The government’s expenditure review committee, An Bord Snip Nua, has released an unapologetic report, urging the government to ruthlessly cut expenditure in order to reassert control over the state's spiralling deficit.
Irish Minister for Finance, Brian Lenihan, upon receiving the report, announced that the government would consider its findings, and set about hammering out measures to save an additional EUR2.5bn per year. He admitted that the report’s recommendation to cut social welfare spending, however unpopular, would be included in some form.
Social welfare spending currently accounts for 37% of total government expenditure, costing the government EUR21bn annually. Bord Snip’s report would have the government reduce welfare spending by EUR1.8bn, through cuts to social welfare payments, and 17,300 public sector redundancies.
The report notes: “It is a simple fact that many long-established and sensitive expenditure programmes, including those in the Social Welfare area, are among the most costly to the Exchequer, and it will not be possible to insulate these areas from review in the context of identifying the necessary large-scale savings.”
Responding to the report, Lenihan indicated that whilst cuts to expenditure, similar in form to those recommended by Bord Snip, would form the majority of the austerity package, tax rates in Ireland would not be left untouched. Lenihan is due to receive a report from the Commission on Taxation detailing where tax would be best increased. It is anticipated that the Commission’s report will largely tally with that of the Bord Snip. Whilst it will undoubtedly advocate higher taxes in some areas, it is expected to recommend significant social welfare cuts.
Lenihan disclosed that whilst the content of the Bord Snip’s report would be reviewed in depth during the course of the week, it would be in September, when meetings resume, that comprehensive proposals would be drafted. It is thought likely that public sector wages will come under increased scrutiny. It has been announced that a report examining public sector remuneration is underway.
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