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Saturday 22 October 2016

Michael Noonan hits back at Fiscal Advisory Council's criticisms

Published 17/06/2015 | 02:30

Minister for Finance Michael Noonan
Minister for Finance Michael Noonan

Finance Minister Michael Noonan has hit back at the Fiscal Advisory Council which had accused the Government of being on the cusp of breaking European budget rules.

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The watchdog also claimed the Government had no real plan, and is too optimistic about future growth with forecasts failing to take full account of an ageing population, spending pressures or promised tax cuts.

The Council also said the Government's plan for Budget 2016 was close to twice as generous as it should be.

It said the Government risks breaching EU rules designed to ensure a steady reduction in the structural deficit - the public sector spending deficit that exists even when the economy is operating at full steam.

But Mr Noonan last night refuted the claims. "The referee on European fiscal rules is the Commission. And the Commission has said that we will meet … them," he told an Oireachtas Committee.

Mr Noonan said the Commission had acknowledged that the Government will actually be ahead of the requirement needed to ensure a reduction in the structural deficit next year.

And he said there was money factored in for demographic changes. "What we did in the Spring Statement was that we gave very specific indicators of the Budget for 2016, but beyond that we identified the fiscal space, and the projections are on a no policy change basis. The policy changes will be the matter for the Minister for Finance on the day he brings in the Budget.

"I think it's anti-democratic for a minister, when there is an election within the 12 month period, to prescribe the details of budgets for the next five years. But I am outlining the fiscal space."

Mr Noonan said he shares the Council's analysis overall. But he added: "The Fiscal Council suggests that it's unwise to use fiscal space of €1.2bn in next year's Budget. They said €750m would be more appropriate.

"Do you think that macroeconomics is such a refined art that the spending of an extra €450m is going to ruin the country in a Budget in excess of €50bn?"

On Greece, Mr Noonan said there is currently no working paper ahead of tomorrow's meting of Eurozone finance ministers in Luxembourg. He speculated that there "won't be a substantive discussion on it". He also said an deal needed to be voted through by some national parliaments, and there is little time to do that.

Irish Independent

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