FINE GAEL is proposing that the pay rises for Ministers and top civil servants should be cancelled and a number of State agencies closed as part of a package of measures to deal with the crisis in the State’s finances.
The party deputy leader and finance spokesman, Richard Bruton, is also proposing to cut the number of junior ministers by three and to achieve savings of €400 million by scaling back public service decentralisation.
Presenting a report entitled “Recovery through Reform”, Mr Bruton, said that judicious measures to stabilise inflation were badly needed.
Among the changes he proposed were using the €1.5 billion carbon windfall levy accumulated by the ESB and other power generators to cut VAT from 13.5 per cent to 12.5 per cent.
He also proposed closing a stamp duty loophole used by developers and landowners in order to cut the rate levied on ordinary families moving house; to freeze charges such as hospital and television licence fees; and moderate pay deals to bring down inflation.
Mr Bruton rejected the charge that the Opposition was talking down the economy and insisted it was bad policies that had driven it down.
“The biggest danger is a Government that remains in denial. If they don’t recognise the problem the danger is that they will go for soft-option policies that will simply paper over the cracks,” said Mr Bruton.
He said that responsibility for the crisis lay squarely with the Taoiseach and the Government.
“In the space of four years at the helm at finance, Brian Cowen steadily and deliberately pursued policies that sabotaged our economy’s capacity to weather external shocks.
“Having steered the economy into recession there is very little confidence that he can steer us out of it again,” he said.
Mr Bruton added that Mr Cowen had made three critical blunders in finance that had driven the country into a recession. He listed the blunders as:
Reckless inflationary budgets, driven by electoral needs, that killed competitiveness;
Huge increases in day-to-day spending financed by unsustainable property tax revenues;
Stalled public sector reform and abandoned value-for-money discipline.
“These three blunders are at the heart of the emerging recession we are now facing,” said Mr Bruton.
He said Fine Gael had spent years warning Mr Cowen of the dangers of reckless spending programmes, unsustainable property and consumer tax revenues and an unwillingness to change our approach to the public finances.
Mr Bruton proposed a series of actions including cutting out avoidable waste, helping keep prices and inflation down, changing the way the country’s finances are managed, and reforming the public service.
After detailing his party’s specific proposals Mr Bruton said that the growth in net voted current spending should be limited to 4 per cent in 2009-11, capital spending should be accelerated in line with NDP commitments.
He called for the abandonment of the “existing level of service” estimates process saying every department should be required to secure 1 per cent savings each year. This would create a €2 billion “strategic fund” for 2009 to finance priority welfare and service improvements such as indexing social welfare and keeping promises in relation to the number of teachers, gardaí and medical staff.