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Irish ministers defend budget after media, public lambasting

Ireland’s Finance Minister Michael Noonan presents the budget to waiting media at the Government Buildings in Dublin Dec. 5, 2012.

Cathal McNaughton/Reuters

Ireland's budget ministers defended a sixth round of austerity in a little over four years on Thursday, after they were ridiculed by the tabloid press and berated on live radio by angry voters.

Finance minister Michael Noonan, who was pictured holding a sign saying "Christmas cancelled" on one front page while dressed in a superimposed Santa Claus suit, took to the airwaves for a now familiar post-budget grilling from listeners.

Joined by spending minister Brendan Howlin of the junior coalition Labour party, Mr. Noonan was criticized for imposing a politically toxic property tax, increasing prescription charges, cutting child benefit and slashing care-givers' allowances.

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The pair introduced the measures as part of a €3.5-billion ($4.5 U.S.) budget adjustment required under the terms of Ireland's EU/IMF bailout, trying the patience of people in a country that has so far avoided large-scale protests.

"Shame on you!," Carolyn Akintola, a care-giver who looks after her sick mother despite being wheelchair-bound herself, shouted down the phone at the ministers after estimating that allowance cuts would leave her over €500 worse off next year.

"You and your ilk know family carers will never, ever, ever abandon the people we love, and you take full advantage of it."

Others told the ministers that the cuts would leave their children with little choice but to join the growing number of emigrants, while one listener warned Mr. Howlin that he should enjoy his time in power because Labour would never see it again.

Labour is now the fourth-most popular party in the country according to opinion polls after emerging from elections last year in second place. While Mr. Noonan's Fine Gael party remain the most popular, its support dropped sharply in a poll last week.

With a budget deficit still among the highest in Europe at 8.2 per cent of gross domestic product (GDP), Mr. Noonan said he had no option but to cut spending further and hike taxes, and he was backed in that assessment by ratings agency Moody's.

The government is desperate to convince Moody's, the only credit rating agency to have downgraded Ireland to junk, that its gradual return to bond markets and economic growth should at least see it lift its negative outlook on the country.

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"It (the budget) is balanced in terms of measures. The cuts in capital expenditure are obviously negative, but overall it was very much in line with Moody's expectations," the agency's lead European sovereign analyst, Dietmar Hornung, told Reuters.

"It's credit positive but ratings neutral because compliance with the fiscal targets is something that we anticipate for Ireland, and that's one of the credit strengths of the country … The risks are still tilted to the downside."

European Central Bank chief Mario Draghi added his approval, saying the steps showed a commitment to restoring sound fiscal conditions, while U.S. Secretary of State Hillary Clinton, on a visit to Dublin, praised Ireland's resilience.

In parliament, however, opposition politicians also zeroed in on the most severe cuts, particularly those aimed at carers.

While the government has a record majority and passed the first series of budget votes without dissent on Wednesday, it will vote on the more sensitive issues in the coming weeks and may have to find ways to soothe the concerns of some of its backbenchers.

"We have had the magnanimity in the past to correct things that were wrong. I can't say what's right or what's wrong at this point until I have a full picture, but instinctively, I think there are things wrong in it," said Labour chairman Colm Keaveney.

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