The Irish government has unveiled a
range of tough austerity measures designed to help solve the country’s debt
crisis.
Among the spending cuts and tax
rises are a reduction in the minimum wage, a new property tax and thousands of
public sector job cuts.
The four-year plan is designed to
save the state $20 billion.
The government is also negotiating
a bail-out package with the EU and IMF, expected to be worth about $113
billion.
Controversially, the plan does not
include any revision to the government’s growth forecast, which is considered
by most private economists to be too optimistic.
The government still expects the
economy to average 2-2.5 per cent growth in 2011, and 3.5-4.5 per cent the year
after.
But rating agency Standard &
Poor’s – which cut the Republic’s credit rating – said it expects close to zero
growth over the next two years.
Lower growth would mean lower tax
revenue, higher unemployment benefit payments and could lead to bigger losses
at Ireland’s banks than is currently forecast by the Irish government.
The Taoiseach, Brian Cowen, claimed
that the cuts would give the country “prospects and prosperity
again”.
But the plans, which include public
sector pay cuts and layoffs, were met with immediate opposition from unions.
“This is a road map back to
the Stone Age,” said Jack O’Connor, head of Ireland’s biggest union,
Siptu. “Ireland needs a strategy for growth, but this plan will achieve
the opposite.”
The union is organising a march on
Saturday in protest at the cuts.
As if the Irish haven’t sacrificed
enough, the Irish government has announced that it will create a new four-year
‘Solidarity Bond’ so that the Irish people can lend to their government”
The recovery plan outlines plans to
cut 24,750 public sector jobs, achieve savings in social welfare spending of $3.7
billion, and raise an additional $2.5 billion from income tax.
The government will also reduce the
minimum wage by 1 euro, to 7.65 euros an hour, and raise VAT from 21 per cent
to 22 per cent in 2013, with a further increase to 24 per cent in 2014.
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