Stephen Kinsella: This is an EU/IMF budget
Published 05/12/2011 | 17:46
"Just about every sector of society will experience cuts. We are talking about hundreds of thousands of people being affected. But it's definitely hitting the less well off. "
Q: Did the Government have any real choices in the cuts?
A: No. This is an EU/IMF budget. They don't have any choice, the name on the label is meaningless, this could have been a Fianna Fail or even a Sinn Fein announcement. It would have been exactly the same. They have to make these choices, it's as simple as that.
Q: Who will be worst hit?
A: Just about every sector of society will experience cuts. We are talking about hundreds of thousands of people being affected. But it's definitely hitting the less well off. But that's always going to be the case, because it is the less well off who depend on welfare payments and publicly-financed schemes.
Q: How can the government say they are not cutting social welfare rates while changing the way jobseekers benefit is calculated?
A: This is a worry. It would be the most disingenuous statement by a minister in years to say I haven't cut the rates if the absolute value of the payment has dropped significantly.
Q: And to declare child payments will be protected although rates will be "standardised" over the next two years?
A: To standardise generally means a drop.
Q: Has any section of society escaped unscathed?
A: I think the elderly seem to have escaped slightly this time, the actual rates of entitlements for the likes of widow pensions, for example, haven't been cut. But if you take, for example, the fuel allowance cuts - this is astonishing. It will mean some people will have cold homes.
Q: How would you sum up the thinking behind the spending cuts?
A: The strategy has been to avoid controversy by reducing everything by 1, 2 or 3pc across the board. It's an interesting and politically savvy approach. Very few can claim they have been particularly singled out. It's a bid to increase solidarity, spreading it out makes it harder for any one group to feel aggrieved. It should work well from a public control point of view.
Q: What will the impact be of these spending cuts on the economy?
A: We only have half the picture... We will need to wait for part two before we can start doing the full calculations.
Q: Any surprises?
A: I was surprised not to see more cuts to the likes of military expenditure apart from the already announced barracks closures. I was amazed we didn't see more root and branch reform or extreme examples like phasing out some of the institutes of technology, or a review of some FAS or social welfare programmes, for instance.
Q: How relevant are these cuts against the backdrop of the Eurozone crisis and international uncertainty?
A: All this may be for nothing. We have predicated everything on an export-led growth path. Everything comes down to exports. If we don't have that, then these cuts won't matter.
Stephen Kinsella is an economist at the University of Limerick
In conversation with Press Association’s Brian Hutton