Gilmore vows to renegotiate 'bad deal' on EU-IMF bailout package


ROAD TO RECOVERY THREE-POINT PLAN:LABOUR LEADER Eamon Gilmore has said he will seek a mandate in the general election to renegotiate the €67 billion rescue package with the European Union and International Monetary Fund.

He criticised the “bad deal” that was agreed by the outgoing Government, which he said would put the country in a “budgetary straitjacket” for years.

Mr Gilmore said the challenge facing the electorate was to accept the rescue deal or to trust Labour to change its terms. “It’s Frankfurt’s way or Labour’s way,” he said.

Launching his party’s economic plan for stability and growth yesterday, Mr Gilmore said the choice facing the electorate was to have the budget decided in Frankfurt (the headquarters of the ECB) or by the Irish government.

“This is a bad deal that has effectively written the budget for the next four years. Fianna Fáil want us to follow the budgetary straitjacket and start taking the ‘shilling’ and following the [beat of the ECB] drum,” he said.

Mr Gilmore said his party was opposed to the deal on the basis that it would mean more taxes and more cuts. He and the party’s finance spokeswoman Joan Burton outlined their economic proposals for the next three years at a press conference at the party’s headquarters in Dublin.

Mr Gilmore said the party was proposing three major initiatives to help the economy recover: Renegotiate the EU-IMF bailout package; no increase on income taxes for those earning under €100,000; and control public expenditure.

In relation to public spending, he said: “We will apply the scalpel rather than the crude hatchet.”

Ms Burton, the party’s deputy leader, said: “We are asking the electorate for a mandate to renegotiate the EU-IMF deal, to seek fair terms for the Irish people. It would not help Germany if Ireland was crushed by the weight of the adjustment,” she noted.

The document includes details of the party’s revised plans to reduce the deficit to 3 per cent of national income. Last weekend, the party announced it agreed with a €7 billion, rather than a €9 billion, adjustment between 2012 and 2014. It also disclosed that it wanted to push the date for reaching the 3 per cent target to 2016. Ms Burton said the lower €7 billion adjustment between 2012 and 2014 would allow room for jobs and recovery. The revised schedule would result in the deficit being reduced to just under 5 per cent of national income by 2014. The figures are predicated on growth of 1.55 per cent in 2012 rising to 2.5 per cent in 2014.

The party did not outline projections or figures for the 2014 to 2016 period. A party official explained that continuing volatility in the domestic economy and in the global economy affected the reliability of such predictions.

Mr Gilmore said Labour would “work the Croke Park deal” with guarantees on no further reductions in pay in return for structural and work-arrangement changes in the public sector. The party said it would seek 18,000 voluntary redundancies in the sector and cap salaries at below €200,000.

Mr Gilmore maintained the ratio of cuts to taxes would be one to one. He said €4 billion in cuts were set out in the plan but that €1 billion was being pumped back into the economy to incentivise jobs in areas like education and health. He said some €3 billion in taxes would be raised under the plan. The measures would include ending remaining property tax reliefs; a 1 per cent increase in VAT, a rise in carbon tax and a second home levy.

The corporation tax rate would remain at 12.5 per cent. However, in one change, companies would be restricted from carrying over more than 75 per cent of losses into a new tax year.

Asked what would Labour do if the ECB in Frankfurt said no to renegotiation, Mr Gilmore argued that the rescue deal would not work and would not be able to reduce Ireland’s deficit to 3 per cent of national income. “We are confident that we can renegotiate it. I will tell you why. The current deal cannot be worked.”

Asked about the obligation imposed on the Government by the IMF memorandum to outline €700 million in cuts by the end of March 2011, Mr Gilmore said the obligation would form part of the renegotiation talks.

He said March, in the immediate aftermath of a new government being formed, would be a very important month for Ireland.

Road to recovery: Three-point plan

1 Renegotiate the EU-IMF bailout package

2 No increase on income taxes for those earning under €100,000

3 Control public expenditure