Irish emergency budget, 2009
Encyclopedia
The 2009 Irish emergency budget refers to the delivery of an emergency government budget
by the Government of Ireland on 7 April 2009, its second in six months. It was also the second overall budget to be delivered by the ruling Fianna Fáil
party's Brian Lenihan
as the country's Minister for Finance
. The emergency budget announcement involved significant tax rises and a decrease in public spending. Prior to its unveiling, it was predicted to be the most severe budget in decades, with The Independent
suggesting in its aftermath that it was the most severe in the country's history.
and the first of the Taoiseach
Brian Cowen
's tenure. It was brought forward from its usual December date due to the global financial crisis. The budget, labelled "the toughest in many years", included a number of controversial measures such as a proposed income levy which was eventually restructured and the withdrawal of previously promised HPV vaccine
s for schoolgirls. Other results of the budget included a new income levy being imposed on all workers above a specified threshold and the closure of a number of military barracks near the border with Northern Ireland
.
were to resign to be replaced by fifteen within a fortnight. A proposal was also announced which would see the transfer of approximately €80–90 billion of bad loans from Irish banks to a new National Asset Management Agency (NAMA)
The Department of Transport
announced a reduction in funding of €315 million. €150 million would be deducted from the €448 million earmarked for local and regional roads, with a further €150 million deducted from funds set aside for public transport infrastructure. The typical person on the minimum wage of €17,500 per annum would have to pay 2% taxes, a person on €50,000 per annum would have to pay 4% taxes and a person on €300,000 per annum would have to pay 9% taxes.
The Taoiseach Brian Cowen called the budget one of the toughest in several years but insisted that the emergency measures were necessary. He defended the taxation increases by stating that high earners would pay a significant amount of the new taxes. Brian Lenihan said "fairness means you cannot shuffle off responsibility to somebody else." In its analysis, The Irish Times compared the budget to that of Ernest Blythe
, who served as finance minister in W. T. Cosgrave's first government in 1923 and attempted to cut the old age pension, as well as to Lenihan's own October 2008 budget which led to him retracting his attempts to abolish automatic free healthcare for over seventies.
featured a brief video clip on its website, describing what the "bust budget" would mean for the economy of the United Kingdom
. The economics editor of the BBC
reported that there were lessons for the United Kingdom to learn from this emergency procedure. The Financial Times
stated that the increased taxes contained within the budget would mainly affect the "middle classes" of Ireland. Reuters
reported that the European Commission
viewed the budget as a form of "decisive action". The Independent described Ireland's financial situation as "the dismal business of adjusting to a generational drop in living standards with the end of the Celtic Tiger
boom and the prospect of a new era of austerity". The Independent also carried a cartoon of Ireland's Taoiseach
Brian Cowen
measuring a lifeless Celtic Tiger before deciding that it would have to go on a diet at the present time. Meanwhile, The Irish Times
disagreed with an assessment on the website of the Toronto Star
which said the budget was a "painstakingly negotiated plan" which involved "hefty hikes in income tax and service spending cuts" which it said were intended to restore confidence in the "shaky finances of debt-stricken Ireland".
Government budget
A government budget is a legal document that is often passed by the legislature, and approved by the chief executive-or president. For example, only certain types of revenue may be imposed and collected...
by the Government of Ireland on 7 April 2009, its second in six months. It was also the second overall budget to be delivered by the ruling Fianna Fáil
Fianna Fáil
Fianna Fáil – The Republican Party , more commonly known as Fianna Fáil is a centrist political party in the Republic of Ireland, founded on 23 March 1926. Fianna Fáil's name is traditionally translated into English as Soldiers of Destiny, although a more accurate rendition would be Warriors of Fál...
party's Brian Lenihan
Brian Lenihan, Jnr
Brian Joseph Lenihan was an Irish Fianna Fáil politician and barrister who served in the government of Ireland as Minister for Justice, Equality and Law Reform from 2007 to 2008 and as Minister for Finance from 2008 to 2011...
as the country's Minister for Finance
Minister for Finance (Ireland)
The Minister for Finance is the title held by the Irish government minister responsible for all financial and monetary matters. The office-holder controls the Department of Finance and is considered one of the most important members of the Government of Ireland.The current Minister for Finance is...
. The emergency budget announcement involved significant tax rises and a decrease in public spending. Prior to its unveiling, it was predicted to be the most severe budget in decades, with The Independent
The Independent
The Independent is a British national morning newspaper published in London by Independent Print Limited, owned by Alexander Lebedev since 2010. It is nicknamed the Indy, while the Sunday edition, The Independent on Sunday, is the Sindy. Launched in 1986, it is one of the youngest UK national daily...
suggesting in its aftermath that it was the most severe in the country's history.
Irish financial crisis
2008 emergency budget
The Irish government budget for 2009 was delivered on 14 October 2008, as the first budget in the tenure of Brian Lenihan as Minister for FinanceMinister for Finance (Ireland)
The Minister for Finance is the title held by the Irish government minister responsible for all financial and monetary matters. The office-holder controls the Department of Finance and is considered one of the most important members of the Government of Ireland.The current Minister for Finance is...
and the first of the Taoiseach
Taoiseach
The Taoiseach is the head of government or prime minister of Ireland. The Taoiseach is appointed by the President upon the nomination of Dáil Éireann, the lower house of the Oireachtas , and must, in order to remain in office, retain the support of a majority in the Dáil.The current Taoiseach is...
Brian Cowen
Brian Cowen
Brian Cowen is a former Irish politician who served as Taoiseach of Ireland from 7 May 2008 to 9 March 2011. He was head of a coalition government led by Fianna Fáil which until 23 January 2011 had the support of the Green Party and independent TDs.Cowen was also leader of Fianna Fáil from 7 May...
's tenure. It was brought forward from its usual December date due to the global financial crisis. The budget, labelled "the toughest in many years", included a number of controversial measures such as a proposed income levy which was eventually restructured and the withdrawal of previously promised HPV vaccine
HPV vaccine
The human papilloma virus vaccine prevents infection with certain species of human papillomavirus associated with the development of cervical cancer, genital warts, and some less common cancers...
s for schoolgirls. Other results of the budget included a new income levy being imposed on all workers above a specified threshold and the closure of a number of military barracks near the border with Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
.
Budget summary
The April 2009 emergency budget introduced a number of new measures. The announcements included:- Rates of the previously introduced income levy doubled to 2%, 4% and 6%.
- Excise duty on a regular packet of 20 cigarettes was increased by 25 cents.
- Excise duty on a litre of diesel was increased by 5c.
- A new "asset management agencyNational Asset Management AgencyThe National Asset Management Agency is a body created by the Government of Ireland in late 2009. It is in response to the Irish financial crisis and the deflation of the Irish property bubble....
" established to remove bad loans from Irish banks. - Early childcare supplement decreased by one half from 1 May 2009 and abolished entirely by 2010. This will be replaced by a subsidy towards pre-school for 3 and 4 year olds.
- No further increases in social welfare for at least two years. Jobseekers' allowance for under 20s was reduced by half.
Details
The cabinet met on the afternoon of 6 April 2009 to finalise the emergency budget. The budget was preceded by an announcement that all twenty of Ireland's Ministers of StateMinister of State
Minister of State is a title borne by politicians or officials in certain countries governed under a parliamentary system. In some countries a "minister of state" is a junior minister, who is assigned to assist a specific cabinet minister...
were to resign to be replaced by fifteen within a fortnight. A proposal was also announced which would see the transfer of approximately €80–90 billion of bad loans from Irish banks to a new National Asset Management Agency (NAMA)
National Asset Management Agency
The National Asset Management Agency is a body created by the Government of Ireland in late 2009. It is in response to the Irish financial crisis and the deflation of the Irish property bubble....
The Department of Transport
Department of Transport (Ireland)
The Department of Transport, Tourism and Sport is a department of the Government of Ireland that is responsible for transport policy and overseeing transport services and infrastructure. The Department is led by the Minister for Transport, Tourism and Sport who is assisted by two Ministers of State...
announced a reduction in funding of €315 million. €150 million would be deducted from the €448 million earmarked for local and regional roads, with a further €150 million deducted from funds set aside for public transport infrastructure. The typical person on the minimum wage of €17,500 per annum would have to pay 2% taxes, a person on €50,000 per annum would have to pay 4% taxes and a person on €300,000 per annum would have to pay 9% taxes.
The Taoiseach Brian Cowen called the budget one of the toughest in several years but insisted that the emergency measures were necessary. He defended the taxation increases by stating that high earners would pay a significant amount of the new taxes. Brian Lenihan said "fairness means you cannot shuffle off responsibility to somebody else." In its analysis, The Irish Times compared the budget to that of Ernest Blythe
Ernest Blythe
Ernest Blythe was an Irish politician.Ernest Blythe was born to a Presbyterian and Unionist family near Lisburn, County Antrim in 1889, the son of a farmer, and was educated locally. At the age of fifteen he started working as a clerk in the Department of Agriculture in Dublin.Blythe joined the...
, who served as finance minister in W. T. Cosgrave's first government in 1923 and attempted to cut the old age pension, as well as to Lenihan's own October 2008 budget which led to him retracting his attempts to abolish automatic free healthcare for over seventies.
International reaction
The 2009 emergency budget received widespread international coverage. The TimesThe Times
The Times is a British daily national newspaper, first published in London in 1785 under the title The Daily Universal Register . The Times and its sister paper The Sunday Times are published by Times Newspapers Limited, a subsidiary since 1981 of News International...
featured a brief video clip on its website, describing what the "bust budget" would mean for the economy of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. The economics editor of the BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
reported that there were lessons for the United Kingdom to learn from this emergency procedure. The Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
stated that the increased taxes contained within the budget would mainly affect the "middle classes" of Ireland. Reuters
Reuters
Reuters is a news agency headquartered in New York City. Until 2008 the Reuters news agency formed part of a British independent company, Reuters Group plc, which was also a provider of financial market data...
reported that the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
viewed the budget as a form of "decisive action". The Independent described Ireland's financial situation as "the dismal business of adjusting to a generational drop in living standards with the end of the Celtic Tiger
Celtic Tiger
Celtic Tiger is a term used to describe the economy of Ireland during a period of rapid economic growth between 1995 and 2007. The expansion underwent a dramatic reversal from 2008, with GDP contracting by 14% and unemployment levels rising to 14% by 2010...
boom and the prospect of a new era of austerity". The Independent also carried a cartoon of Ireland's Taoiseach
Taoiseach
The Taoiseach is the head of government or prime minister of Ireland. The Taoiseach is appointed by the President upon the nomination of Dáil Éireann, the lower house of the Oireachtas , and must, in order to remain in office, retain the support of a majority in the Dáil.The current Taoiseach is...
Brian Cowen
Brian Cowen
Brian Cowen is a former Irish politician who served as Taoiseach of Ireland from 7 May 2008 to 9 March 2011. He was head of a coalition government led by Fianna Fáil which until 23 January 2011 had the support of the Green Party and independent TDs.Cowen was also leader of Fianna Fáil from 7 May...
measuring a lifeless Celtic Tiger before deciding that it would have to go on a diet at the present time. Meanwhile, The Irish Times
The Irish Times
The Irish Times is an Irish daily broadsheet newspaper launched on 29 March 1859. The editor is Kevin O'Sullivan who succeeded Geraldine Kennedy in 2011; the deputy editor is Paul O'Neill. The Irish Times is considered to be Ireland's newspaper of record, and is published every day except Sundays...
disagreed with an assessment on the website of the Toronto Star
Toronto Star
The Toronto Star is Canada's highest-circulation newspaper, based in Toronto, Ontario, Canada. Its print edition is distributed almost entirely within the province of Ontario...
which said the budget was a "painstakingly negotiated plan" which involved "hefty hikes in income tax and service spending cuts" which it said were intended to restore confidence in the "shaky finances of debt-stricken Ireland".
See also
- Irish budget, 2010Irish budget, 2010The 2010 Irish Budget refers to the delivery of a government budget by the Government of Ireland on 9 December 2009, its third in fourteen months...
– a later Budget delivered by the Irish Government in 2009
External links
- Budget coverage and reaction at RTÉ.ieRte.ieRTÉ.ie is the brand name and home of RTÉ's online activities, located at the URL http://rte.ie. The site began publishing on 26 May 1996. According to RTÉ, it operates on an entirely commercial basis, receiving none of the licence fee which funds much of RTÉ's activity. The site, it says, is funded...
- Budget speech at RTÉ.ie