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Saturday 20 September 2014

Austerity here to stay despite voter backlash, says John Moran

Ronald Quinlan, Special Correspondent

Published 01/06/2014 | 02:30

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LECTURE: Spend less and work more, says John Moran
LECTURE: Spend less and work more, says John Moran

IF you work your Saturday afternoons and pay down your debt, you might still be able to go for dinner on Saturday night.

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That's the analogy Department of Finance Secretary General John Moran used when asked if the end of austerity might now be in sight following the overwhelming protest registered against the policy in last week's local and European elections.

Speaking to the Sunday Independent at the Irish Small and Medium Enterprises (ISME) annual lunch last Friday, Mr Moran made it clear that there could be no easing of the conditions laid down by the Troika if Ireland was to reach its target of bringing its budgetary deficit to below 3pc by next year.

"Even if there was a windfall in the morning, we couldn't necessarily go off spending it without understanding how you get back to a structural balance along the way, and that was signed up to by the Government and all the [Coalition] parties," he said.

Mr Moran is working out his notice after resigning his public sector job at the start of May. He is expected to move into a senior financial role in the private sector.

He said his department had laid out a path in its Medium Term Economic Strategy (MTES) to show how this balance might be achieved through a combination of reduced expenditure and increased productivity.

Comparing the potential productivity of the overall economy to that of an individual worker, he said: "You might just work a little bit harder. You do it by potentially working on a Saturday afternoon and earning a bit more money and you pay down the money [debt].

"You may not have to stop going out for dinner on a Saturday night. You might just work a little bit harder and earn a bit more money. So essentially what we're saying is if we can turn the economy and make it a little bit more productive, get the pay rise, in the sense that the overall economy makes more money, that growth level is enough to lift us back into a good position."

When asked if he foresaw any easing up of austerity given the massive electoral kickback both here and across the EU against it, the former finance chief said: "Austerity, it's a word that people like to use. What we're really saying is that you cannot spend more money than you're earning.

"It's a simple exercise. It applies in households. The household has to manage their domestic bills so as not to spend more money than they are earning. That's really what this is all about. It's moving to a position where we earn as much money as we spend or even more money than we spend so we can repay debt even more quickly."

Asked if he believed those people who protest against austerity fully appreciate what true austerity is, Mr Moran replied: "I think everybody has their own view on what austerity is so it's hard to comment on what they mean when they use the word.

"Some people like to use some terms [such as austerity] which have a connotation that is more negative than others. I think everybody understands the objective of where we need to get to, of not borrowing new money every year to keep the lights on."

Mr Moran insisted that while the Government had "waved goodbye" to the Troika last December, there was still a very definite direction being followed in relation to the country's economic management.

He said: "People seem to think that just because the Troika programme disappeared that in some respects there's no path in what we do.

"The MTES is there for a reason as it lays out what needs to be done for the next seven or eight years, in the broad macro sense, which is all the Troika programme ever did. Now what was different about the Troika programme before this happened is that in order to get additional funds, there was a sort of an exam and you passed the exam or you didn't.

"Now that we have taken down all the bonds, then the Troika have an interest in ensuring that they get repaid."

Mr Moran said the Troika's governance would in some respects be replaced in the coming days by European governance with the announcement of the country's specific recommendations, the imposition of which had been agreed when Ireland signed up to the Fiscal Compact Treaty.

Sunday Independent

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