* Dublin to hike taxes by 1 bln euros, cut spending by more
* Record majority will see measures pass, reaction is key
By Padraic Halpin
DUBLIN, Dec 5 The Irish government will test the
public's patience and the economy's resilience on Wednesday when
it unveils another 3.5 billion euro dose of austerity in its
sixth budget since the financial crisis began.
Bailed-out Ireland has made a limited return to bond markets
and is one of few euro zone countries that have managed to eke
out mild growth, but with one of the highest budget deficits in
Europe, there will be further harsh spending cuts and tax hikes.
The new measures come on top of 25 billion euros taken out
of the economy since 2008 - equivalent to 15 percent of annual
output - and the government is hoping to show a public so far
willing to accept the cuts that the end is in sight.
"Tomorrow's budget will be a very tough budget. It was
always going to be a tough budget, but it is the budget that is
going to get us to 85 percent of the adjustment that has to be
made," Deputy Prime Minister Eamon Gilmore said on Tuesday.
"It will therefore put the end in sight for these type of
measures and these type of budgets."
The broad thrust of the budget is already agreed under the
terms of Ireland's 85 billion euro EU/IMF bail-out, with around
one billion euros coming from new tax measures, 500 million to
be trimmed from the country's capital budget and 1.7 billion to
be saved through cuts to departmental current expenditure.
Finance Minister Michael Noonan at 1430 GMT will present the
taxation measures - which will include a politically sensitive
property tax - before spending minister Brendan Howlin lays out
cuts mainly to the big-spending health and social protection
Ireland's studious application of its austerity plan - which
still has at least three years to run - has so far impressed
investors and helped push yields on benchmark Irish 2020 bonds
to 4.5 percent from over three times that level 18 months ago.
With a record majority, Noonan will have few problems in
pushing the measures through parliament when the first votes are
taken on Wednesday. The public's reaction will be much more
"I don't think international investors are particularly
concerned about the measures, their focus will be on the overall
number and the reaction to it," said Alan Ahearne, an economics
professor at the National University of Ireland, Galway, who was
special adviser to Noonan's predecessor Brian Lenihan.
"One of the reasons there has been an increase in confidence
among international investors is that they see that unlike other
countries in the periphery, the budgetary adjustments, although
difficult, are being accepted by the people."
With unemployment stuck close to a crisis high of 15 percent
and with homeowners struggling to pay mortgages, the government
will nevertheless test the public's patience.
Michael O'Reilly, president of the Dublin Council of Trade
Unions, will lead one of a number of small protests expected
outside parliament and had a clear warning for the government.
"I'm absolutely certain that there's nothing else facing the
country, only more protest. None of this is working," he said.
Irish trade unions have protested little due to a deal
struck with the government to protect public sector pay from
further cuts but they have challenged authorities to slow down
the pace of austerity.