Saturday 3 December 2016

Cash back in our pockets: Budget gains aimed at low and middle-income families

Kevin Doyle, Charlie Weston and Daniel McConnell

Published 14/10/2015 | 02:30

Minister for Public Expenditure and Reform, Brendan Howlin, and Minister for Finance, Michael Noonan, deliver the Budget on the steps of Government Buildings
Minister for Public Expenditure and Reform, Brendan Howlin, and Minister for Finance, Michael Noonan, deliver the Budget on the steps of Government Buildings

The Coalition will have put an extra week's wages in the pockets of every voter in the country before going to the polls in the New Year.

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As the country finally moves away from the era of austerity, working families and the elderly were the big winners in Budget 2016.

Cuts to the hated Universal Social Charge (USC), a childcare package and a series of measures aimed at pensioners formed the centrepiece of the 'giveaway' Budget.

As a result of what Finance Minister Michael Noonan described as "sensible, affordable steps":

Finance Minister Michael Noonan speaks at a press briefing in Government Buildings yesterday. Photo: Frank McGrath
Finance Minister Michael Noonan speaks at a press briefing in Government Buildings yesterday. Photo: Frank McGrath
  • A young family with an income of €55,000 will be €2,800 better off next year.
  • A married couple with a single earner and no children on €55,000 will have their income boosted by almost €900 a year on foot of the USC cuts.
  • Pensioners will get €156 a year more in the State pension. There will be a Christmas bonus of €173, and a higher weekly fuel allowance, bringing their total gain to €350 a year.

Opposition parties were quick to describe it as an "Election Budget" but Taoiseach Enda Kenny last night categorically said: "There won't be an election this year."

Read more: Prudence is sacrificed for cute-hoor politics

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Click to view full size graphic
Public Expenditure Minister Brendan Howlin on the steps of Government Buildings yesterday. Photo: Steve Humphreys
Finance Minister Michael Noonan speaks at a press briefing in Government Buildings yesterday. Photo: Frank McGrath
Jobs Minister Richard Bruton
Jobs Minister Richard Bruton and Employment Minister Ged Nash sign the Minimum Wage into law yesterday. Photo Sam Boal
Environment Minister Alan Kelly speaking at his Budget press briefing at Government Buildings. Photo: Steve Humphreys
Click to view full size graphic
Click to view full size graphic
Minister for Public Expenditure and Reform, Brendan Howlin, and Minister for Finance, Michael Noonan, deliver the Budget on the steps of Government Buildings

Despite the flow of positive news from the Coalition, there was a major row behind the scenes over Environment Minister Alan Kelly's plan to deliver rent certainty.

The Labour Party is "very unhappy" with the failure to agree a plan to deal with spiralling rent costs in time for the Budget.

It is understood that a deal was secured on the issue last Friday - but Mr Kelly "pulled the plug".

Talks between the Depart- ment of Environment and Finance officials which broke down on Monday are expected to resume in the coming days.

Backbench TDs were last night confident that they now have a viable message to bring back to their constituencies as attention turns to the General Election.

During their speeches Mr Noonan and Public Expenditure Minister Brendan Howlin repeatedly stressed that they wanted to "make work pay".

Mr Noonan said that the average worker would enjoy the equivalent of an extra week of wages every year.

And they made a major pitch to win over self-employed workers, who Mr Noonan said had suffered "unfair treatment" at the hands of the tax system.

Read more: Middle earners are long overdue something back

As a result of the Budget, a self-employed worker earning €40,000 will see a gain of €1,002 in his or her take-home pay.

The big-ticket item was the reduction in the USC, which was introduced as a temporary tax at the height of the crisis in 2011.

The reduction of 1.5pc to the 7pc rate of USC will mean the marginal rate of tax will be 49.5pc for all people earning under €70,444 next year.

Some 42,500 workers will no longer pay USC, after the minister increased the entry threshold to €13,000.

Furthermore Mr Noonan promised that if the Government was re-elected, the USC would be abolished by 2021.

The minimum wage will be raised by 50 cents to €9.15 an hour from January 1.

Read more: Labour finally gets its way as 'every little helps'

Mr Noonan told the Dáil that the Coalition would not "gamble with the future".

He added: "We have consigned to the history books the days of boom and bust and the attitude of 'If I have it, I'll spend it'."

Speaking to the Irish Independent, he said low and middle-income families would be the main beneficiaries of the cuts to USC.

"When you couple the USC cuts with the increase in the minimum wage, there are very significant gains in the Budget," he said.

"A young man or young woman on the minimum wage will gain by the tune of €700, which is a very significant gain.

Read more: Property Tax must change due to 'serious shortcomings'

"Every measure is to remove obstacles to growth and jobs. The policies on the tax side, together with a very strong childcare package, in making work pay, will increase the incentive to work," he added.

"If we can keep the recovery going, then it throws up the revenues to provide the extra services."

The €85m childcare package is set to save €1,000 a year for parents. Free pre-school places will be available for children for up to two-and-a-half years before they start school.

There is also increased funding for after-school care and a €5 rise in monthly child benefit.

"It's by no means a big bang, but it's a good first step on the road to affordable, high-quality and accessible childcare for every family who needs it," Children's Minister James Reilly said.

It was also confirmed that Health Minister Leo Varadkar is to enter negotiations with doctors in the hope of introducing free GP care for all children under 12 by the end of 2016.

Read more: Bertie: 'Those who ridiculed me must ridicule this Budget'

Social Protection Minister Joan Burton raised the old-age pension by €3, gave a €2.50 increase in the fuel allowance, and restored of 75pc of the Christmas Bonus, which she described as an "iconic payment".

She said the Budget would help "ordinary families and individuals in ordinary jobs".

Two of the main planks of the education budget are smaller classes at primary-level and a restoration of half the cuts suffered by guidance and counselling services at second-level. Spending will rise €144m to a total of €9bn, the highest it has been since 2010.

An additional 2,260 teachers will be employed next September, including 600 new resources teachers.

Justice Minister Frances Fitzgerald has gotten the green light for 600 new gardaí and funding for a new operation to target rural crime gangs.

Fianna Fáil's finance spokesman Michael McGrath said the Budget was "the final roll of the dice from a government that has run out of ideas and is about to run out of road".

Read more: Explainer: The three most-talked about things from Budget 2016

He said the Government had made the country a "more unequal place" and cuts made to lone parents, women and the elderly in previous budgets "will live long in the memory".

Sinn Féin's finance spokesman Pearse Doherty said the 2016 Budget was the "epitome of the boom-bust politics of the past".

"You truly have stolen Fianna Fáil's clothes," he said.

Irish Independent

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