LABOUR PARTY leader Eamon Gilmore said yesterday that if elected he would seek to renegotiate the size and timing of the budget adjustment contained in the EU-IMF bailout deal.
This objective is in addition to the party’s previously announced intention to seek to reopen two other aspects of the deal: the rate of interest charged on European funding and the extent to which Irish taxpayers backstop bank losses.
Mr Gilmore said that the Labour Party wants the budget adjustment in the 2012-2014 period to be reduced to €7 billion, €2 billion less than set out under the terms of the bailout. He also wishes to extend the time frame for bringing the budget deficit below the EU ceiling (3 per cent of gross domestic product) by one year to 2016.
The announcement marks a divergence from the position of Labour’s likely coalition partner after the next election, Fine Gael, which is committed only to seeking a lowering of the interest rate and renegotiation of terms related to the banking system.
Separately, Labour Party sources told The Irish Timesthat the party will unveil significant commitments on taxation on Thursday, when it publishes its detailed budgetary strategy for 2012-2014.
A previous commitment to introduce a 48 per cent personal income tax band will be abandoned formally and a new commitment made to place a ceiling on the marginal rate of combined personal taxation.
That ceiling is to be 55 per cent, regardless of income. The ceiling will include all three forms direct personal taxation: income tax, the universal social charge and pay-related social insurance.
Labour sources said that “the Government had done the job on personal income tax”, and said there was no further scope for increases.
Despite this, the sources confirmed that budget adjustments in future years would be based on an equal split between additional taxation measures and cuts in expenditure. Up to now, the Labour Party has committed itself to the 50:50 ratio between tax and spending for 2011 only.
The budgetary strategies of the outgoing Government and of Fine Gael are for spending cuts to account for two-thirds of future adjustments, with one-third coming from taxation.
Mr Gilmore made his announcement on expanding the scope of bailout issues on which the Labour Party will seek renegotiation at the launch of the first policy document of the general election campaign.
In its 18-page paper on enterprise, innovation and growth, Labour gives prominence to boosting exports by Irish-owned companies. The party committed itself to establishing a trade council to “to strengthen co-operation and co-ordination across all key departments and State agencies involved in the promotion and development of trade and exports”.
An “enterprise and trade czar” is also to be appointed. Mr Gilmore said he wished to see the percentage of Irish exports going to high-growth developing countries such as China and India rise from 4 per cent now to 10 per cente.
Labour also intends to merge the four State agencies with a remit to support innovation into a single Innovation Strategy Agency. The agency will have as one of its main priorities the removal of obstacles to the commericalistion of innovation, a key problem identified by the party.
The document reiterated the party’s proposal to establish a €500 million fund for job creation, funded by the National Pension Reserve Fund.
Mr Gilmore said the document deliberately avoided setting targets for the number of jobs to be created as a result of the proposals. “Government doesn’t create jobs but it influences the environment in which they are created,” he said.