Cowen goes it alone to deliver a wide range of painful cuts
Taoiseach Brian Cowen faces the media after his speech in the Dail
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TAOISEACH Brian Cowen yesterday unveiled a painful range of spending cuts and a tough new levy on public servants.
In his most important speech since becoming Taoiseach, he told the Dail the measures were needed to secure the immediate saving of €2bn in the first step towards stabilising the public finances.
"We will provide the necessary hope and direction and we will take the difficult decisions now, in the interests of the country and our people," Mr Cowen said. The measures include:
- slashing €1.4bn from the public sector paybill through pay-scaled pension contributions.
- Cutting the early childcare supplement from €1,100 to €1,000 a year, and restricting it to children under five, instead of five-and-a-half.
- A €95m reduction in overseas development aid.
- Cuts of 8pc in state payments of professional fees, such as legal and medical areas.
Further savings will be made in restricting civil-service travelling and subsistence rates, not paying due increments that include politicians' pay, as well as in the areas of advertising, PR, consultancies, and Defence equipment.
The State would also save €300m across its 2009 capital budget because "competitive tenders for capital projects are coming in at prices 20pc less than before", Mr Cowen noted.
Despite the collapse of negotiations in the early hours of yesterday morning, Mr Cowen insisted talks with the social partners had not failed.
However, the Taoiseach failed to make a "State of the Nation" address that offered any overarching strategy.
"The inability of the Irish Congress of Trade Unions to agree to the Government's proposals does not mean that the partnership process has failed," Mr Cowen said. "The overall framework remains in place and will be built on."
Intensive discussions had resulted in the unions agreeing on the need for urgent and radical action in extremely difficult times, he added.
Mr Cowen said this was not just for now, but in the context of the Government's overall plan, submitted to Brussels, for a wave of cuts each year from now to the end of 2013.
Roadmap
Attacked by the Opposition for failing to offer a roadmap for the future, Mr Cowen later said the need for further taxation and spending cuts in coming years would be identified by both the new An Bord Snip and the Commission on Taxation.
"Today we are announcing the first steps towards achieving those targets," he said.
The Taoiseach conceded that the new impositions "represent a huge political, economic and social challenge for every single person in this country".
Legislation would be urgently brought forward to give effect to the pension-related measure, which will also apply to local authority staff.
Prudence
"Implementation will be discussed in the normal way with the Public Service Committee of the Irish Congress of Trade Unions," Mr Cowen added, claiming the Government had been "guided by the principles of fairness and prudence in making these tough decisions".
The new pension payment would be graduated across income levels, while the other cuts were aimed at ensuring all sectors of society contribute on an equitable basis to what were "immense" challenges.
"As we pointed out last week, we are experiencing the most profound global economic crisis in 70 years," Mr Cowen said.
He said the Irish economy was beset by an international financial and banking crisis, as well as a worldwide recession, while also "suffering from the aftermath of a large housing and construction boom and a loss of cost competitiveness".
He added: "This is being exacerbated by the decline in the value of sterling relative to the euro."
"We are conscious of the many challenges people face, but it is in everyone's interest that we deal responsibly with the situation and safeguard this country's future prospects."
- Senan Molony Deputy Political Editor
