The Budget demonstrates that the Government is firmly committed to making the necessary tough choices, writes Brian Cowen
THE GLOBAL economic and financial crisis is unparalleled in our nation's history. Unfortunately we cannot avoid the global recession which has affected most economies.
When confronted with pressures of the scale and pace of those being seen at the moment, there is an immediate challenge placed before everyone in public life: will we act for the long term even when this requires tough measures? Or will we take the soft option - focus on the short term and hope the problems disappear?
Budget 2009 demonstrates that the Government is firmly committed to making the necessary tough choices to chart a course through these difficult circumstances and back to stable economic growth. It is about protecting the progress that Ireland has made over the past decade. It is about ensuring Ireland has a solid basis for economic recovery when world economic conditions improve.
Up to this year, the Irish economy was growing year on year. Hundreds of thousands of jobs were created. We reformed our income tax system and reduced tax on workers and businesses. We invested heavily in public services and infrastructure to meet the demands of a growing population.
At the same time, we put more than €20 billion into a national pension reserve to provide for the future. We halved the national debt in a decade. Those improvements are there for all to see.
However, the recent sharp slowdown in economic activity has resulted in our tax revenues this year being significantly less than expected. Unprecedented times call for unprecedented measures. Therefore, Budget 2009 is tough - it had to be. Nevertheless, I believe that the Budget is fair.
When money is less plentiful we must divert it to those who are most in need. We increased the income tax band to ensure that workers on modest incomes do not pay tax at the higher rate solely as a result of standard pay increases. We have capped the tax benefits of pension contributions at a significantly reduced level of earnings, so that we do not provide subsidies to those who are not in need.
Those on very modest incomes are sheltered from the necessary increases in charges. With a package worth more than €515 million, we are protecting pensioners and other social welfare recipients from the effects of inflation.
I know there is concern about the changes announced in respect of the medical card for people over 70. However, I believe the changes are not unreasonable. The facts are: approximately 94 out of every 100 will get a medical card, a doctor's card or the €400 grant.
The small percentage remaining will not qualify because they have a pension of more than €650 per week, which is equivalent to the average industrial wage in Ireland.
The necessary income levy requires everyone to make a modest contribution proportionate to their income. The levy spreads the burden in accordance with people's ability to pay - the essence of a fair tax system. Those on higher incomes will pay more and, importantly, they cannot avoid it through tax shelters.
One of the important messages of this Budget is that Ireland is very much open for business. We are keeping our commitment to capital spending of more than 5 per cent of GDP.
The significant investment in transport, research and development, environmental services and communications will enhance the competitiveness of our economy and drive future economic progress.
Despite the severe economic difficulties emerging across the global economy, there is still a strong enterprise sector which is world-class in its capacity and performance. Underpinned by the rapidly evolving scientific, technological and innovation base, this enterprise economy is well-placed for further growth and development.
The basis of Ireland's past economic growth is also that which will fuel our future recovery - our people. It is our people that will always be the most critical ingredient in our performance.
We have one of the youngest and best-educated workforces in Europe. It is their ingenuity and creativity which will drive the next phase of Ireland's economic development. That is the Irish advantage, and we must never lose it.
We must learn from our past experiences during difficult economic times.
The business of government is about making choices. I have great confidence in the wisdom of the Irish people to take the long-term view and understand why we have made the difficult choices that we have in this Budget. The alternatives were more unpalatable.
I do not believe the Irish people would want Government to shy away from the difficult decisions that had to be taken. Nevertheless, I appreciate the sacrifices that this Budget requires.
If we stay the course, however, I know that we will come through these difficult times and on to a path to economic recovery and renewal.