FINANCE BRIEFING:THERE WAS no credibility in seeking an extension of the 2014 deadline for achieving the deficit target of 3 per cent of Gross Domestic Product, Minister for Finance Brian Lenihan said yesterday at Leinster House.
He stressed that the savings to be secured under the Croke Park agreement would have to be broader and deeper than previously envisaged although the Government had no plans to alter the pay provisions.
The Minister repeated his undertaking that no hospitals or “full-sized” schools would be closed as a result of the fiscal correction. In a briefing for political correspondents, he accused Fine Gael leader Enda Kenny of questioning the “good faith” of Department of Finance officials.
Addressing the issue of the target date, he said: “The core issue here is, there’s a fiscal gap of €19 billion between what the State receives and what the State spends. That gap first emerged in the summer of 2008 and that gap has to be filled.
“You can’t leave that gap there on an indefinite basis. And this is the argument to be made to the ICTU point: the State already is seeing an impact on its borrowing costs because that gap is so wide.”
He added: “There is no credibility in seeking an extension of a period in a context where markets have already priced your borrowing at between six and seven per cent in September and October, because that’s what the markets say our borrowing percentage payment ought to be. That’s a very serious matter.”
Asked if the Croke Park agreement on public service pay and reform would survive, he replied: “The Croke Park agreement offers substantial opportunities to the State, in that, in return for, in effect, a freeze on wages and an acceptance of a 14 per cent average reduction, the staff side have engaged, through a public service agreement with the Government and the Minister for Finance to see what efficiencies and economies can take place in the delivery of public services.
“I do think that the ambition of the Croke Park agreement will have to be broadened and deepened in relation to the savings that can be secured by it, but in relation to the pay provision, the Government has no plans there.”
Asked if was satisfied with the rate of progress on the agreement given the failure of a number of Government departments and agencies to meet the deadline for submitting reform plans, he replied: “No, in fact I’ve raised that issue with the relevant departments and said they must be more ambitious in their business plans and expedite these matters.”
He said there had been “a very courteous meeting” earlier in the day between himself and Fine Gael finance spokesman Michael Noonan who had been “very responsible in his comments” on the fiscal situation.
However, the Minister criticised the Fine Gael leader for questioning “the good faith and hard work” of officials in the department when Mr Kenny said he wanted to subject the figures supplied by the department to independent verification.
Asked if he still stood by his undertaking a number of weeks ago that schools and hospitals would not close as a result of the fiscal correction, Mr Lenihan replied: “I can certainly say that hospitals will not close, there’s no question about that.”
He added that “full-sized schools” would not close, although there was “always a process of amalgamation of schools in the Department of Education”.
The Minister said European commissioner for economic and financial affairs Olli Rehn had confirmed to him earlier yesterday afternoon that he would be visiting Dublin in the week beginning November 8th: “He will brief the Opposition parties and the social partners on the commission’s perspective on the economic position.”