Opposition 'surprised' at shortfall in public finances
Fine Gael finance spokesman Michael Noonan today said the level of adjustment required in the Government's four-year budget plan will be much higher than previously considered.
Opposition politicians from all the major parties were briefed today on the state of the country's finances ahead of December's budget.
Emerging from his discussion with Department of Finance officials this morning Mr Noonan said: "We accept now from the conversations we had with the officials that they are putting in a lesser figure than in last year's budget so the level of adjustment is going to be bigger than that which was published so far.
"The figure of adjustment published already in the Government plans was €7.5 billion. With lower growth rates projected, the level of adjustment is going to be significantly higher than that."
Discussing the briefing in more detail on RTÉ's Drivetime programme this afternoon, Mr Noonan said it was impossible to get a complete picture of the level of adjustment needed at present until the latest tax figures were known.
"We don't know what the starting point is yet because we don't know what the whole revenue is coming in in October . . . it's impossible to know what the exact level of adjustment is because it depends on what decisions the Government takes, and the only thing that can give further clarity is if the Government brings forward their decisions" he said.
Mr Noonan added he was "surprised" to see the Government was painted into such a tight corner.
"The key factor in this situation now is whether the economy can grow or not, and in the last budget, the Government predicted growth rates of 3¾ per cent for 2011, and we know from today's briefing that their growth rates will fall well short of that," he said.
Echoing Mr Noonan's comments, Labour Party finance spokeswoman Joan Burton said after her briefing this morning: "There is a significant increase in the correction over what they had previously calculated.”
Ms Burton, who emerged from the Merrion Street meeting in Dublin shortly after 11am, described as “very challenging” the information provided at the first Department of Finance briefing this morning.
She said although much of the information had been given on the condition of confidentiality, departmental officials had expressed concern income tax receipts would be lower than had been expected previously.
“What they told us was very challenging,” Ms Burton said. “Our discussions today were mainly about the macro issues of growth and also about the macro and longer-term issues of the structure of the bank bailout cost, which are, to be honest, pretty horrific.”
There had been no discussion about departmental spending or social welfare reforms.
However, Ms Burton said she had a “positive” engagement with officials and believed the process of briefing the Opposition parties would continue until the budget is published on December 7th.
"I think this process is actually going to change the way Government and Opposition work in Ireland for all future budgets. In that sense it is very helpful."
Ms Burton said she questioned officials on their forecast for growth, the cost of servicing the national debt and what would happen to treatment of national accounts for people given promissory notes for financial institutions.
Sinn Féin's Arthur Morgan was also briefed by officials today. Speaking before entering the Department of Finance this afternoon he said Sinn Féin had no interested in begin part of a "consensus for cuts".
"The Taoiseach Brian Cowen has now set the pre-condition that all parties must sign up to the target of reducing the budget deficit to 3 per cent by 2014. Sinn Féin will not be signing up to that target which is totally unrealistic and which this Government is preparing for by slashing and burning the Irish economy," said Mr Morgan.
Department of Finance secretary general Kevin Cardiff and other senior officials provided the briefings.
Elsewhere, Irish Congress of Trade Unions general secretary David Begg today urged the Government to extend the target of reducing the deficit from 2014 to 2017.
In an address to the Institute of Taxation he said cutting the deficit to 3 per cent of gross domestic product by 2014 could do permanent damage to society.
“I do accept that we cannot sustain the high level of borrowing and the cost associated with it indefinitely,” Mr Begg said.
“But the target date of 2014 and the figure of 3 per cent are quite arbitrary. More importantly they cannot be attained without doing permanent damage to our economy and to the fabric of our society.”
Minister for Social Protection Éamon Ó Cuív last night confirmed social welfare cuts would be an element of the strategy. “It’s not necessarily across-the-board cuts, but there will inevitably have to be cuts in the social welfare budget,” he told RTÉ’s The Week In Politics programme.
Taoiseach Brian Cowen said today there would be a meeting among party leaders to discuss Opposition suggestions with regard to the Budget later this week.
Yesterday he called on the Opposition to unite with Fianna Fáil and the Greens around the idea the time for “politics as usual” had passed. He outlined his belief other parties could help the State’s position abroad and welcomed as a “good start” the acceptance by Fine Gael and Labour of the need to reduce the deficit to 3 per cent by 2014.