Noonan introduces Finance Bill and says economic outlook is improving

THE MINISTER for Finance has told the Dáil that the economic outlook is improving. Michael Noonan added that the most recent CSO figures showed that in the first three-quarters of last year, GDP increased by 0.7 per cent compared to the same period a year earlier.

“This was thanks to strong export growth which was due in turn to improvements in competitiveness and to Ireland’s enduring attractiveness as a destination for foreign direct investment,” Mr Noonan said yesterday.

He said the strong export performance also meant that the current account of the balance of payments was back in surplus.

GDP was set to grow again this year and to strengthen over the medium term.

Introducing the Finance Bill giving effect to the budgetary measures, Mr Noonan said economic progress was reflected in the confidence of investors.

For example, he said, the yield on 10-year Irish bonds – the notional cost of borrowing for the Government – had more than halved, falling from 14.5 per cent in mid-July to under 7 per cent at the start of this month. Mr Noonan said the public finances had stabilised and the budget deficit had started to decline.

This year the deficit would be reduced further to 8.6 per cent of GDP. In order to meet that target, the budget introduced a package of adjustment measures totalling €3.8 billion.

“The Government is well aware that these measures will have an impact on the living standards of our citizens,” he added.

Mr Noonan said the Bill met the commitment in the programme for government to increase the rate of mortgage interest relief to 30 per cent for first-time buyers who took out their first mortgages between 2004 and 2008.

“As with all time-limited reliefs, there will always be people who just miss out, and that is why I have been as flexible as possible with the legislation,” he said.

“However, I do not intend to extend the period any further as the measure would then become less targeted and very costly.”

Fianna Fáil finance spokesman Michael McGrath insisted that the mortgage interest relief was untargeted. “When you put in place a provision like this, there are people who will lose out and you could have somebody in quite a good financial position who bought between 2004 and 2008 and are going to benefit,” he said.

“You could have somebody who bought in 2003 or 2009, and who has since lost their job and is in negative equity, and they will get nothing.”

Mr McGrath said that at a time of limited resources, measures should be focused on precisely where the problem lay.

Sinn Féin finance spokesman Pearse Doherty said the Government would have been in power for a full year in two weeks’ time. “It will be remembered by many as a year of missed opportunities and broken promises,” he said.

“Despite all the promise of change . . . the hallmark of Fine Gael and Labour’s first year in office is continuity with the past.”