Recovery plan unveiled
The Government today unveiled a raft of Budget measures to restore the State's finances by 2014.
Measures include cutting social welfare by €3bn, reducing the public sector pay bill by €1.2bn and increasing VAT by 2pc.
The four-year plan warned that the drastic cuts will negatively impact on the living standards of the people of Ireland.
The budget roadmap includes the following savings and tax reforms:
- The minimum wage is cut by one euro to €7.65;
- VAT will increase 1pc to 22pc in 2013 and to 23pc in 2014;
- Corporation tax will remain at 12.5pc;
- Public sector workforce to be cut by 24,750, bringing levels back to 2005 levels;
- Student fees will increase;
- Water metering will be brought in by 2014;
- Carbon tax charges will double to €30 a tonne, raising €330m.
The National Recovery Plan stated: "The Plan will help dispel uncertainty and reinforce the confidence of consumers, businesses and of the international community.
"The tax and expenditure measures contained in this Plan will negatively affect the living standards of citizens in the short term.
"But postponing these measures will lead to greater burdens in the future for those who can least bear them, and will jeopardise our prospects of returning to sustainable growth and full employment."
Taoiseach Brian Cowen said no one can be sheltered from a plan for national recovery.
"It's to bring certainty for our people," Mr Cowen said.
"It's to ensure that they have hope for the future. To let them know that while we have a challenging time ahead, we can and will pull through, as we have in the past.
Mr Cowen said the plan would see workers facing taxes they paid in 2006 while the Government would oversee spending levels similar to 2007.
"It's a time for us to pull together as a people. It's a time to confront these challenges and do so in a united way," the Taoiseach said.
Property will be taxed under a new site value levy designed to raise €530m and used to fund local services.
The public sector will be further hit through pension reform and 10pc reductions in pay levels for new entrants, and those who have retired from State jobs will be hit with pension deductions to raise €100m.
The plan was unveiled in Government Buildings, central Dublin, by the Taoiseach, Finance Minister Brian Lenihan and John Gormley, leader of the junior coalition partners the Greens and Environment Minister.
Mr Gormley said his party focused on education and environmental measures, such as water rates, renewable energy and broadband.
"We are proud that education spending will be increased over the coming period," he said.
"This is vital to protect the needs of a rising generation.
"Increased spending on education is, above all, central to the efforts to rebuild national prosperity."
The Government predicted that the economy will grow by 2.75pc on average between next year and 2014.
It forecast 90,000 new jobs and unemployment easing back to below 10pc over the period.
The plan is designed to reduce the State's running costs by €15bn by 2014, with €10bn from spending and the rest from tax.
The December 7 Budget will explain in detail how €6bn of the savings will be pushed through next year.