Friday 22 September 2017

Noonan long on aspiration but short on explanation

Thomas Molloy

Thomas Molloy

FINE Gael's first campaign press conference started late and ended in disarray.

But there was even more confusion to be found in the party's five-point recovery plan which contains many pious aspirations but few explanations of who will pay for what.

The party's front bench has ducked the biggest issue facing future growth, the €85bn bailout, and introduced a major change to its taxation policy which most voters will dislike intensely.

Finance spokesman Michael Noonan ended his party's commitment to cut three euro from government spending for every extra euro raised in taxes.

He now plans to shave just two euro from government spending for every euro raised despite the party's often-stated belief that cuts are far more effective than tax hikes when it comes to creating jobs.

That is likely to delight public sector unions and the Labour Party but disappoint voters; our opinion poll today shows that only 7pc of voters prefer tax hikes to spending cuts, which may explain why the party was coy about the explaining the policy change.

An extra €3bn would be taken from taxpayers' pockets while government services will be cut by almost €6bn over the next four years, under the plan. Together with December's €6bn Budget, this would enable Fine Gael to achieve the €15bn target dictated by the IMF and Europe.

To slash spending, Fine Gael says it can save one euro in 10 spent on public services by cutting 30,000 civil servants, closing 145 quangos and privatising services such as the passport office.

There was no mention of a property tax, water charges or any of the other taxes that the IMF and think-tanks have long demanded.

More saving is envisaged from local government reforms and better procurement practices but without any breakdown, it is impossible to say whether the projected savings are realistic.

The target of 30,000 public sector jobs is less ambitious than it might sound as something not far off this number is likely to retire or resign over the next four years.

One small policy rabbit to come from Mr Noonan's hat was a pledge to balance current spending by 2016 rather than just bringing spending down to 3pc of gross domestic product by 2014.

While such a move makes sense, and would still leave us borrowing to fund spending of capital projects, he was unable to provide any figures to back up this claim. He suggested there might be a €3bn gap which would have to be filled to balance the current spending budget -- and claimed that increased economic growth would provide the solution.

A testy Mr Noonan also pointed out that medium-term predictions are difficult in the present economic climate, but failed to explain why he made them in the first place.

On renegotiating the €85bn bailout, Mr Noonan appears to understand what needs to be done but seems unable to do it.

Dogmatic

He admitted we may well not have a new government when EU leaders meet in early March for a crucial discussion on changing the bailout fund which is currently keeping us above water. But even more disturbing than that is Fine Gael's reluctance to let our partners know what we want.

While "Fine Gael is in no way dogmatic about the details of such a deal" it gave no coherent set of requests for a new bailout deal.

While the party offered no carrots to Europe, it was not short of sticks, including the ultimate threat of a default if the present deal is not renegotiated.

"We believe that Ireland may be left with no option, in the absence of a renegotiated deal, but to write-down the value of the bonds in the Irish banks, or face the prospect of a hugely damaging sovereign default," is how the policy document puts it.

However, the EU Commission has let it be known it believes such threats are the least effective way of achieving a new deal because it would encourage other countries to try to bully the EU in future.

Whether Mr Noonan understands just how weak his hand is remains to be seen.

Irish Independent

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