Spring statement: the main points
Noonan and Howlin outline aspirations for spending increases and tax cuts
The Minister for Finance Michael Noonan and the Minister for Public Expenditure and Reform Brendan Howlin have delivered the spring statement, outlining the Government’s broad aspirations for tax cuts and public spending increases.
Below are the main points from both Ministers’ speeches:
Minister for Finance Michael Noonan
The Government will be in a position to implement expansionary budgets (in which taxes are cut and spending is increased) this year and every year until 2020.
There will be scope within the order of €1.2 billion and €1.5 billion to cut USC and income tax while increasing public spening. The measures will be split 50:50 between tax cuts and spending increases with the actual measures to be announced in Budget 2016.
Economic growth is forecast at 4 per cent in 2015 with stable growth of 3.25 per cent for the rest of the decade.
Employment is expected to surpass 2 million next year with all jobs lost during the downturn to be replaced by 2018.
The deficit will fall below 3 per cent to 2.3 per cent of GDP this year with debt levels set to move down towards the European average in the next few years.
Net outward migration is expected to cease next year with a return to inward migration from 2017 onwards.
The national debt is on a downward path, having peaked in 2013. It is expected to drop below 100 per cent of GDP and move towards the EU average in the years ahead.
The Minister is confident all taxpayer money invested in AIB, Bank of Ireland and Permanent TSB will be fully recovered because the value of this investment continues to rise.
The Government will in a few weeks make an announcement on how to strengthen the mortgage arrears framework to help the more than 30,000 homeowners in long term arrears of more than two years.
Mr Noonan will initiate discussions in May with the six main mortgage lenders to hear their plans for reducing interest rates.
Minister for Public Expenditure and Reform Brendan Howlin
Gross expenditure in 2014 was €54 billion, a reduction of more than €9 billion since its peak in 2009. Budget 2016 will seek to increase expenditure by €600 million to €750 million, allowing the Government to deal with “demographic pressures” in social protection, education and health.
Under new EU rules, future growth in public expenditure will not exceed the level of potential economic growth unless the Government specifically levy additional taxes.
The portion of the population over the age of 65 is projected to increase from 11 per cent in 2010, to 15 per cent in 2020 and to 24 per cent in 2060. Demographic changes will cost an estimated €200 million a year in health spending over the coming years.
Ireland spends more than €6.5 billion a year on pension provision. The cost of paying for State pension schemes is projected to increase by €200 million a year until 2026.
By 2021 an extra 3,500 primary and secondary teachers will be needed provide education to an additional 50,000 pupils. The number of third level students is set to increase by 20,000 in the same period.
A new “Capital Plan” will be published in June outlining spending on infrastructure until 2020.
The Government has agreed to the Minister’s proposal to enter discussions with the trade unions on the question of public service pay. The Government will plan to unwind the emergency legislation governing the post-crash public service pay reductions.