More medical card cuts on the way
However, further as yet unspecified cuts to medical card entitlements for other age groups are also due to take place next year and are to be revealed in the HSE‘s forthcoming 2013 service plan.
The Department of Health old irishhealth.com are to be changes to the medical card means test next year, but so far no precise details of this have emerged. The Government had been under pressure from the Troika to tighten up on medical card eligibility.
Minister, Reilly, having promised on coming to office last year that he would abolish the 50 cent medical card prescription charge, has now trebled it to €1.50 per prescription item, subject to a monthly maximum charge of €19.50 per family. This increase has been ‘due to the current financial climate’.
Under the over 70s medical card changes, the Minister said 92% of over 70s will still have medical cards, while 5% will no longer have a full card but will qualify for a GP visit card, while the wealthiest 3% will have neither card, which is the same percentage as at present.
Dr Reilly said single over 70s earning €600 to €700 per week will lose their entitlement to a full medical card, while those earning over €700 per week already do not qualify for a card, following the last review of eligibility in 2009. The new thresholds are double for elderly couples.
Elderly people who will be downgraded to a GP visit card will now have to pay drug costs up to €144 per month, following a new rise in the drug payment scheme threshold.
GPs and other professionals providing services under the medical card and other State schemes are to have their fees cut further.
Dr Reilly told a press conference on the health measures in the Budget that €781 million will have to extracted from the health service in savings next year.
By the end of 2013, this will bring the amount cut from the health service in the previous four years to around €3.3 billion. The service is to get €13.626 billion for everyday expenditure next year.
According to the Department of Public Expenditure, this will be reduced to €13.420 billion in 2014, when further health cuts will be required.
However, Dr Reilly said the lesson over the past year had been that by reforming services, more had been done with fewer resources, with inpatient waiting lists and trolley numbers reduced. He admitted, however, that next year would pose great difficulties.
Dr Reilly stressed the need to promote a greater level of generic prescribing. He said there were some drugs that were of the same class that were one-third the price of the other drugs in that class.
There would be legislation and initiatives to promote more generic prescribing.
The bulk of the €781 million in savings will come from €323 million in primary care scheme savings – this includes the medical card scheme.
The projected savings of €323 million in primary care schemes will come from:
* A projected €120 million from agreements with the pharmaceutical industry on drug cost cuts.
* A projected €70m from reductions in fees to primary care health professionals.
* €50m from the increase in prescription charges.
* €20m from changes to medical card means test.
* €12m from replacement of medical cards with GP visit cards for persons over 70 in excess of certain income limits.
* €10m from increasing the threshold in the Drugs Payment Scheme.
* €15m from ‘delisting’ certain products from the medical card scheme.
* €20m from promotion of more cost-effective prescribing practices by GPs and consultants.
* €5m from a reduction in reimbursement prices of oral nutritional supplements.
The remainder of the total €781 million in health service savings will come mainly from ‘pay related savings’, as yet unspecified; increased generation of private income from public hospitals – a measure that was promised for 2012; a net saving on the Department’s vote, and savings in procurement.
Dr Reilly declined to be drawn specifically on what pay savings in health might arise from an extension to the Croke Park Agreement. However, areas such as rostering were being looked at.
Asked what level of cuts in their allocation hospitals might face next year, Minister Reilly said there would be details of hospital allocations in the HSE’s service plan when published.
Minister of State at the Department of Health Alex White indicated that the €20 million planned to be spent on primary care staffing this year but which was reallocated to cover the HSE’s deficit would be spent next year. However, there is no specific provision for this expenditure in 2013 in the Book of Estimates.
Funding is to be allocated for the initial phase of the planned free GP care scheme for people with certain long-term conditions, Mr White said.
Minister of State Kathleen Lynch said a further €35 million would be spent on mental health services next year. She said all of the €35 million allocated for development of these services in 2012 was not spent.
[Posted: Wed 05/12/2012]
Responding to Budget 2013, Congress General Secretary David Begg said: “The budget could cost us up to 40,000 jobs, due to the ongoing extraction of money from the economy.
“The money taken from the pockets of working families is money that will not be spent in local shops and on local services and will cost us jobs.
“The abolition of the PRSI Allowance is particularly harsh and sees working families lose €5 per week,” Mr Begg said.
“In effect, this budget could cost working families up to €1000 per year, in terms of increased taxes and charges. What makes this particularly unfair is that families with an income of €30,000 will pay the same as those on €300,000.
“Congress believes this cut must be reversed.
“Meanwhile, business has not been asked to pay more – instead we have seen a package to tax breaks that will do nothing for domestic demand and job creation,” Mr Begg said.
He said that there was some progress on the tax treatment of unearned income, and pensions, although he described the measures as “somewhat timid.”
Mr Begg pointed out after six austerity budgets we had seen some 360,000 jobs lost, some €28 billion extracted from the economy and we have made minimal impact on the deficit.
Budget 2013: Property and NAMA
December 5, 2012 by namawinelake
This afternoon in the Dail, the finance and public expenditure and reform ministers, Michael Noonan and Brendan Howlin presented Budget 2013. All the associated documents are here. These are the tax measures. These are the cuts to services and welfare. Overall, the Government presented a positive assessment of the economy overall and confirmed that it expects to beat the deficit target for 2012 with an actual of 8.2% versus the target of 8.6% in the Memorandum of Understanding with the programme finance Troika. So, what about the NAMA and property aspects of the Budget 2013 announcements?
(1) NAMA is to ramp up its provision of residential property for social housing in 2013. This is grossly unfair on NAMA which has already made 3,800 homes available to Government which has only overseen the acquisition of 133 homes to date, including 58 in 2011. So much for environment minister, Phil Hogan’s fanfare last December 2011, indicating that NAMA would provide 2,000 homes in the short term.
(2) NAMA has spent €650m of the €2bn investment announced in May 2012.
(3) The property tax will come into effect from 1st July 2013. Residential property will be self-assessed by homeowners and the tax will be collected by the Revenue Commissioners. The tax is payable by owners rather than occupiers unless they’re both the same of course.
(4) So far, claims the Government – opponents have different figures – 66% of households have paid the €100 household charge in 2012 which was supposed to have been paid by 31st March 2012. From 1st July 2013, the Revenue Commissioners will collect arrears on this charge, and from 1st�July 2013, the arrears will rise from €100 to €200.
(5) The property charge will be 0.18% on homes worth less than €1m and will be 0.25% on homes worth more than €1m, but only on the element in excess of €1m. If a home is worth less than €100,000 then the assessed value will be €50,000. Above €100,000 there are bands of €50,000 and the assessed value will be the midpoint of the band, eg your home is worth €130,000 then the assessed value will be €125,000, if your home is worth €205,000 then the assessed value will be €225,000.
(6) In 2013 only, only 50% of the annual charge will be payable.
(7) There will be exemptions for three years for first time buyers in 2013, and buyers of homes which were previously vacant and unlived in.
(8) There will be no waivers, only deferrals so if you can’t pay, the charge will be added to a tab� which will be payable when you sell or die.
(9) In 2013, if you have a second property and are presently paying the non principal private residence tax of €200, you will continue to pay that tax in 2013, IN ADDITION to the new charge. From 1st January 2014, you will only need pay the property tax, with the NPPR abolished, but only from 1st Jan 2014.
(10) Rental income will be subject to PRSI, typically about 4%.
(11) Real Estate Investment Trusts will be introduced in 2013. REITs are managed property investment funds and allow ordinary investors to invest in property without investing large sums with tax incentives. Typically, you buy a share in a property fund and then you get income on your share from rent and if property is sold at a profit. If you want out of the fund, you can sell your share. REITs have been promised since this administration came into office.
(12) There was no change to the incentives offered in last year’s budget, but mortgage relief for first time buyers will be ended as previously indicated by the end of December 2012. However first time buyers in 2013 will be exempted from the new property tax for three years.
Estate agents and property consultants Lisney have been quick out of the gates and have provided a response to the Budget 2013 announcements. They criticise the structure of the new property tax for a variety of reasons including no account of stamp duty and that it should be on occupiers rather than owners. With respect to REITs, James Nugent, the managing director of Lisney has this to say:
“REIT’s are publically traded property companies, where the majority of the assets of the company are income producing real estate assets. This will provide liquidity to the market and will allow investors participate in areas of the property market that they would not traditionally have had the opportunity to enter, i.e. it will allow them invest small sums of money in large-scale commercial properties. Given the relatively small size of the Irish market, it is likely that there will only be a limited number of REIT’s established, perhaps two or three. It is positive that this is being introduced at a time when property values are low. This is contrary to the situation in UK when they were introduced at the height of the market in 2007 and suffered large losses within a short period of time due to the falls in property values. REIT’s are also positive from the point of view that they will provide a new source of funding for property companies. A return of a listed property sector is to be welcomed, the added benefit of no taxation at company level is good news for the investor.”
via NAMA Wine Lake.
via NAMA Wine Lake.
Key Budget Measures – Education
1. The staffing schedule for primary schools remains unchanged at 28:1 in the education measures announced under Budget 2013. However, the measures announced in staffing schedule changes for small schools (1, 2, 3, 4 class teachers) in Budget 2012 last year remain in place.
2. An additional nett 450 primary teachers will be recruited to cater for increased demographics in the 2013/2014 school year.
3. The additional days-in-lieu (max. 30) currently applicable to teachers and SNAs who avail of maternity leave will be revised with effect from May 1st 2013.
4. Teachers and SNAs will be referred to the occupational health service after four weeks of sick leave, rather than the current twelve weeks and eight weeks respectively (this is already part of the revised sick leave scheme).
5. Provision for special education remains in place, including the number of resource teachers and SNAs.
6. There are no changes to overall teacher numbers or funding for DEIS schools.
7. The standard capitation grant rate for primary schools in 2013 will be reduced by 0.5%.
8. The student contribution at third level will be increased by €250.
9. There is a further change to the staffing schedule for private schools at second level. It will rise by two points.
FAMILIES are facing a €10 cut in child benefit and medical card holders will see a doubling of the charges they pay for prescription drugs in next week’s Budget.
Pensioners are also still in the firing line, with changes to the over-70s medical card and the home package of free TV licence, electricity and telephone allowances still on the table.
Although the pension is safe, the rest of the benefits for the elderly have yet to be decided upon by ministers.
The Cabinet met twice yesterday to work through the health and social-welfare aspects of the budget, with another special meeting tomorrow evening.
Among the swingeing measures to emerge from the discussions are:
* A €10-a-month cut in child benefit, which will drop from €140 to €130.
* A cut to the time for which non-means-tested dole is paid from 12 months to nine months.
* A doubling of the 50 cent charge that medical card holders pay for medicines and other items that they get on prescription from pharmacies, up to a maximum of 10 items per month.
And further details have emerged about the property tax, which will come into effect next year, following yesterday’s revelations of the plan in the Irish Independent.
* Elderly people will be given the chance to pay the property tax on their home from beyond the grave
* People living in council houses are expected to be hit with higher rents – with rises of €1 or €2 a week to bring in €50-€100 a year per house.
The Government has devised a way of protecting old people who live in large houses where they raised their children and who now can’t afford to pay the property tax from their meagre pensions.
Rather than forcing them to borrow or sell their home, elderly people will be able to apply via a means test for a deferral of the property-tax payment. However, there will be a cap on the number of years that can be deferred.
Similar to the Fair Deal nursing-home scheme, the accumulated bill would then be paid when the person sells their house or if they pass away, when their estate would pay it off.
Although local-authority housing will be exempt from the property tax, the occupants will have to make a larger contribution to take account of the charge going to local services.
Those in council estates who bought out their houses will have to pay the full property tax anyway, so the Government wants to see every home make a contribution.
The property-tax rate will be at 0.2pc in a self-assessment system, with bands starting at €50,000 and going up by €50,000 each time.
There is no cap on the market value of the home, so millionaires living in mansions will pay the same percentage on the total value of their house.
Someone living in a house worth €100,000 will pay up to €200, while someone living in a house worth €1m will pay up to €2,000.
The amount of tax to be paid is set at the mid-point of the bands. For instance, where the value of the house falls anywhere within the band of €100,000 to €150,000, the homeowner will pay on 0.2pc of €125,000 i.e. €250.
A special meeting of the Cabinet yesterday saw the detail of the health and social-welfare budgets thrashed out.
Any changes to the medical-card system are not yet signed off. But the over-70s are being closely examined, especially the means-testing threshold of €72,000 for a married couple and €36,000 for a single person.
A move towards a GP-only card is being examined for those on healthy pensions. The pension will not be cut and the free travel scheme is not expected to be touched. But a cut to the package of free TV licence, electricity and phone is still alive.
There will be a change to the entitlement to the dole. When someone becomes unemployed, they go onto the non-means tested dole, unemployment benefit, of €188 a week.
After 12 months, they move to the means-tested payment of the same amount. However, if another member of their family is working, this can put them over the means-test limit.
This period will be cut back to nine months to encourage people to get back to work.
But Labour Party sources believe this will not have a major effect on its policy not to cut welfare benefits. Party figures claim it is not a direct cut to a core social welfare payment.
– Fionnan Sheahan and Fiach Kelly
Talking the talk on sharing the pain will not suffice for a Coalition that continues to defend its indefensible privileges
NEXT MONTH’S budget will be a moment of truth for the Coalition and it really needs to come up with a bold gesture to show the public that it is going to lead by example when it comes to the imposition of further hardship.
An analysis of the generous ministerial pension regime published earlier this week by The Irish Times was a reminder that the elite among the political class are still pampering themselves, despite the severe cutbacks affecting other members of society.
The analysis put the market value of the pension entitlements of the current Cabinet at €36 million, but it did not take account of the far greater cost of paying very generous pensions to a range of senior politicians who have already retired.
The actuarial cost of that would easily exceed €100 million. For instance Mary Robinson has an annual pension of €187,297 for her 6½ years in Áras an Uachtaráin and 20 years in Seanad Éireann.
Funding a pension of that magnitude for somebody in the private sector would cost a minimum of €6 million and possibly much more. The pensions paid to former taoisigh and former government ministers are not far behind, ranging from about €120,000 a year for most of the ministers in the last government to over €150,000 for Bertie Ahern and Brian Cowen.
Robinson and Ahern have gifted part of the pensions back to the State, but their entitlements are extraordinary and appear to be wildly in excess of the pension arrangements for public figures in other EU countries.
Given the scale of the financial crisis facing the country, and the fact that it has taken the bailout to keep the State functioning for the past two years, it is amazing that no effort has been made to scale back the pension entitlements of former as well as current politicians.
As with other parts of the public service, new entrants into politics in 2010 suffered a significant reduction in entitlements and will be able to claim pensions only at the age of 65, but for the older generation of politicians, almost all of the entitlements they amassed during the boom are intact.
To be fair the current crop of politicians have taken a series of pay cuts since the start of the crisis but their salaries are still among the highest in the democratic world and those already on pensions have hardly been touched.
The excuse given by Minister for Public Expenditure and Reform Brendan Howlin for not touching some of the most privileged pensioners in the country is that they had “a legitimate expectation” that the current arrangements would continue to apply, regardless of the pressure on the State’s finances.
Strangely enough “legitimate expectation” does not seem to apply to those outside the public service. People in private sector pension schemes have received letters in the past two months informing them that their future entitlements will be cut as a result of the levy on pension funds introduced by the Government last year to fund its jobs initiative.
Politicians are not the only ones to benefit from enhanced public sector pensions. Judges, semi-State senior executives, Army officers and gardaí all benefit in varying degrees from a system that nobody in the political world appears willing to challenge.
How public service pensions of all kinds will be funded in the future is an issue that will have to be faced at some stage. The most recent estimate in 2009 of the accrued liability to the State for public service pensions was €116 billion.
Given the flood of early retirements since then, that figure is now undoubtedly much higher. An official report published during the week pointed out that public service pensions now account for 14.8 per cent of the annual pay bill, up from 8.5 per cent in 2007.
The figure has risen by 67 per cent – up from €1.5 billion in 2007 to €2.5 billion this year. Yet the political system is paying scant regard to how this escalating liability can be put on a sustainable basis into the future.
The immediate danger facing the country as it heads into its final phase of reckoning for the excesses of the boom is that the contrast between the way different groups have been treated will lead to a breakdown of the social cohesion that has been such a feature of the crisis.
About 75 per cent of the adjustment required to get the State’s finances back on track has already been achieved. The final 25 per cent is probably going to be the most painful of all and it will take a lot of political skill and courage to see it through to the end.
That is why it is imperative that the Coalition comes up with a budget package that demonstrates a genuine commitment to fairness rather than paying lip service to the notion while continuing to protect its own privileges.
The unremitting focus by the Coalition and its opponents on the bank debt has, if anything, only obscured the real choices facing the country.
The Government has overhyped the scale and timing of a debt deal while the Opposition has been far too dismissive of its prospects.
The likely outcome is that a deal on the debt will ultimately be done but it will not happen quickly and the precise nature of the arrangements will probably not become clear until the end of next year.
Just as Albert Reynolds got the £8 billion from the EU in the 1990s, despite the dismissive claims of his political opponents and media critics, Enda Kenny will most likely deliver a substantial deal on the bank debt, but it is going to take time.
The more critical challenge facing the Taoiseach and his Government is the fact that the public finances remain in a parlous state due to the collapse in tax revenues after 2008, combined with the failure to rein in expenditure. So far the Coalition has managed to keep on course towards a more sustainable budgetary position, but imagination as well as gritty determination will be needed to see the job through.