Analysis:The gloves are off in the debate on the economy, writes Marc Coleman, Economics Editor
"They don't add up. Their macro-economic forecasts don't add up." The time for set piece presentations on the economy is well and truly over. The election has been called, the gloves are off and yesterday saw the first serious punches being traded with that remark from Brian Cowen summing up his judgment on rainbow economic policies.
When drawing up their economic programme, Fine Gael and Labour made similar assumptions to Fianna Fáil about how fast the economy will grow over the period of the next government (7 per cent per annum in nominal terms on average), how much taxes will grow (7.7 per cent) and how much tax revenue this gives them to play with per annum - to reach €71 billion by 2012.
The latter figure compares to €49 billion that the Department of Finance expects to receive this year and the rainbow thus expects the economy to provide a €22 billion boost. Fianna Fáil's figure is the same.
Of that, rainbow plans assume that election promises will use up about €8.3 billion, the remainder going to day-to-day spending growth (the usual public sector pay increases and the like). For Fianna Fáil the figure is €9.4 billion reflecting a slightly lower prediction for growth in day-to-day spending. And when you get to the bottom line - the projected balance of revenue over spending - the two plans remain similar. Between 2008 and 2012 Fianna Fáil expects to keep the general government balance in surplus to the tune of between 0.2 per cent and 0.6 per cent of GDP. For Fine Gael and Labour the range is 0.0 per cent and 0.6 per cent.
But according to Cowen, the rainbow won't reach its bottom line. Fianna Fáil yesterday made great play of the fact while Fine Gael and Labour detail the cost of their policies on health and crime over the period of government - €2 billion of the €22 billion is earmarked for these policy areas - Fianna Fáil says there is insufficient costing for other policy commitments.
The heading given for these in the Fine Gael/Labour manifesto, "Additional Strategic Priorities" is, according to Fianna Fáil, too vague to be matched against the cost of specific policy proposals. By way of contrast, Fianna Fáil pointed to an appendix in its programme in which net spending commitments are identified in some detail.
Adjust the rainbow's sums for these and other alleged slips and Fine Gael and Labour, according to Cowen, will "end up with deficits in year two and a higher debt burden in year five". While Fianna Fáil did not specify the extent of the shortfall, the party said it would quantify it in due course.
Both Brian Cowen and Micheál Martin also claimed that Enda Kenny did not once mention jobs. They also proudly contrasted the unemployment rate in 1997 when the present government took office, some 10.4 per cent, with that prevailing now, 4.4 per cent. Fianna Fáil forgot to point out that in the three years between 1994 and 1997 the rainbow government reduced unemployment from under 15 per cent to 10 per cent.
Point scoring about the past notwithstanding, this campaign is about each side's assumptions about the future and the holes that the other side can find in them. And even that may become academic fairly soon: From teetering close to its forecasted rate in the first three months of the year, tax revenue growth for April is likely to show a rapid slowdown in property-related tax revenues that have driven recent revenue buoyancy. With growth forecasts also falling, far from pointing at each other, both the rainbow and Fianna Fáil/PDs may have to explain the holes in their common assumptions.