and family support services, -3%
- Action against drugs, -7%
- Sports, -9%
- Arts & culture, -11%
- Dormant accounts, -41%
The Wheel worked with our partners in the CV Pillar to make a strong case in the run up to Budget 2012 that Government should make an assessment of what the long term impact of the cuts to services and service reductions will mean for Ireland in ten years’ time. It is clear that Budget 2012 adopted a “death by a thousand cuts” approach devoid of any coherent, integrated vision of Ireland’s future.
Without a major rebalancing in Government’s approach to future budgets, the process of poor people being dispossessed seems set to continue as their resources (financial and services) are appropriated to re-pay those who knowingly took risks, gambled their resources and lost.