Cowen ignores back bench revolt over Budget ‘09

Ireland’s Taoiseach Brian CowenBrian Cowen intends to face down a growing backbench revolt over this week’s budget despite a back bencher resigning from his party and signs of discontent among others. Tuesday’s budget was advanced by 2 months as a sign of government concern at the collapse in the Irish economy and their intention to tackle the crisis.

The government’s finance minister Brian Lenihan faced a dramatic collapse in revenue and with Ireland officially in recession he had to deal with a turn around form 2007 when there was a budget surplus of €4B to a deficit that required government borrowing of 6.5% GDP as well as €2B in cuts affecting health, education and welfare. Ireland’s bankers and developers were pleased to see themselves relatively untouched with the new €10 departure tax not being applied to those who own an executive jet seating less than 20. Stamp duty on commercial development was reduced from 9% to 6% as a further fillip to the construction sector.

Media attention focussed on a plan to remove the right of citizens over 70 to free medical care. The scheme was introduced in 2002 after Fianna Fail retained power in a general election and the government decision to review universality in regard to entitlements has seen talk shows and political programmes inundated with elderly people worried at the prospect of losing medical care by January 2009. About 140,000 people benefited from the 2002 decision and right wing Health Minister Mary Harney has said that she will not revisit the decision that yesterday cost the Fianna Fail party a backbencher in the Irish parliament (Dáil). However under Irish law each card holder is entitled to appeal the decisionot remove the card and doubts exist as to whether the system could cope wiht this number of appeals. The main opposition party Fine Gael has tabled a motion calling on the government to rescind the move next Wednesday. This will provide the uneasy backbenchers with an opportunity to have the planned removal of medical cards stopped.

Defeat for the government will undermine the authority of Brian Cowen, himself the immediate predecessor of Brian Lenihan at Finance. The junior partner in the coalition is the Green Party which initially supported the plan but now has said that while they have concerns about implementing the plan, it’s not a walking issue will be further embarrassed by the row. Labour’s Eamon Gilmore has warned that wider concerns exist about other cuts such as the decision to ignore OECD reports on class sizes and let 400 teachers go and a plan to introduce a 1% levy on all earnings while the trade unions are attempting to get support for a national wage agreement which will see an 11 month pay freeze in the public sector. The cabinet has warned that budget ’09 is one of a number of budgets that promise to be severe so as to improve Ireland’s competitiveness in a global economy. The question that many observers are asking in Ireland is if the government are going to blink now what other instability lies ahead?

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