Ireland details new budget cuts to welfare, health

AP News
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Posted: Dec 05, 2011 1:45 PM
Ireland details new budget cuts to welfare, health

Ireland unveiled new spending cuts Monday that will reduce civil servants' pay, increase waiting times for medical services, and lower monthly payments to parents with large families.

Ireland's minister for expenditure and reform, Brendan Howlin, said the government had no choice but to impose euro1.4 billion ($1.9 billion) in spending cuts to health, welfare and other state-funded services as part of Ireland's commitments under terms of its year-old international bailout. The figure represents 2.7 percent of current government spending.

"No government, whatever its numbers, wants to be the bearer of bad news. But our options are extremely limited. The public knows this," Howlin told lawmakers as he spelled out the first half of Ireland's fourth austerity budget in four years. The second half, detailing euro1.6 billion ($2.15 billion) in tax increases, is coming Tuesday.

Ireland last year was forced to negotiate a euro67.5 billion ($92 billion) line of foreign credit after the cost of its bank-bailout program overwhelmed state finances. The EU-IMF loan package is designed to keep Ireland funded through 2013 as the country merges and revives its debt-crippled banks. But as part of that deal, Ireland has promised to reduce its deficit to the eurozone limit of 3 percent of GDP by 2015 through four more years of austerity.

Ireland is planning euro3.8 billion ($5.1 billion) in total 2012 cuts and tax hikes in the hope of shrinking next year's deficit to 8.6 percent of GDP. Its 2010 deficit surged to a modern European record of 32 percent, reflecting exceptional bank-rescue costs.

Howlin said the government hoped to reduce this year's total spending of euro57.7 billion to euro55.8 billion next year, euro54 billion in 2013 and euro52 billion in 2014.

He said next year's cuts would reduce health costs by euro543 million, welfare benefits by euro475 million, and education by euro132 million. Civil servants in all three areas would see their numbers, overtime and expenses curtailed, saving euro400 million.

The welfare system currently accounts for 40 percent of the government's total spending, health care 27 percent, and education 17 percent.

Howlin cut welfare much less than expected, based on previous government plans, reflecting the involvement of the left-wing Labor Party in Ireland's 9-month-old coalition government.

He said parents with three or more children would see their monthly child payments shrink. But against expectations, he kept the euro140 monthly payment intact for first and second children.

On education, Howlin said the fee that students must pay annually to attend state-funded universities would rise euro250 to euro2,250, generating an extra euro18.5 million.

As part of each department's cuts, he said the 2012 civil service payroll would fall by euro400 million through 6,000 layoffs and reduced pay for overtime and expenses. Ireland's unemployment is currently 14.5 percent, near an 18-year high.

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Online:

Ireland's austerity plans, http://budget.gov.ie/Budgets/2012/2012.aspx