BUDGET BRIEFINGS:THE BUDGET adjustment over the next four years will have to be significantly higher than the previous projection of €7.5 billion, Fine Gael finance spokesman Michael Noonan said after his briefing by Department of Finance officials yesterday.
Speaking immediately after the meeting, Mr Noonan said a bigger adjustment would now be required because the figure for growth next year was not going to be the 3.25 per cent originally forecast by the Government.
“We accept now from the conversations we had with the officials that they are putting in a lesser figure than in last year’s budget so the level of adjustment is going to be bigger than that which was published so far,” he said.
“The figure of adjustment published already in the Government plans was €7.5 billion. With lower growth rates projected, the level of adjustment is going to be significantly higher than that.”
Mr Noonan said that estimates for growth from the Economic and Social Research Institute and from independent economists also suggested that it would be considerably lower than earlier forecasts.
He added that decisions on the budget would affect the projections for growth. If the emphasis was on tax the growth projections would go one way and if it was on spending cuts it could go in another way.
“It is hard to be accurate about the level of adjustment required until we have Government projections for growth and decisions about the framing of the budget. There are a number of variables,” he added.
Mr Noonan said that detailed costings of the various budget options involving their revenue-raising potential or the savings that could be made through particular spending cuts did not form party of yesterday’s discussions.
“My feeling is that while Opposition parties may work on alternative strategies we won’t be able to come to conclusions until we have the figures to build on.”
Mr Noonan added that the Government would need to give the Opposition the time required if the process was to work. “The can’t give us the information a few days before the budget.”
Asked if the four-year adjustment should be front-loaded in next year’s budget, Mr Noonan said the Government’s original plan envisaged 40 per cent of the cuts coming in the first year followed by 25 per cent the following year and the final part spread out over years three and four.
He said the figure for next year would probably be somewhere around 40 per cent of the revised total but it was too early to speculate on precisely what that figure would be.
Mr Noonan was accompanied at the meeting by Fine Gael’s spokesman on public expenditure Brian Hayes, spokesman on small business Damien English, and the party’s Seanad finance spokesman Liam Twomey.
The party’s economic adviser, Andrew McDowell, also attended the meeting and he will be the point of contact between the Department of Finance and Fine Gael for the remainder of the process.
The department’s official team was headed by finance secretary general Kevin Cardiff.