1. Pre-Budget Perspectives on a Fair Way to Fix the Economy and the Public Finances

2. Ireland vs The World (OECD Economic Outlook, Nov 2009)

3. End of the Domestic Bubble Not Internationally Driven A Home Grown Recession (OECD Economic Outlook, Nov 2009)

4. Fine Gael Budget Perspectives 1.We cannot tax our way to recovery 2.Politics must lead the adjustment 3.Broadest shoulders to bear the biggest burden 4.We have to make room for job measures 5.Protect services by cutting costs and bureaucracy 6.We must protect those who cannot work 7.Activate the unemployed

5. €4.0 Billion Fine Gael Fiscal Adjustment€m Tax (net of €1.3bn jobs stimulus)-389 Payroll savings from cuts in pay, over-time etc.-1,200 Payroll savings from 10,000 headcount reduction-500 Other savings from service reconfiguration-1,072 SW (net of €308m “activation” measures)-387 Capital budget transfer to FG “NewERA” Plan-500 Total 2010 deficit reduction measures-4,048 1. We Cannot Tax our Way to Recovery

6. 2. Politics Leading from the Front 100% of McCarthy recommendations for Oireachtas accepted Additional FG proposals: –Commitment to cut Oireachtas members by one-third, including abolition of the Seanad –Cut no. of Junior Minister’s to 12 from 15 –Taoiseach’s salary as cap for public sector

7. 3. Broadest Shoulders Should Bear the Biggest Burdens €593m in extra taxes on better off for job creation and deficit reduction, incl.: –Tighter rules for non-residents (€20m) –restriction of exemptions for artists (€33m) –Restrictions on pensions tax relief (€235m) –Curtain other tax shelters (€87m) –Lower threshold (€125k-€250k) for minimum 20% tax rate on higher earners (€9m) –Abolition of PRSI ceiling (€120m)

8. 4. Make Room for Job Measures €1.3bn tax cuts for jobs, trade and tourism –Cut the jobs tax (€887m) 2% off 10.75% employers’ PRSI rate 4.25% off 8.5% lower employers’ PRSI rate Allow R&D spending offset against employment tax bill –Reverse 2008 0.5% VAT hike (€127m) –Abolish €10/€2 travel tax (€125m) –Cut in 13.5% VAT rate on labour-intensive services (building, catering, motor repairs) to 10% (€175m) €250m Sustainable Economy Fund

9. 4. Make Room for Job Measures Free up resources for: –NewERA (€750m seed capital in 2010) –National Recovery Bank (€1 billion capital) By: –Winding down Anglo Irish Bank – save €2-3 billion in repayments of sub-bonds –Selling non-network utility assets (€2-3 billion)

10. Permanent €1.2 billion reduction in the pay bill (excl. head-count) –shelter earnings below €30,000 –cut core payroll by 3.2% (€575m) –defer increments (€250m) –local pay efficiencies (€375m) Future upside dividend linked to public service re-configuration and fiscal stability 5. Protect Services – Cut Costs and Bureaucracy

12. FG Spending Cuts Year 1 Savings (€m) F/Y Savings (€m) % of McCarthy (%) Programmes and Grants199 16% Big Bureaucracies38651463% Back Office Efficiencies44659467% Quangos88175107% Shared services/ outsourcing2448115% Procurement431 131% Total 1,5721,96156% 5. Protect Services – Cut Costs and Bureaucracy 10,000 head-count (extra €500m off payroll) 150 cut in agencies (€175m)

13. 5. Protect Services – Cut Costs and Bureaucracy

14. Start a total Public Sector Transformation, with 3 drivers: 1.Performance at the heart of new Budget Process (B.A.R.T.) 2.Reconfigure Routine Processes 3.Choice, contestability and local mgt. autonomy at the Front line (FairCare, Choice, Contestability) 5. Protect Services – Cut Costs and Bureaucracy

15. 6. Protect Those Who Cannot Work Ring-fence from cuts the “human shield” against poverty and isolation –old age pensions –children (child benefit and qualified allowances) –carers, the disabled and the blind –foreign aid

16. 6. Extra Tax Relief for Young Home-Owners in Debt Distress Increase mortgage interest relief rates from 20-25% of interest paid to 25-35% for 160,000 First Time Buyers in 2004-08, nearly all of whom are in negative equity Financed by closing mortgage interest relief to new entrants and cuts in other property-related tax reliefs Mortgage yearYear 2Year 3-5Year 6 Extra FG relief 10%7.5%5% Aver. Monthly Saving (Samples) €91€68€46

17. 7. Activate the Unemployed Protect Family Income Supplement Move recipients of Rent Supplement to Rental Accommodation Scheme to make savings and reduce poverty traps) Youth Activation Plan to support 38,000 job and training places (removing 30,000 under 25s from next year’s live register) 3% cut in weekly working age payments €50 weekly cut for < 25s who refuse offers of training or work after six months

18. Summary of Jobs Measures Jobs MeasureYear 1Full Impact NewERA / National Recovery Bank10,000105,000 Jobs Tax Cuts6,00030,000 Youth Employment Pact14,00028,000 Workshare10,000 VAT / Travel Tax7,5002,000 Sustainable Economy Stimulus Fund2,500N/A Total50,000175,000