Burton: €2bn budget adjustment doesn’t make sense

Minister for Social Protection Joan Burton has said a mooted budget adjustment of €2 billion doesn't make economic sense.

Ms Burton questioned why the Government would wish to “suck €2 billion in spending out of the economy” when the country needed more money in circulation to help people get “back on their feet”.

Her comments follow a warning from the IMF’s departing representative in Ireland Peter Breuer that the country risked missing its budget deficit target of less than 3 per cent of gross domestic product by 2015 if it failed to make the adjustment.

The independent Fiscal Advisory Council and the European Commission have also advised the Government to stick to the €2 billion target. But Minister for Finance Michael Noonan has said Ireland could meet its deficit target with a smaller adjustment.

Ms Burton this morning said economic returns this year show Ireland is ahead in taxation by about €0.5 billion. The economic growth and additional taxes means “we’re in a much better position than we were before”, she told RTÉ’s Morning Ireland. She described those looking for the €2 billion adjustment as “austerity hawks”.

She added that although it was “too early” to predict what will be in October’s Budget, she said she would like to see a “serious capital programme” in relation to house building with a particular focus on social housing. This, she said, would address the lack of supply in areas such as Dublin.

Asked about the Labour Party leadership contest, Ms Burton said there will be changes in the make up of the party's front bench if she sees off her rival for the position Alex White. She also said it was "almost completely unlikely" that the party would go into coalition with Sinn Féin. "I'm unhappy that Sinn Féin have unanswered questions in relation to the nexus between Sinn Féin and the IRA."