Wednesday 26 November 2014

Noonan warns Cabinet not to get their hopes up on Budget

Howlin also dampens expectations

Daniel McConnell and Fionnan Sheahan

Published 24/07/2014 | 02:30

Brenda Howlin,TD,the Minister for Public Expenditure arriving for the Cabinet meeting at Government Buildings yesterday. Picture: Tom Burke
Brenda Howlin,TD, the Minister for Public Expenditure arriving for the Cabinet meeting at Government Buildings yesterday. Picture: Tom Burke
Michael Noonan and Brendan Howlin.

Finance Minister Michael Noonan has cautioned fellow ministers against getting carried away by the package of cuts and taxes in the Budget being lower than expected.

Public Spending Minister Brendan Howlin told the Irish Independent he is having to "manage the expectations" of his cabinet colleagues, who are seeking to increase their budgets, despite the need to reduce the country's debt levels.

The Government has accepted the adjustment in the Budget will be less than the projected €2bn.

But Mr Noonan warned ministers against assuming the Budget would be easy as a result. In a briefing to the Cabinet yesterday, he pointed out the tax take last year was high in the first half and tapered off towards the end.

Mr Noonan said nothing can be taken for granted on the figures for the second half of the year.

Mr Howlin pointed out spending overall was on target this year, despite the overrun in health. The Cabinet agreed the deficit next year would still have to be less than 3pc of GDP. But a government spokesman said the adjustment was likely to be less than €2bn.

"Today's memo outlined how developments since then have, on balance, been positive, and it is likely that the fiscal effort to achieve the Government's targets will be less than the €2bn previously projected.

"Fiscal policy for 2016 and 2017, including the expenditure ceilings, will be governed by the preventive arm of the EU's Stability and Growth Pact and the impact of these rules will become clearer in September," a Government spokesman said.

The date of the Budget was also agreed as October 14.

After overseeing three tough austerity budgets, Mr Howlin has said the major issue this year is dampening the hopes of other line departments who want spending increases after six years of retrenchment.

Mr Howlin said he asked each minister to come up with proposed cuts worth 5pc from their budgets – but none of them did.

Ahead of the Budget in October, Mr Howlin, who has jokingly referred to himself as the 'Minister for Cuts', and his department have already received spending submissions from other ministers.

"It is a process of managing expectations. All departments want more money," Mr Howlin said.

A 5pc reduction on this year's total spending figure of €52.9bn would deliver savings of €2.6bn, but it has emerged that many departments did not comply with Mr Howlin's request. A number of them sought to increase spending on what they were allocated in 2014.

The request from Mr Howlin's department for savings is part of the process of compiling the annual Comprehensive Review of Expenditure (CRE).

Departments have in recent years been called upon to suggest where cuts can be made.

Mr Howlin disputed that the spending allocations given to the Department of Health since 2011 were "unrealistic," saying that all budgets the Government proposed were signed off by the Cabinet.

The ESRI and other bodies have suggested that with growth as strong as it is, the adjustment could even be less than €1bn.

Better than expected tax returns and fewer people out of work in recent months have aided the Government aims of reducing the country's debt.

Irish Independent

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