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Tuesday 30 September 2014

Burton says next Budget must be less harsh after €1bn deal

Fionnan Sheahan Political Editor

Published 15/02/2013 | 04:00

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Joan Burton: savings

SOCIAL Protection Minister Joan Burton is demanding a far softer Budget so the taxpayer "immediately" sees the full benefit of the bank debt deal.

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Labour Party ministers are pushing for a reduction in the tax and cuts package in the next Budget by up to €1bn.

Fine Gael ministers have spoken about the benefits being spread over two Budgets.

But Labour wants the entire rewards from the promissory note deal to be front-loaded into Budget 2014 -- before the local and European elections.

Finance Minister Michael Noonan has warned the knock-on effects from the promissory note deal will have to be worked out later and negotiated with the IMF-EU bailout team.

Firing the first shots in what is expected to be a year-long battle, Ms Burton said there was "no time to waste" in showing the public the entire benefits of the deal.

Tanaiste Eamon Gilmore has also talked about "lifting the burden" and Public Spending Minister Brendan Howlin referred to a "social dividend" after the deal.

Labour is currently languishing in the opinion polls, but the party hopes for a boost if the public can see the direct impact of last week's bank debt deal on the cash in their pockets.

The Government says the bank debt deal will mean there is an extra €1bn to play with over the coming two years.

It is due to introduce a Budget package of €3.1bn in cuts and taxes in 2014 and a further €2bn in 2015.

Within Labour, there is a concern that Fine Gael and the Department of Finance will try to push out the €1bn benefit from the bank deal.

They fear it will be swallowed up in debt repayment, be used to reduce the deficit faster or to compensate for lower levels of economic activity.

"There's a fear that Finance will hold back and Labour will have nothing to show in this Budget but more pain.

"It will be disastrous," a source said.

Last night, Ms Burton said the debt deal will produce "immediate bottom-line savings", and added: "We need to invest those proceeds immediately to get our people and our economy working again, beginning with this year's Budget because there is no time to lose."

Labour Party sources say the "adjustment burden" should be reduced in Budget 2014.

"The minister believes it is essential in Budget 2014 that the adjustment target is reduced in line with the savings secured from the promissory note deal," a senior source said.

Dividend

"That could mean reducing the adjustment by somewhere between €800m and €1bn, with a proportionate reduction in the amount of expenditure measures that have to be implemented."

Sources indicated that the party does not expect to get the full €1bn factored into the 2014 Budget, but the party would be pushing for it.

"I don't think we'll get to the 100pc," the source said.

Mr Howlin said yesterday that the public must see a "social dividend" from the bank debt deal, which he described as "one step in the path of recovery".

"The people have taken an enormous burden and it is to them the vast bulk of the credit for the steady progress on the road to recovery we have achieved is due," he said.

Irish Independent

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