GOVERNMENT PLANS to reveal details of its €15 billion four-year budget have been pushed back towards the end of this month and may not be unveiled until after the Donegal South West byelection.
A detailed four-year budget had been scheduled for publication in the next week or so but it emerged yesterday that the plan will not be disclosed until closer to the December budget.
The Government is hoping to minimise internal dissent by leaving as little time as possible between the publication of the plan and the budget on December 7th.
The long-delayed Donegal ballot will be held on November 25th and the selection convention to choose a Fianna Fáil candidate takes place in Glenties on Sunday night. The date was announced yesterday following Wednesday’s High Court ruling that a delay of 18 months was “inordinate”.
The four-year plan, devised in consultation with the European Commission, will involve an adjustment of €15 billion, with €6 billion of that coming next year.
Next year’s €6 billion adjustment will involve spending cuts of €4.5 billion and tax increases of about €1.5 billion. The four-year plan is predicated on unemployment remaining close to its present rate and emigration of 100,000 people over the period.
Announcing the adjustment, Minister for Finance Brian Lenihan said yesterday that a consolidation package of €15 billion was required over the next four years.
“A significant frontloading of the consolidation in 2011 is deemed necessary and will underline the strength of our resolve and show that the country is serious about tackling our public finance difficulties,” said Mr Lenihan.
“By the end of 2011, we will have implemented over two-thirds of the overall adjustment and we will be on a path towards renewed budgetary sustainability,” he said.
Taoiseach Brian Cowen said the reason the Government was planning to make the most significant changes next year was to “convince people on whom we depend to fund our deficits to continue to provide finances for the State”.
Fears over Ireland’s financial stability have pushed the nominal cost of Government borrowing to over 7 per cent in recent weeks, some 5 percentage points more than Germany, the strongest Euro zone member. Documents released yesterday show the Government plan only assumes a small fall in borrowing costs next year to 6.4 per cent, dropping to 4.7 per cent in 2012.
Mr Cowen, who appeared on television and radio to defend the Government’s decision, said the country’s budgetary target for this year was on course in terms of tax receipts and what the country was spending. He added that taxes had fallen to 2003 levels and would have to be brought back to 2007 levels, while spending would have to be reduced to 2007 levels, over the course of the four-year plan.
Fine Gael finance spokesman Michael Noonan described the proposed budget adjustment for next year as a “prudent target” after a briefing by Mr Lenihan and his officials. He added, however, that the Government had given Fine Gael no confidence that they had any plan to protect jobs. “Fianna Fáil and the Greens don’t get it. The country needs hope, optimism and the confidence that only a jobs and growth economic plan in parallel with the fiscal correction would deliver.”
Mr Noonan said the country needed certainty and leaving the publication of the four-year plan until after polling day in Donegal would not do that. Labour Party finance spokeswoman Joan Burton did not accept the €6 billion figure, saying it posed “an unacceptable risk to jobs and growth.” Speaking after the meeting with Mr Lenihan, she said that while the headline figure might be initially attractive, the implications of such an adjustment for jobs and growth were just as likely to undermine confidence in Ireland over time as to enhance it.
Sinn Féin spokesman on finance Arthur Morgan said after his meeting with the Minister that four successive budgets of cuts to public spending had shown austerity has failed. “The Government has unveiled a plan to cut spending, not a plan to cut the deficit. If spending cuts could fix the problem, the problem would be fixed by now,” he said.
The detail of next year’s adjustment was outlined in a nine-page document setting out the economic and fiscal background to the four-year plan. The document specified an adjustment of €6 billion next year, followed by one of €3 to €4 billion in 2012; €3 to €3.5 billion in 2013; and €2 to €2.5 billion in 2014.
The measures are aimed at cutting borrowing to 3 per cent of gross domestic product by 2014. This is the target set under the rules of the European single currency and is seen as a sustainable level of borrowing by the European Commission.
The department accepted the spending cuts and tax rises would further reduce growth by reducing spending by departments and individuals.