OPPOSITION REACTION:THE PROGRAMME documents relating to the EU-IMF bailout, published yesterday, confirmed the entire bill for the 2008 bank guarantee would fall on Irish taxpayers, Labour's deputy leader and finance spokeswoman Joan Burton has said.
Fine Gael finance spokesman Michael Noonan said the party was considering the Memorandum of Understanding as part of its preparations for the budget, and would respond in more detail in due course.
“However, we have noted that the memorandum becomes less specific after 2011, which leaves an incoming government free to introduce its own policies.”
Sinn Féin finance spokesman Arthur Morgan said the memorandum on the conditions for the €85 billion aid package was not financial support, rather it was “financial suicide”.
Ms Burton said the documents “set out in gory detail the wide-ranging programme of pain negotiated by the Fianna Fáil-led Government” and they confirmed “the entire bill for Fianna Fáil’s disastrous bank guarantee is to fall on Irish taxpayers”.
Minimum budget reductions made up of “painful” tax hikes and spending cuts were foreseen for the next two years.
“The Labour Party remains convinced that it is not possible to frontload the budgetary adjustments to such an extent without seriously compromising prospects for jobs and growth.”
She said the Labour Party had instead proposed a twin-track approach: balanced consolidation of the public finances with strategic investment in infrastructure, growth and jobs.
“Unlike Fianna Fáil, the Green Party and Fine Gael, all of whom support a draconian €6 billion budget for 2011, Labour proposes a €4.5 billion package which leaves room for growth.
“We also propose using €2 billion from the National Pension Reserve Fund to finance a strategic investment bank that would channel funds to important competitiveness-boosting infrastructure projects and to innovative start-up and growing businesses.”
The Labour spokeswoman added: “It became clear during the Labour Party’s meetings with the troika of the European Commission, European Central Bank and IMF that it was the IMF who wanted the more holistic approach to supporting Ireland.
“This may come as a result of recent studies by the IMF indicating that there is little evidence that a developed economy can deflate its way out of the sort of onerous debt burden now being imposed on Ireland.”
Ms Burton concluded: “This is a bad deal for Ireland and a bad deal for Europe. We need a new government with a mandate to renegotiate the terms of this agreement. The sooner we have a general election the better.”
Giving the Sinn Féin perspective, Mr Morgan said it was “farcical” to describe this as a programme of financial support for Ireland.
“This is a programme of financial support for wealthy European banks and their bondholders, at the expense of the Irish people.”
Thrusting vulnerable people into the depths of poverty and creating further inequalities in this State was in no way financial support, Mr Morgan said.
“The Irish people are being put on a fiscal starvation diet as the parasitic bondholders feed off the lifeblood of our economy. We need less debt, not more loans. We need economic stimulus, not strangulation.”
The memorandum looked like a legally binding document which would contractually bind Ireland.
“Sinn Féin will be taking legal advice on this,” he said.