Cut dole, medical cards and child benefit – IMF

THE International Monetary Fund (IMF) heaped pressure on the Government last night to means-test child benefit, remove the automatic right to a medical card for the over-70s and cut the dole.

It also encouraged the Coalition to set the planned property tax at a “suitably high level”.

Admitting “few low-hanging fruit remain” for cuts, the Washington-based paymasters said future Budgets needed to focus on “efficiency and fairness”.

IMF chiefs also expressed confidence in the Government’s ability to close the spending overrun in the Department of Health.

In a stark assessment of what it wanted to see in the next Budget, the IMF outlined a series of unpalatable options to cut spending, while protecting the vulnerable.

IMF mission chief for Ireland Craig Beaumont specifically mentioned removing the universal right to child benefit for all families and medical cards for the over-70s.

He suggested targeting child benefit at poor families and limiting the issuing of medical cards.

"Child benefits are universal. There is no means testing so all families qualify for child benefits. And the child benefit amount has risen very substantially in the last decade so it is quite an expensive part of the social welfare budget," he said.

"We are just laying out the option that you consider paying it to the families who are relatively less well-off and save quite substantial expenditures in the process."

Mr Beaumont also raised the highly contentious question of giving everybody over 70 a free medical card.

"Similarly with the medical card, all persons over a certain age, I think it's 70, qualify for a medical card. The population over 70 is going to be rising so the cost of the medical cards will keep on rising.

"One way to contain that type of demographic pressure is to again look to some means testing on eligibility for those medical cards," he said.

IMF bosses, who were in Dublin for a regular review of the economy, also told the Government to cut high social welfare benefits to encourage people back to work.

The organisation warned that dole payments were high by international standards and responsible for "low exit rates" from the Live Register.

Deficit

Forecasting the economy would grow by just 0.5pc this year, it said certain welfare payments should be means-tested to avoid long-term unemployment.

The Government said it was not going to comment on the IMF's specific suggestions.

Finance Minister Michael Noonan's spokesman said the Government was committed to meeting its target and reducing the deficit to 8.6pc of GDP in 2012 and to 3pc by 2015.

"The Cabinet will take the budget decisions at the time of the Budget and will endeavour to implement the measures in as fair a way as possible," the spokesman said.

The spokesman said the IMF review acknowledged the progress that had been made in returning the economy to growth, restoring order to the public finances and dealing with the banking crisis.

"The IMF also pointed out (that) many challenges remain," the spokesman said.

The IMF praised the Government for its implementation of the Croke Park Agreement, the €2.25bn stimulus plan announced this week and the continued work towards meeting debt repayment targets.

Mr Beaumont said the Croke Park Agreement, a pact between the Government and public sector workers aimed at protecting jobs while scaling back resources, had made significant savings.

"It has been done in a way which has enabled public services to be protected and for gains to be achieved," Mr Beaumont said.

IMF European department deputy director Ajai Chopra said the organisation was assisting in the work to reduce Ireland's bank debt.

He said efforts must be taken to honour Europe's commitment to separate Ireland's sovereign debt from its banking debt.

"The IMF position on burden sharing is well-known. Much of this debt has been repaid," Mr Chopra said.

"What we now need to do is to make the June 29 summit commitment into something that helps Ireland."