Noonan rejects talk of budget causing rifts in Coalition
Minister for Finance Michael Noonan dismissed reports of acute strain between the Coalition parties over tomorrow’s budget, saying most of the plan had been agreed for weeks.
“I don’t know who is writing those headlines but it’s just not true. Relationships are very good,” Mr Noonan told reporters in Brussels.
“The debate on Saturday was about the last €100 million or so out of an adjustment of €3.5 billion and there are different takes on it, different opinions and different political assessments on what should be in a tax package or what should be in an expenditure control package. But it’s around the margins; the main thrust of the budget has been agreed for some weeks.”
Asked if the budget would be sufficient for Ireland to return to private debt markets without bank debt relief, Mr Noonan questioned whether anyone ever said it would.
“What the budget is about is getting the deficit down and progressively matching the tax take to what we spend. That’s one part of what we have to do.
“The other part of what we have to do is to get the economy growing, and as the economy grows obviously GDP goes up and the ratios – debt-to-GDP ratios – come down.”
Mr Noonan cited ongoing talks to recast the Anglo Irish Bank promissory note scheme and to agree direct bank recapitalisations by the European Stability Mechanism fund.
The European Central Bank is reluctant to do a deal on the Anglo scheme, and Germany and its allies are resisting any rapid deployment of direct ESM aid for banks.
“The historic debt is very high and, as long as we continue to run deficits, that debt is increasing rather than reducing so we have to address the debt situation as well. Because while it’s sustainable in the sense that we can service it, it’s certainly putting a drag on our growth rates,” he said.
“Most of the literature would say that when your debt/GDP ratio goes significantly above 100 that you’re not achieving the growth rates that you might achieve if you didn’t have the burden of servicing that debt. It would be part of the economic policy to make the debt more sustainable.”
Minister for Jobs, Enterprise and Innovation Richard Bruton said yesterday the Government was well aware of the difficulties faced by the public, but said the people understood that tough decisions needed to be made. “We do understand the difficulty that it is causing for people, but I think people also recognise that this Government was put in there to do a job to transform this economy and to do the reforms that we are doing,” he said.
Fianna Fáil spokesman on finance Michael McGrath said there were “deep divisions” between Fine Gael and Labour which were “most revealing”.
“Fine Gael showed that its absolute priority in this budget is to protect those in the highest-income bracket. According to reports, the pound of flesh that Fine Gael wanted in return for considering even a modest increase in tax on those earning over €100,000 was to cut the basic welfare payments to the most vulnerable people in society.”
Mr McGrath said that “talk of a higher rate of property tax on properties worth over €1 million is little more than a sop to the Labour Party, who will experience the wrath of families if reports are true that their pledge not to cut child benefit has been broken once again.”
The Campaign Against Household and Water Taxes said it would hold a protest march against the budget tomorrowat 4.30pm, from the Central Bank to the Dáil.
“The spin from Government that a ‘mansion tax’ is being introduced which will hit the wealthy is a ‘fig leaf’ to cover over the naked home tax which will disproportionately hit low- and middle-income households,” Cllr Ruth Coppinger said.
“A real wealth tax would, of course, go after the wealth and property assets of the super rich, including their commercial property.”