POLICY CHANGES:THE GREEN Party has pulled back from two of the commitments it made when agreeing the Government's four-year austerity plan.
The party yesterday said it was no longer in favour of the severity of cuts in the social welfare budget and wants lower reductions in non-pay spending cuts in the public sector.
In its “Better Budgeting” document published yesterday, the party insisted it would not depart from the overall aims of the plan to make adjustments of €15 billion by the end of 2014, with a two to one ratio between cuts and taxation.
The party also said it was not in favour of any increases in income taxes. It said it could generate income by broadening the tax base to ensure it was more sustainable and equitable, and through the drawing down of funds from the National Pension Reserve Fund (NPRF).
The four-year plan, published in November, committed the Department of Social Protection to lower its budget by €3 billion each year by 2014 .
The Green Party document disclosed the party would commit to a final reduction of only €1.6 billion in the annual social welfare budget by that date, or €800 million between 2012 and 2014.
The plan was unveiled at a news conference in the Westin Hotel in Dublin yesterday by party leader John Gormley, former minister for energy Eamon Ryan and finance spokesman Dan Boyle.
Mr Boyle said the gap between the Green Party proposal and the four-year plan on social welfare would be made up by shifting funds from the National Pension Reserve Fund and a new approach to the child benefit system, where benefits would be taxed. He also said the Green Party proposal for the social welfare sector did not take into account staffing arrangements, which accounted for some of the difference.
The party’s rationale for the lesser amount was that it would keep social welfare cuts to a minimum, and allow an incoming government maintain basic rates at their current level.
“Increased efficiency, labour activation measures and the integration of tax and social welfare system will make up the bulk of the savings,” the party said.
The second departure is in relation to current non-pay expenditure. The party has set out its plans for cuts of €2.1 billion, significantly less than the €3 billion provided for in the four-year plan.
The party said it would still “undeniably mean cuts in public services”, but they would not be as severe as those set agreed by the party in Government. It would fund some of the shortfall through new non-income taxes.
Mr Gormley said that plan would allow Ireland sort out its public finances in a way that was fair and equitable, and would also allow for the reform of public services. The party was still committed to the overall adjustment of €15 billion.
“There can be no doubt that taking a further €9 billion from the economy is no easy task and will cause a drop in living standards.
“By sticking to some important principles, the bulk of the adjustments can be dealt with in a way that is fair and sustainable,” he said.
The party proposes no increases in income tax over the next four years. However, it does intend to draw down monies from the National Pension Reserve Fund to mitigate some of the larger cuts (in social welfare and current spending), and to fund an additional €1 billion spend on capital infrastructure programmes.
The party also proposes to impose a new site value tax, which will replace the second home tax and yield €675 million annually by 2014.
It also agrees with the higher rate of carbon tax – €30 per tonne. In addition, the party has proposed a new tax on packaging (to be borne by the producer) worth €60 million per annum to the exchequer, as well as new waste levies which will rise to €50 million per annum by 2014.
These levies, if implemented, would be applied to landfill sites as well as to incineration.