Budget war over social welfare increases for 400,000 people
Social welfare will receive €350m in the Budget, but trouble is brewing over how and when it is spent, writes Jody Corcoran
THE Budget war over increases in social welfare payments will go right down to the wire with Fine Gael and Fianna Fail last night still at odds over when the benefit hikes should be paid.
Social Protection Minister Leo Varadkar told the Sunday Independent the aim of this week’s Budget is to ensure “everyone feels it in their pocket — even if it is modest”.
The minister’s spokesman later said the Government is united in its view that there should be benefit hikes for a wide group of people — and not just pensioners.
He said the minister would like to increase all payments by €5 a week — as proposed by Fianna Fail for pensioners — but said this will not be possible as it would cost €350m a year.
Mr Varadkar proposed delaying increased welfare payments until June next year to ensure 400,000 people could receive increases in their weekly payments.
But speaking before the Fianna Fail presidential dinner last night, Micheal Martin said he wanted the pension hike to be introduced in January.
However, he did not say this was a red-line issue for the party.
“I think there’s an element that Leo feels that if he can have a go off Fianna Fáil consistently, and try to undermine Fianna Fáil, that might gain him traction in whatever subsequent election he might find himself a party to,” Mr Martin said.
The Sunday Independent understands both parties are likely to settle on payments being made in April or March.
It has also emerged that there will be no cuts to the prescription charge in Tuesday’s Budget. Health Minister Simon Harris is understood to favour using his funding this year to improve services and reduce waiting times for hospital beds. It is likely he will cut prescription charges in future budgets.
The Government is also expected to approve a 10c increase in the minimum wage from €9.15 to €9.25.
Meanwhile, Public Expenditure Minister Paschal Donohoe was in ongoing discussions yesterday afternoon with his Cabinet colleagues in the Independent Alliance.
Relationships between the Alliance and their Fine Gael colleagues were described as “tense” last night.
Junior Minister Sean Canney said the Alliance is still pushing to have a €25m fund for sheep farmers established next year. The scheme would see farmers who have fewer than 100 sheep paid €20 per sheep annually.
They also want a tax-back scheme for people making home improvements extended and Transport Minister Shane Ross also convinced Minister Michael Noonan to close a tax loophole exposed by the Panama Papers scandal.
POUND for pound they are probably two of the smarter politicians in the Dail: Leo Varadkar and Willie O’Dea, the urbane sophisticate from comfortable Castleknock, and the unassuming street fighter who bestraddles the divide in his native Limerick; Varadkar, the classical liberal, O’Dea, the essence of a social democrat.
For months now they have been getting the measure of each other in the Dail, and in the Fine Gael minister’s office, where O’Dea attends to lay down the requirements of Fianna Fail in this era of ‘new politics’. Oh to be a fly on the wall.
A begrudging respect is said to have developed between them, begrudging being the operative word. So, when it comes to analysing who has won and lost the Budget — Fine Gael or Fianna Fail — it was always going to come down to the battle between Leo and Willie.
As of this weekend, the upshot is that the Department of Social Protection looks set to receive a package of €350m in the Budget — €150m for old age pensioners and €200m for everybody else. So the real ‘winner’ will be pensioners, carers, the disabled, the blind, widows, and the sick and lone parents, insofar as that sum can be spread between such large numbers. But that’s the problem, as far as Willie O’Dea is concerned. Spread it too thinly and nobody will really feel the benefit.
This time last year, O’Dea skewered Varadkar’s predecessor in the Department of Social Protection, Joan Burton, when she boasted loudly and clearly at having increased the old age pension by the princely sum of €3 a week, or not enough for a “pint or a bag of chips” as the Limerick TD drily put it. So, he was first out of the blocks in August to demand a €5 increase for pensioners this year, lest he be in turn accused of, well, securing not enough for a pint and or bag of chips under Fianna Fail’s ‘confidence and supply’ agreement with Fine Gael.
Word has it that Fianna Fail was not entirely pleased with what was said to be a solo run by O’Dea: a fiver for pensioners would cost around €150m, a sizeable chunk of the overall amount the Government has available to spend in this Budget. Whatever about the Fianna Fail hierarchy, certainly Leo Varadkar was smarting at having been, apparently, out-smarted in the dog days of summer, while he was abroad sunning himself and Willie was walking the streets of Moyross.
So, as is his want, Varadkar went deep into contemplation as to how to best turn the situation to his advantage, otherwise described by Fianna Fail’s Dara Calleary as entering a “phone box and came out with a cape of fairness”. Varadkar is now proposing the further €200m spend for said carers, disabled, lone parents, the blind, widows and the sick — a fiver a head, to trump Willie’s mere €5 demand for pensioners.
The move is said to have “stunned” even Leo’s Fine Gael colleagues. It is not difficult to imagine why they were stunned. Here is how this new “cuddly” Varadkar described himself in the lion’s den of an ICTU conference recently: “I believe that capitalism, free trade and the market economy are most effective means of creating wealth… I believe in individual liberty and the concept that people know best how to order their own lives and spend their money. I believe that low taxes encourage innovation, enterprise and ambition. I believe in equality of opportunity. We are all equally important but we are not all the same and hard work, excellence and inventiveness should be rewarded.” Have a look at Leo’s Twitter account, and the face on SIPTU’s Jack O’Connor standing alongside Varadkar in a photograph taken at the conference.
Anyway, this weekend Fine Gael, or the ascendant Leo Varadkar wing in the party’s leadership contest, believes their man has outmanoeuvred Fianna Fail and Willie O’Dea. Hard to imagine, but yes, it may be so.
O’Dea wanted his pension increase from January 1; Varadkar’s plan is to postdate all social welfare increases to June 2017, which would make them more affordable. Apparently, it would cost around €30m for every month they were brought forward, and even Charlie McCreevy, it is said, post-dated such increases in the past. Having your cake and eating it, it is called. The bottom line: everybody benefits under Leo’s plan, not just pensioners, just not immediately, but in June, by which time we may have another general election on our hands, and Leo spoiling to be Taoiseach.
This is the man said to be arguing since August that Fine Gael needed to show that it had learned the lessons of the election, that the recovery had to be for everybody, not just the few; but also the man, as was pointed out here recently, who tweeted about government policies working based on recently published macro-economic statistics. Keep the recovery going, like.
As for Willie O’Dea, well, if he insists on his old age pension increases to apply immediately and not in June, the benefit of that increase may not amount to enough to pay for a pint or a bag of chips. Expect a compromise then — social welfare increases to kick in around March.
So, who wins — Leo or Willie? Old age pensioners may blame Varadkar for the postponement of increases. O’Dea certainly will blame his ‘odd couple’ adversary. Willie wins then. But, well, what’s a few more months, when there’s a leadership contest and election in the offing? Let’s call it a one-all draw then, but Leo will be cheered on Budget Day. That’s politics, folks, and that’s how your budget is crafted.