Coalition faces into difficult period

BUDGETARY CYCLE:TAOISEACH ENDA Kenny has told his parliamentary party that the budgetary cycle over the next four months could be the most difficult period in this Government's term of office.

Mr Kenny told his party’s TDs and Senators that December’s budget, which will require some €3.5 billion in adjustments, would be extraordinarily difficult and would require some very unpopular decisions.

He was speaking at a private session during the party’s two-day parliamentary party meeting in Westport, Co Mayo.

According to two of those who attended the sessions, and who spoke on the basis of anonymity, Mr Kenny said he had a very long and involved one-on-one conversation with Tánaiste and Labour Party leader Eamon Gilmore before last week’s Cabinet meeting, during which both said they were determined the Government would last the full term.

“He said that he had a man-to-man chat with Eamon Gilmore and both were very clear that they were going to last the full five years and that they were singing off the same hymn sheet,” said one deputy.

The two priority issues for the conference are the economy as well as the children’s referendum. Mr Kenny said yesterday it would take place in the autumn, although the text has yet to be agreed by Cabinet.

Minister for Children France Fitzgerald will today update her party colleagues on its status.

At yesterday’s opening session, Minister for Finance Michael Noonan told party TDs and Senators that the level of property tax recommended by an IMF staff report was too high and he was hoping to achieve about half of that.

The conference was also addressed by the former deputy director of the International Monetary Fund Donal Donovan. According to one of those who was present for the session, Mr Donovan gave quite a pessimistic assessment of the economy at present.

“He seemed to be saying that unless Ireland gets a very serious writedown on our bank recapitalisation debt, all the austerity is not going to deliver for us in terms of growth.

On the negotiations to reduce Ireland’s bank recapitalisation debt burden, Mr Noonan accepted it was unlikely the October deadline will be met but indicated that meeting the deadline was not the Government’s priority.

He said the rationale behind this is that Ireland needs to see what kind of deal Spain gets before seeking its own deal.