Ministers of State disagree over Budget deficit targets

A disagreement in Government over Ireland’s Budget targets has emerged this morning with two Ministers of State taking varying positions on deficit reduction.

Labour Minister of State at the Department of Transport Alan Kelly said comments by a Fine Gael colleague in a national newspaper this morning calling for tougher budget measures were "not necessarily helpful".

Minister of State at the Department of Finance Brian Hayes said the Government should impose harsher cuts than required in the upcoming Budget.

Mr Hayes told the Irish Examiner if Ireland reduced its fiscal deficit by 1 per cent more than has been suggested so far it would strengthen the country’s reputation in the international markets, making it easier to borrow money.

“If we’re seen to be pitching a budget to be more ambitious in terms of reducing the deficit, that would send out a very strong signal to the markets,” he told the newspaper.

The Government has committed to reducing the fiscal deficit to 5.1 per cent by 2014 and 3 per cent by 2015. But Mr Hayes said the Government should aim to reduce the deficit to somewhere “in the region of 4 per cent”.

Mr Kelly criticised his colleague for discussing the Budget in the media. “This idea of negotiating like this or putting Budget plans like this into the press continuously is not good for the Government and I think it should stop,” he told RTÉ’s Morning Ireland.

He also said he disagreed with calls for harsher measures in Budget 2014, saying taxpayers should be given some relief after years of austerity.

“From my point of view I think we really need to achieve any savings that can be made. I think we need to lessen the burden on ordinary workers and tax payers.”

The Labour Party has also come out against more stringent budget measures. Last month Tánaiste Eamon Gilmore rejected a call from the head of the euro zone rescue fund, Klaus Regling, for adherence to a budget adjustment of €3.1 billion next year.

“I do not accept what he said,” Mr Gilmore said.

“The target is expressed as a percentage of GDP and that target for 2014 is 5.1 per cent. We have met all of the targets that have been set.”

Mr Gilmore did not put a figure on it but it is estimated that his way of calculating the adjustment would be at least €500 million less than the €3.1 billion figure.