Coalition leaders rally round Budget to cut unemployment

A SERIES of schemes tailored to take an extra 18,000 off the dole is the central plank of a Budget which bears all the hallmarks of a three party coalition.

After the public pitches made by Ministers in the run up to its delivery, the Minister for Finance, Mr Quinn, yesterday carefully worded it to appeal to the Fine Gael, Labour and Democratic Left constituencies.

He declared as his objective the rewarding of work, the promotion of enterprise and the strengthening of social solidarity.

The employment schemes for the long term unemployed, coupled with the lower than expected Exchequer borrowing requirement of £729 million, were the measures trumpeted by the three party leaders afterwards.

Mr Quinn awarded some £247 million in tax, PRSI and Social Welfare concessions and took an extra £40 million in revenue, mainly on cigarettes and petrol.

Mortgage interest relief will be reduced from 37.5 per cent to 32.25 per cent in year three of a four year plan to cut it to the basic income tax rate of 27 per cent.

Some £500,000 was provided for increased allowances and expenses for TDs and senators.

Following recent Cabinet divisions, Mr Quinn focused on new band reworked measures for the long term unemployed. He announced a new recruitment subsidy of £80 a week for employers to create 5,000 places for people who have been unemployed for at least three years.

An extra 1,000 full time places will be provided on Community Employment Schemes for people "over 35 who have been unemployed for at least five years.

He also announced that those unemployed for at least one year would retain their medical card for three years after getting a job.

A programme for 18 and 19 year olds, the source of pre Budget tensions between the Minister for Enterprise and Employment, Mr Bruton, and the Minister for Social Welfare, Mr De Rossa, will require them to register with FAS or the Local Employment Service after six months on the live register.

While Mr Quinn said last night that the details of the measure would be announced after consultations between Mr Bruton and Mr De Rossa, Department of Employment and Enterprise sources claimed failure to register would lead to young people being reassessed for continued unemployment assistance.

They could be subject to disqualification for nine weeks if they refused a placement offer without good cause.

The tax concessions in the Budget were generally minimal.

To promote enterprise, Mr Quinn reduced the standard rate of employers' PRSI from 12.2 per cent to 12 per cent, cut the lower rate from 9 per cent to 8.5 per cent and increased the threshold below which this lower rate applied from £12,000 to £13,000 a year.

He proposed a new, lower rate of Corporation Tax of 30 per cent on the first £50,000 of taxable income for all companies from April 1st. For service sector companies, he said, the effective rate of Corporation Tax would be between 30 per cent and 38 per cent, depending on size.

He also retained the current Business Expansion Scheme with the addition of a statutory certification system for all BES projects which raise over £250,000. He decided to continue the Section 35 relief for the film industry, with modifications, for another three years and provided a new mining tax relief.

A 3 per cent increase in all social welfare payments from mid June was announced, coupled with a £2 per month increase in child benefit. Improvements were also proposed in the Back to Work Allowance Scheme, the Family Income Supplement, the carer's allowance, and other schemes. The free travel pass has been extended to visually impaired children.

Increases in indirect taxation were imposed. An additional 10p was placed on a packet of 20 cigarettes, a penny was put on a litre of regular petrol and an extra £3 was levied on ATM "whole in the wall" cards.

Major reforms in traditional budgetary procedures were announced. They include the publication of the main features of the Finance Bill within a couple of weeks and the holding of budget submission hearings by the Finance and General Affairs Committee of the Oireachtas.

In a major departure, Mr Quinn announced that budgets for following years will be presented in the autumn, beginning with the 1998 budget which will be delivered in late 1997.

In a post Budget briefing, Mr Quinn said the average projected live register unemployment figure for 1996 is 275,000, down 3,000 on last year.

Opposition representatives gave a lukewarm response to the employment proposals. The Fianna Fail spokesman on Finance, Mr Charlie McCreevy, and Mr Michael McDowell for the Progressive Democrats, were critical of the minimal tax concessions.