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Thursday 18 September 2014

Revealed -- how Cowen splurged on social welfare

Pork-barrel politics led to €6bn rise in benefits

Published 07/10/2012 | 05:00

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FIGURES compiled internally by the Department of Social Protection reveal that four years of austerity have clawed back less than half of a massive €6bn in increased social welfare expenditure, which Brian Cowen granted during his period as Finance Minister from 2004 to 2008.

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A departmental analysis of reductions between 2009 and 2012 reveals that a series of hotly contested cuts will secure savings of €2.7bn.

The main cuts consist of €928.4m in weekly rates of payments, €381m of reductions in child benefit and the abolition of the ' Christmas bonus', saving €250m.

However, this is still less than half of the increases that Brian Cowen provided as Minister for Finance during his four-year tenure.

At that time, in an economy that was experiencing low inflation and almost full employment, expenditure on social welfare projects ballooned from €11.291bn in 2004 to €17.809bn in 2008.

During that era, the number of welfare benefits doled out by the State increased from 957,362 in 2004 to 1,208,883 by 2008. The number of actual weekly beneficiaries also increased, from 1,463,921 to 1,799,875 or approximately 80,000 a year.

The most up-to-date figures also reveal just how circumscribed Social Protection Minister Joan Burton's options for effecting savings are in the absence of any proposals to cut pensions and unemployment benefits.

Pension payments of €6.255bn constitute 30.4 per cent of the total social welfare spend, while social welfare benefits and allowances of €5.707bn constitute 27.8 per cent of her budget.

In contrast, expenditure on employment-creation initiatives, including Community Employment, JobBridge, TUS and various other employment supports, amount to over €983m or a mere 5 per cent of the department's expenditure.

Ms Burton has, however, noted that "this represents an increase of €122m or 14 per cent over 2011 and is a clear indication of my priorities in this area."

These figures also mean that, essentially, the €540m in cuts must come from 40 per cent of the departmental budget. The minister's options will, however, be further restricted by an increase in expenditure on pensions of €200m in 2013 as a consequence of the increased numbers of pensioners next year.

Outside of pensions and income support, the highest-spending areas of the department are illness, disability and carers, at €3.439bn or 16.7 per cent of expenditure.

Children, at €2.4bn, made up 11.7 per cent of expenditure, whilst supplementary payments of €1.164bn make up 5.7 per cent of total spending.

Mr Cowen's increases were only part of a broader pattern during the Ahern era of widespread and untargeted welfare increases, where a pattern of the doubling of beneficiaries and the tripling of costs from 2002 to the present day has emerged.

In a State of 4.6 million people, 2.248 million citizens -- just under half -- are weekly beneficiaries, in some form or shape, of social welfare payments.

The increase in other areas is even more startling. Since 2002, illness benefit increased from 54,590 recipients at a cost of €385.297m to 73,397 at a cost of €875.641m.

Invalidity payments increased from €403.617m to €606.512m, whilst payments for disability allowance more than doubled from €407.585m (62,783 recipients) to €1.089bn, which had 102,866 beneficiaries in 2011.

One of the main consequences of the pork-barrel-style clientelism of the Ahern era was the astonishing doubling of supplementary welfare payments from €611.986 in 2002 to €1.329bn in 2011.

During the last decade, payments for electricity, TV, the telephone, free travel and fuel increased from €296.043m to €711.011m.

Some of the more intriguing discretionary payments include three different forms of bereavement grants and a payment covering lost or stolen money.

Sunday Independent

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