In its first Budget, the Government managed to generate a correction of over â‚¬3bn without touching headline rates of tax or welfare, apart from a VAT increase that will barely break even. Magic, surely? This post explores the magic trick and finds it relies on the sleight of hand of assuming the equivalent of 200,000 new jobs in 2012, while still not grasping the nettle of reforming the three main areas of Government spending: social welfare, health and education.
The need to close Ireland’s deficit from â‚¬15bn to â‚¬4bn means that over coming years, â‚¬7bn in public sector expenditure will need to be cut. Social welfare payments – almost all of which are not means-tested – comprise one third of the â‚¬60bn in discretionary spending each year. This post outlines how to reform the system so that it is simpler and fairer, while generating â‚¬2bn in Exchequer savings.