Odd couple will learn how little they have in common
Many FG and Labour policies are poles apart -- and their divergences far outweigh their common stance, says Willie Kealy
Published 27/02/2011 | 05:00
FINE Gael and Labour will find themselves poles apart on some of the major elements of recovery that must be implemented immediately, if they decide to sit down together to try to work on an agreed programme for government.
• Fine Gael accepts the national deficit target of 3 per cent of GDP must be achieved by 2014.
Labour wants this target pushed back to 2016.
• Fine Gael wants 73 per cent of the money needed to achieve that target to come from spending cuts, with 27 per cent coming from taxation increases.
Labour wants 50 per cent from tax and 50 per cent from spending cuts.
• Fine Gael says it will cut 30,000 public sector jobs over four years. This target includes reducing civil service back-office staff by one-third and reducing HSE staff by 8 per cent (a reduction of 8,000 by 2016), abolishing 145 State bodies (quangos) and appointing a 'Bord Snip' for the semi-states. It says it can save €5bn by dealing with waste, duplication and inefficiency in the public service and it will streamline services by creating a single business inspectorate and licensing authority.
Labour says it will reduce public sector numbers by 18,000 by 2014. In the HSE, it wants to see a reduction of 7,000 jobs through voluntary redundancy. It says it will cap public sector pay at €190,000, create a new office of public sector reform headed by a cabinet minister and amalgamate quangos.
Neither party is advocating compulsory redundancies, but if Fine Gael felt changing circumstances made this necessary it would be opposed strongly by Labour.
• Fine Gael says there will be no increase in income tax, corporation tax or taxes on jobs.
It will increase the higher 21 per cent VAT rate, and reduce the lower standard 13.5 per cent rate in labour-intensive industries for two years. It wants to increase Dirt tax from 25 to 30 per cent; and abolish travel tax if Aer Lingus and Ryanair agree to restore abandoned routes.
Carbon taxes will rise under Fine Gael from €15 per tonne to €25 per tonne over four years; and water charges will be introduced once a new utility company is established to take over responsibility from local authorities.
Labour has pledged no income tax increase only for those earning under €100,000, but a higher 10 per cent universal charge on those earning over €100,000; a minimum tax rate of 30 per cent on those earning over €250,000; a one per cent rise in the standard 13.5 rate of VAT; and an increase in the second homes levy from €200 to €500. It also says it will increase the carbon tax to €25 per tonne.
• Fine Gael says it will create 100,000 jobs by investing €7bn in new infrastructure, renewable energy, water and telecommunications funded from the National Pension Reserve Fund and the sale of some State assets.
It has promised lower PRSI for employers hiring off the dole and greater tax reliefs for research and development. It will reduce welfare payments where a person refuses offers of training, education or work experience. Jobseekers' benefit will be cut by €3 a week in 2012 and 2013 and €4 in 2014, and it will save €250m by reforming child benefit payments. It also says there will be 23,000 places in a national internship programme and 17,000 in second-chance education.
Labour says it will create 30,000 work experience positions for new graduates and apprentices and 30,000 new education and training places for the unemployed. It wants to replace Fas with a new national employment service and give a one-month PRSI holiday to employers hiring off the live register. It also promises a crackdown on social welfare fraud.
• Fine Gael wants lower pay caps on banking salaries and a ban on bonus payments in banks relying on State support. It wants to close down Anglo Irish Bank and Irish Nationwide by the end of the year, and "consider" selling off AIB to a large foreign-owned bank.
It also wants to complete the sale of EBS, promises to introduce mortgage indemnity insurance to protect against negative equity, and pursue rogue bankers with the full rigour of the law.
Labour wants to create a strategic investment bank to enhance infrastructure, dispose of public stakes in banks as soon as possible, and restructure bank boards to ensure replacement of directors who presided over failed practices.
• Fine Gael has pledged no further capitalisation of Irish banks until the size of the hole in the banks is known.
Labour has not been clear on this, but says it is opposed to further sales of bank assets.
The list of items on which they seem to be broadly in agreement, when dealing with the EU/IFM deal, the banks and jobs, is much shorter.
• Fine Gael wants to negotiate a "haircut" with holders of unguaranteed senior bank bondholders.
Labour wants bondholders to share the burden of bank losses.
• Fine Gael wants no further asset transfers to Nama.
Labour wants to curtail further asset transfers to Nama.
• Fine Gael wants to renegotiate the interest rate on the EU/IMF bailout.
Labour also wants to renegotiate the interest rate on the EU/IMF bailout.
Labour and Fine Gael both say they will reverse the cut in the minimum wage.