“Hookie”’s commentary I find hot and cold at times, (he must be adamantly anti-FF going by his new years eve outburst), was talking in the aftermath about people banging the steering wheels as they caught the drivetime details on the way home.

I wasn’t banging any steering wheels on Tuesday, as I said I remain personally sanguine about these things, in the national interest and all the rest, but I was certainly banging the steering wheel and profaning wildly in the car the following morning. The reason for this was not not the previous days medicine but rather the virtual two fingers given to Ireland Inc by ratings agency Moodys literally the day after the budget when they downgraded Irish soverign credit on the money markets. We went from AAA to AA+ which may add up a billion extra to our borrowing costs which will in turn strain the national finances and potentially lead to more taxation etc etc in a vicious circle. Just how a body of unelected unaccountable financial analysts can wield such power over soverign nations is almost immoral. The rating could not have taken into account the budget details as it was anounced as the markets opened and just as Irish bank shares had begun to rise they turned again thanks to our friends in the ratings game. Completely inappropriate release date and potentially damning for a sovereign nation.

The budget itself was tough as expected but very much progressive. “From each according to his means, to each according to his need”. The government had 4 possible options – 1) Cut welfare 2) Cut public sector pay (again) 3) Borrow More 4) Tax more and spend less… It went for 4. Politicians own pay was one of the first items to be addressed with a range of allowances and pensions scrapped instantly, several remaining capital loopholes were closed, efficiency reviews and early retirement scheme was introduced in the public sector whilst the welfare bill will be audited for abuse cases but largely remains static with payments remaining at current levels (which include a 3% increase in October and a 4% rise in purchasing power since equating to a 7% rise overall).

Lots more including the ‘bad bank’ idea, an exports fund, flagging of possible future measures and more. If things do turn around some of these future steps may not be necessary. There weren’t too many surprises pretty much everything had been flagged in advance and detailed in media, and could have been a lot worse.

The opposition are of course making some noise so far do not appear to have any substantative complaints. They were invited to make submissions and of an approximate 6.5BN hole to be plugged the FG proposal would have salvaged 4 whilst Labour appeared to scrape together a measly 1.5 savings plan. So their numbers don’t appear to work but that’s the beauty of opposition they don’t have to.

Lastly on a practical note, here’s a handy tool to work out how it affects you.

Construction – got it wrong – over dependent – property bubble

International perspective

Contraction property sector

Openness economy

Stablise public finance

Restore international reputation

Stimulate economic confidence

Protect Jobs

Repair banks

“From each according to his means”

Governement examining own costs..

Remuneration scheme

10% additional reduction, (25% reduction already)

No long service increments

Ministerial Pensions in service – gone

Teachers differences – gone

Oireachtas chairs – halved

Whips, vice chairs – no extra allowances

10% – Ministers, Cabinet

Public service levy – 20% down due to pension levy and other cuts

Review of top level pay rates, changed circumstances

Benchmark against Euro countries same scale

“From each according to his means”

Progressive – tax changes –

Minimum wage – 7 euro per week 2% of income

300K PA – 300 per week 9% income

Against extra debt 12.75% GDP ratio national debt

Now targeting 10.75% borrowing target ratio

Limited scope for public expenditure cuts – prefer not to cut public sector pay further, cancel infrastructure or cut welfare rates

Over reliance on construction related activity in economy

“Multi-annual consolidation plan”

Spending cuts = 2.7BN (2010)

Capital Cuts (1.3BN 2010)

Public sector pay roll (reduction cost of payroll – levy saved 1.4BN; Numbers to go now – ban on recruitment; Early retirement over 50s new scheme no penalty; Pensions will be taxed in future; Lump sums possibly in future budget)

Welfare spending 21BN budget (Pension has increased up to now)
No reduction this budget – flag for future years

No December welfare bonus; Job seekers allowance halved ; Rent supplement reduced (fall in rents); Welfare fraud targetted; Non nationals especially; Child benefit taxed from next year

Early childcare supplement – preschool year ; new supplement instead ; existing benefit to be abolished at end of year.

NDP spending programs will be met, tenders more competitive now. Sustain construction and development.

Extra PPPs to fund infrastructures ; consider sale and leasebacks ; national recovery bond

Taxation

12.5% coroporation tax to remain

Tax shelters, loopholes to be cut off. Residential rental reliefs cut. Trading profits residential land gone. Property health schemes (private hospitals) tax reliefs gone.

Mortgage interest relief – available first 7 years only.

Capital gains increase to 25%

New levy rates 26,000 – 75,036 – 174,980; 2% ; 4% ; 6%

1st May 2009 ; extra taxes become effective

Remoulding of public service levy – addresses anomalies at bottom end

25% extra tax on cigarettes ; no increase on alchol or petrol ;

Bank restructure..

I don’t generally believe in dealing on the basis of media frenzy, as there is often a ‘rent-a-mob’ element at work (the Joe Duffy effect) and also I have often found an amount of artificial outrage can be manufactured on the airwaves which is not in fact matched by people on the ground. A good example is the last general election when the media weaved tales of Fianna Fáil canvassers being ran from the doors, whilst in fact I canvassed night after night and met with little, if any hostility, rather an occasional robust debate, in many cases a hearty welcome and probably the majority a polite but brief interaction as people get on with their busy lives.

But I digress. My point is that, media reaction regardless, on this occasion I feel there is substance behind the controversy and my sympathies extend across the divide. I think most people understand in tough times, tough measures are called for and I think most people, whilst they may grumble, will in the long term thank a government for taking necessary but unpopular decisions for the long term greater good. That being so, I believe many measures in this budget present bitter pills but will be swallowed, in a spirit of solidarity and the end justifying the means. The new income levies for example represent tough but fair measures.

However the particular issue of medical card cuts and education cuts I believe are a step too far. I have always believed Fianna Fáil to be a broad church, one that can harbour many ideologies within but I personally have always identified with an ethos of social democracy which I believe runs throughout the party and would have been shared by many of the founding fathers. From the radical polemicism of Liam Mellowes on the “men of no property” to Frank Aiken (a proud Republican if ever there was one) “workers and small farmers republic” right through to men like Lemass, and that ethos continued in greater or lessening degrees right into the current decade when the party pledged to prioritise the old age pension as a manifesto promise I was proud to see honoured in many successive budgets over the past decade. Arguably even this year social welfare payments have been increased as perhaps the only payment moving against the otherwise downwards tide.

However it is not acceptable after a decade of growth, much of it fostered by Fianna Fáil policy and prurience over previous years (I will put it to anyone that MacSharry, Haughey and Ahern in departments of Finance, Taoiseach and Labour laid the path for which Ireland would travel from ’sick man of Europe’ to ‘An economic miracle’ in the turn of a decade) to be in a situation where classroom sizes are now being threatened with once again climbing, threatening to jeopardise the pivotal but pain-staking progress of recent times. The school building programme thankfully continues but I would rather sacrifice my beloved transport projects than see class sizes go backwards.

As for the medical card scheme there are a few points to be made. The proposal is not, as some would have it, an out and out wrestling of the card from people’s grasp in an across the board gesture. Rather the proposal is to end the automatic age-based entitlement that currently exists. As such it is less draconian than may first appear, but nonetheless I have stated my belief in social democracy and social justice, and I count it a principle in a civilised society that certain things are provided on a universal basis, independent of means or ability to pay. Fundamental services should be delivered to our citizens in an advanced society irrespective of means, income or social status. Fianna Fáil pioneered this philosophy when it was still regarded almost subversively radical, introducing free education for all, a public health system, the creation of the welfare state, free old age travel scheme, numerous assists for heating and energy bills many the latter benefits specifically targeted at older people. Are we now to lose decades of policy progress to squeeze a few extra pound from the exchequer purse?

I listed and agreed with much of what Deputy Joe Behan said on tonight’s news after resigning the party whip. He came across a noble and decent man and I hope he will come back to the party because we need people like him to help us to be all that we can be, as a party, and by extension because the Fianna Fáil party is passionately patriotic if it is anything, as a nation. For the first time in a long time I heard Joe Behan give voice on the airwaves to what I know the Fianna Fáil party to be. The voice of cumann secretaries, of grass roots activists, of local councillors and backbench deputies. What to me is the real social democratic heart of the party, an ethos that prizes community values and social justice for all. The voice that will speak up for the bowed whilst encouraging the brave. The party that will enable enterprise whilst nourishing the needy. That will allow progress to prosper but with noone being left behind. The voice and the will that I know the party to have.

I have raised issues of social justice before, at a time when I felt strongly on a an issue of fundamental fairness. I wrote to the Minister at the time, in correspondence that has echoes of the current dilemma where it appears GP contracts are not facilitating the intended workings of the scheme. It is not the first time I have exchanged such correspondence with the present health Minister. I was heartened to see An Taoiseach appear in public view tonight on the nine o’clock news when he said he would progress a ‘pragmatic response’ to what he acknowledges was a far more wide reaching reaction than anticipated.

The over-70s medical card was not up until recently an automatic entitlement. It was introduced only at the start of this decade in an earlier Fianna Fáil budget. It was a progressive move to bring it in. It was a regressive one to take it back. Let’s hope that social justice prevails and that the real soul of the Fianna Fáil party now has the courage of its convictions. I know there is the will. Now let’s find the way.