Taoiseach Brian Cowen this morning defended the Government’s economic strategy to tackle the recession amid heated exchanges in the Dáil.
Opening Leaders' Questions this morning, Fine Gael leader Enda Kenny accused the Government of having no coherent strategy amid "an economic swamp" and the revelation that Exchequer returns are predicted to be out by at least €5 billion next year.
He challenged Mr Cowen to clarify whether there would be tax increases next year, and whether the national pay deal would be reassessed.
Mr Cowen said that expenditure plans were broadly on target but that a “serious decline” in tax revenues has impacted position for next year. He said a collective effort, involving the social partners the pay agreement, public-sector investment, and public-sector reform, all formed part of strategy to bring public finances under control.
He said although the situation was serious, Minister for Finance Brian Lenihan had outlined he would not be looking to increase taxes amid weak revenues.
Amid heckling from the Opposition benches, the Taoiseach repeated there would be no more taxes over and above the those introduced in the Budget, which saw the introduction of an income levy.
After accusing Mr Cowen of ignoring warnings on the economy as minister for finance, Mr Kenny said: “The problem now Taoiseach is that you have job losses of 10,000 a month . . . no confidence in consumer spending, and you exacerbated that by imposing a VAT increase which is now devastating a complete swathe of countryside 50 miles south of the Border.”
“There isn’t any plan, any coherence, any strategy.”
To jeering from both sides of the House, the Taoiseach accused Fine Gael of having no economic policy. Mr Cowen said the cross-Border issue was not related to VAT but to exchange rates.
"You talk about the need for a reduction of €5bn [but] you tell me to spend an extra €1bn on capital . . . and then you tell me to reduce the rate of VAT. The problem on cross-Border trade is related to the exchange rate."
Declaring that he would use social partnership to tackle the economic difficulties, Mr Cowen told Mr Kenny: “This is the difference between you and me . . . I believe that the social partnership process is a problem-solving process, not a problem-avoiding process.”
Mr Cowen said Fine Gael had always decried social partnership but the Government would prove Mr Kenny's party "wrong on this one as well".
After the Cathaoirleach restored order in the Dáil, Labour leader Eamon Gilmore told Mr Cowen: “If you could do your job as Taoiseach and provide some leadership for the country as well as you can attack the Opposition, we would all be better off.
“What people expect to see from Government is some leadership. You have been behaving for the past number of months like bewildered bystanders . . . the worst thing about the recession . . . is that increasingly people believe not only do we have a serious economic problem, we have a Government that is not up to the job.”
Mr Cowen responded: “You’re entitled to attack me, and I’m entitled to defend myself and the position of this Government."
The Taoiseach said the Government had introduced an early budget to keep within expenditure, and then introduced changes that brought in expenditure on line for this year - moves that were all opposed by the Opposition, he added.
He went on to defend investment in the capital programme. “I have no problem borrowing for capital purposes, I think it’s the right thing to do . . . so we can make the economy more competitive.
“The simplest way [of staying in budget] would be to suspend the capital programme . . . but we’re not prepared to do this, as it is vital that the capital investment programme continue.”
Mr Cowen said although the National Development Plan 2006-2013 will not be implemented within its time frame, it should be completed even if that was over a longer period.
The Labour leader said Mr Cowen's answer was "a very fine speech, but it's riddled with inconsistencies and contradictions. From what we can deduce from the Taoiseach’s rhetoric this morning, the Government is going to depend on the capital programme . . . but you tell us at the same time that [the plan] won't be achieved within the period of time involved.
"At the same time, you told 'An Bord Slash' . . . to reduce and cut back on the capital programmes."
Amid further jeering, Mr Cowen said “An Bord Snip” was an advisory body but the Government would make the decisions and did not subcontract these out. Mr Cowen was then subject to sustained heckling from the Opposition benches.
In 1987, an expenditure review group established by then-minister for finance Ray MacSharry became more commonly known as "An Bord Snip".
