Mary Hanafin (Dún Laoghaire, Fianna Fail)

The Cabinet considered all elements of this budget including the impact it would have. We considered not only the rates and value of cuts in respect of social welfare but changes in other Departments that might impact on the same people. We also took into account the consumer price index, CPI, figures. I accept that not everyone has benefited in the same way from the change in prices. An analysis was carried out by the Department of Finance in respect of the decrease in prices during the year and how it has affected people. We examined that analysis carefully. The analysis suggested the CPI fell for retired households by 3.25%, one of our considerations in making decisions in respect of pensioners. Prices decreased by 5.75% for unemployed households and 7.5% for working households. Although the analysis shows the highest income people have benefited more from the drop in prices, the lowest income people have also benefited greatly from it. We considered the matter very carefully to establish the position in respect of the increases of 3.5% for this year. The process was carried out very carefully across Departments to establish the impact. Nevertheless, we found ourselves in the position of having to make these proposals.

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