THE REAL BUDGET DEFICIT

9 December 2011 No Comments by The Northern Standard

“I’m sick of hearing about the Budget!”
There’s a good chance that if readers haven’t made the above comment themselves, they’ll have heard it in recent days from a family member, work colleague or friend.
Budgets, like all other big news stories these days, incite overkill in the media.
The mainly grim announcements made by Minister for Public Expenditure Brendan Howlin and Minister for Finance Michael Noonan have been so analysed to death, and then pathologically dissected even further by pundits and soothsayers, that even the most enthusiastic consumer of news can get to the point when they can take no more.
The Budget 2012 surfeit arises in part from the fact that much of its content was flagged well in advance through a mixture of deliberate and accidental leaks, lending an almost déjà vu element to the actual announcement of its detail and doubling its debilitating action on the spirits.
It is this morale-sapping effect of how the Budget has been flagged, presented and mulled over that threatens to be its most dangerous adverse impact.
The detail of how the Government’s attempts to bring the economy back into line will affect us as individuals is presented so well elsewhere in the media that it would be superfluous in this editorial to dwell upon it.
In essence the Budget has left the majority of Irish people poorer in the pocket.
Working people have not been subject to increases in direct taxation, but there are a range of other revenue-collecting measures that will impinge significantly on disposable income.
And, as ever, despite the eloquent endeavours of their advocates and lobbyists, it appears that those on limited incomes and in vulnerable sectors of society have been hit disproportionately hard by benefit and entitlement cuts.
The Budget is not entirely bleak – there are some measures designed to stimulate dormant sectors of the economy such as construction and property activity, a degree of relief for those who purchased houses when the market was at its most feverish, and proposals with the intent of fostering employment.
But in attempting to address the fiscal deficit and adhere to the diktats of our international bailspersons, the Government has left a much more fundamental deficit unaddressed.
The human cost of the economic crisis, what could be called its humane or moral dimension, has been backgrounded.
The intangible problems confronting tens of thousands of Irish people every day have received scant address in the measures announced by Ministers Howlin and Noonan – in fact they have been in some cases added to considerably.
These problems are often emotional and psychological in nature, hidden behind the stoic mask that people wear to safeguard their dignity and avoid the painful admission of difficulty or defeat.
In a great many cases the problems are generated by debt.
There was a palpable ripple of shock at Monday’s meeting of Monaghan Co Council when the Treasurer of Clones Credit Union, Mr Jim McMahon, told members that a moneylender is operating openly in the town each Friday.
Mr McMahon, a former President of the Irish League of Credit Unions, was urging the Council to lobby Oireachtas members for political action to persuade the Financial Regulator to ease some of the lending restrictions Credit Unions have had imposed upon them.
This newspaper has editorially in the recent past warned of the damage that could be inflicted upon the Credit Union movement by its being subjected to regulatory measures that are inappropriate to its particular modus operandi – which is grounded in co-operative principles far removed from those motivating the business practices of other financial institutions.
With a very important report on the future operation of Credit Unions due to be published shortly, we would add our voice to that of Mr McMahon in exhorting urgent political action at national level to ensure that the community-oriented, non-profit nature of the movement is accorded legislative protection rather than legislative interference when the regulatory future of the sector is being determined.
Simply put, many small borrowers who customarily relied on their Credit Union for the loan to tide them over Christmas or to deal with a particular domestic budgeting situation or unforeseen eventuality now find themselves unable to obtain credit from this source due to lending restrictions that have been imposed from outside.
Those in urgent need have to turn elsewhere – and some are evidently turning to either licensed or in some cases unlicensed money lending institutions or individuals for help.
A section of those who make this decision will be subject to predatory and unscrupulous interest conditions that will deepen rather than alleviate their financial problems.
The social toll will be heavy, and there will be no rush from Government or the financial sector to pick up the tab.
This is one example of where a humane Budgetary provision, easing the strictures on Credit Union lending, would have addressed a compelling social and moral deficit.
Another is suggested by a motion put forward at Monday’s Council meeting by Fine Gael representative Ciara McPhillips.
Colr McPhillips proposed in essence that the option of a ‘pay as you go’ meter system be made available to electricity consumers as a means of regulating and assisting their energy budgeting and reducing the number of accounts that are slipping into serious levels of arrears at the present time.
Her research revealed the surprising situation that such a provision is only made available to electricity consumers after they have fallen into serious debt and are on the verge of disconnection.
Surely it would be more humane – and more cost-effective – for such an option to be available to consumers, particularly those whose economic circumstances might have changed radically because of unemployment or benefit reduction, at a much earlier stage?
The economic problems of Ireland and the eurozone in general are very serious, and painful corrective measures seem unavoidable if they are to be remedied.
But there are ways of achieving economic targets, even the sternest ones, without accentuating human suffering.
The instances cited by Mr McMahon and Colr McPhillips at Monday’s Co Council meeting represent examples where a more sensitive regulatory or administrative approach could circumvent some of the devastating personal consequences of extreme and unmanageable debt.
The lack of such approaches in the Budget announced this week represent its real deficit, and are its most regrettable feature.

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