Business

Saturday 10 December 2016

Welcome to the new order of austerity

Nick Webb and Roisin Burke look at how everything will change after last week's €15bn IMF austerity package -- from how long we live, to what kind of drug addicts roam the streets, down to what we watch on television

Published 28/11/2010 | 05:00

SIGN OF THE TIMES: A woman walks past a chalkboard outside a cafe on Kildare Street last week
SIGN OF THE TIMES: A woman walks past a chalkboard outside a cafe on Kildare Street last week

Living standards will be on life support when the four-year plan kicks in. The €15bn IMF/EU-directed austerity plan will have a massive impact on our tax bills, but also on our standard of living.

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"There will be at least a 20 per cent reversal in living standards" as the effects of the four-year plan take hold, warned economist Jim Power of the Friends First financial services company. "And this thing isn't over yet," he added.

"I wouldn't take what's in the plan as being written in stone; there may be worse to come. Further bank debt and other fiscally damaging factors mean the picture is by no means complete."

Here are just some of the ways the package will impact on the way we live.

Leisure

At 80,000 tickets, the Kings of Leon concert at Slane sold out in 40 minutes... or so we're told by the organisers. The band's gig in the O2 took just two minutes.

But down the road at the Aviva stadium, things aren't so good, with poor attendances at both football and rugby matches. The fixtures list doesn't bode well.

Pubs and restaurants are both suffering badly and the hike in VAT rates will only make matters worse.

"One-in-three restaurants will close over the next six months if business and conditions don't change, said Restaurants Association boss Adrian Cummins.

On the plus side, cinema seems to be performing well, with the top 10 movies at the box office generating close to €36m, compared to €32.8m for the previous year's top 10.

Consumer spending

With families facing average tax hikes of €4,600, it's a heck of a lot of money that isn't going to be spent on new cars or sofas or Manolo Blahniks. With property prices predicted (by some) to fall another 20 per cent, consumer confidence is only going to diminish.

Inflation returned for the first time in nearly a year and a half, with prices up 0.7 per cent over the last 12 months.

This upward spike has been most notable in food, which saw flour prices jump 8.8 per cent in October alone. Pork, tea, coffee, fruit juice, sweets and ice cream all saw worrying price hikes last month, according to the CSO. On the plus side, potatoes are miles cheaper, falling 11.3 per cent in the last year.

Crime

With up to 1,200 fewer gardai on the beat over coming years, crime figures are bound to increase sharply.

Crime figures from the CSO show that incidences of "robbery from the person" increased by 21 per cent in the first three months of the year compared with the same period last year.

Heroin use has soared in the recession, with seven out of every 1,000 people classed as opiate-users.

Boomtime drug cocaine has also fallen out of fashion, with seizures falling from 1,749 occurrences in 2007, down to 635 last year.

Communications

The State's proposals for rolling out digital television have become a shambles due to the recession. Analogue television will be switched off in 2012 and there's going to be a lot of snow on televisions.

Radio listenership has slipped slightly from 86 per cent down to 85 per cent according to the latest JNLR/Ipsos MRBI figures. Dwindling advertising revenues may see a further shake-up in the swathes of local and national radio.

Heavily subsidised smart phones are flooding the market as mobile phone companies try to shift consumers on to data tariffs. But mobile phone revenues tumbled 8.3 per cent in the last quarter, so belt-tightening is hurting the market. Mobile and fixed-line broadband continues to grow. Landline numbers are tumbling, according to ComReg's latest quarterly data report.

But consumer spending will hit purchase of new technologies like iPads and Kindle.

Transport

The vast white elephant of Terminal 2 at Dublin Airport will be under-utilised as passenger numbers continue to fall because of weak spending. Having lobbied so hard to get the €10 travel tax repealed, Ryanair may be under pressure to deliver passengers into Ireland if the tax gets chopped.

With CIE subsidies in the firing line, rail and bus fare increases are a shoo-in -- plus a fall in the standard of service to the public.

There will also be more use of tolls to fund maintenance of the roads. Increased carbon taxes and VAT will also see car journeys fall, which means fewer traffic jams.

Health

Taking €1.4bn and 6,000 staff out of the health sector -- even if they are pencil-pushers rather than frontliners -- is taking a risk with the provision of patient services.

Hospital ward closures and bed reductions are also planned, as there's a push to divert patients towards cheaper day-care and outpatient services to save on bed costs.

The slashing of healthcare budgets is likely to see a dampening of our life expectancy rates. Health insurance subscription charges could rise, as private bed costs in public hospitals are to be hiked.

Medicines will get more pricey as the drug-payment scheme is being restricted.

Education

Some 1,550 extra staff are actually going to be hired in the education system by 2014 -- but that's just about enough to keep up with the burgeoning population. Meanwhile, contracts for some other key education staff, like special-needs assistants are for the chop.

Private schools thrived during the boom, but with top schools charging €5,000+ a year and a new €2,000 third-level "student subscription" fee, some parents may have to rethink their child's future at Blackrock, Clongowes, Alexandra and the rest. There goes the old boys' network...

The college grant will be cut by five per cent. Fas schemes and other education training allowances are to be axed to the tune of €21m.

Social

Taking a €3bn chunk off the social welfare bill as jobless numbers keep climbing is a recipe for social unrest.

The planned 20,000 public service staff cuts will deliver many straight on to the live register. Charities say more people are struggling to put food on the table and pay for heat and light. This plan won't make things any easier.

With big staff and admin cost, axings at local authorities, social amenities like libraries, sports pitches, playgrounds, parks, community centres and public swimming pools, and services like street cleaning and traffic management will be under threat.

Sunday Independent

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