THE GROUP asked to identify reductions in public expenditure will propose cuts of €5 billion when it reports to Minister for Finance Brian Lenihan this week.
The Special Group on Public Service Numbers and Expenditure Programmes, informally known as An Bord Snip Nua, will make more than 400 recommendations for public sector cutbacks.
It will primarily focus on public pay and pensions, and social welfare.
Several sources centrally involved in the process, who spoke on condition of anonymity, said the cuts would span across all Government departments and State agencies and provide a list of options to the Government on where cutbacks can be applied.
The six-person group, chaired by UCD economist Colm McCarthy, was established late last year.
About €1.5 billion will be cut from the €21 billion social welfare budget, with child benefit and rent supplements being the primary targets. It is understood to recommend reductions of between 20,000 and 30,000 in public sector numbers through natural wastage, as well as the lowering and withdrawal of a large number of allowances currently received by public sector workers.
Minister for Social Affairs Mary Hanafin accepted yesterday that child benefit is likely to be taxed or means-tested from the beginning of next year, leading to savings of some €400 million.
Taoiseach Brian Cowen said the report was the start of a process that will culminate with the budget in December. Speaking at the Irish Derby at the Curragh, he said: “We have a challenging situation and there is no doubt that the Government is determined to do whatever is necessary to get our public finances back into order. That is in all of our interests, even if it involves, in the short-term, decisions which obviously will be difficult but have to be confronted . . .”
While the report will be presented to the Minister this week, it is still unclear whether he will present it to Cabinet next week, or later in July. There is also uncertainty on whether or not it will be published. Several influential figures involved in the process favour the publication of the report, preferably in mid-July, on the grounds that the public will be left in no doubt of the severity of the measures required. One source close to the process emphasised the report was not a stand-alone document, but was contingent on the report of the Commission for Taxation, due to be completed at the end of July.
“Some measures can have a cumulative impact that can adversely impact on one group. The budget has to be considered in the round, and you have to look at the whole tax benefit,” said the source. It was also pointed out that the cuts totalling €5 billion were not necessarily to be achieved within one year. Mr Lenihan has said that he would seek reductions of approximately €4 billion in December’s budget.
The Green Party’s finance spokesman, Dan Boyle, yesterday said the party accepted that dramatic cuts had to be made, but that the party’s attitude would depend on how the Department of Finance proposes to implement the measures.
“We know it’s going to be a very difficult budget,” he said.