THERE ARE diverging views within the Government on the scale of the adjustment required for the budget on December 7th, ahead of this evening’s special meeting of the Cabinet.
There is general agreement in the Cabinet that €4.5 billion will be the minimum adjustment sought, and officials from both sides of the Coalition referred to growing acceptance the final figure may be closer to €5 billion.
However the Department of Finance has not ruled out the possibility the adjustment could be as high as €6 billion.
Minister of State for Children Barry Andrews said last night that the budgetary choices were very difficult. He said Minister for Health Mary Harney had already made that point clearly in terms of the health budget.
"It is going to be painful for people in receipt of welfare. It may have a detrimental effect on some of our educational provisions," he told RTÉ's The Week in Politics.
This evening’s special meeting will involve detailed discussions on specific measures to be adopted. The meeting at Farmleigh will start at 6pm and is expected to last several hours.
It will focus on specific cuts and measures in all Government departments, including the future of Metro North and the possible imposition of a property tax – on a temporary, flat-rate basis – in the budget.
The Green Party spokesman in Government warned last night about the deflationary effects of an overly severe package of cuts.
“What emerges has to be a balanced package, because there’s a danger of deflating the economy,” he said. “We believe the Government is very conscious of that danger.”
The Government has definitively ruled out a €7 billion adjustment mooted by Fine Gael’s Michael Noonan following his briefing with officials last week.
However, a finance source said the adjustment would be between €4 billion and €6 billion. The final figure will be dependent on the latest exchequer returns and outlooks, as well as detailed economic analysis of the impact of cuts and other measures on growth, said the source.
“It is not a linear exercise and the extent of cuts sometimes has a bearing on growth,” said the source, who added it was “too early” to arrive at a final figure.
Minister for Finance Brian Lenihan is understood to be in favour of a credible frontloaded adjustment of €5 billion or more, but the need for a very large adjustment is not shared by all Ministers.
Another senior Government source, not attached to finance, said that while the figure of €6 billion was theoretically possible it was not practical from a political perspective.
Green Party leader John Gormley has accepted the budget will be severe and said there could be no deviation from the 3 per cent deficit target for 2014, agreed with the European Council. “We have to stick to it, it’s a huge challenge,” he said in Belfast on Saturday.
He also sharpened his criticism of Fine Gael and Labour in relation to their approach to last week’s meeting of party leaders on the public finances. He said both parties had given “very little” to the process and had “reverted to type and returned to adversarial mode”.
Fine Gael frontbench spokesman Alan Shatter said the Government had consistently got its calculations wrong and was refusing to state its final figure for adjustment.
“We have to get clarity on the bottom line figures,” he said.
Ms Harney has confirmed that cuts in the Health Service Executive could be between €600 million and €1 billion. The cuts will be implemented largely on the service delivery side.
A spokesman for the Minister said last night there are no imminent plans for a voluntary redundancy programme. It has also been suggested that the social welfare budget – which accounts for one-third of overall current spending – could be cut by up to €2 billion in the budget.