Cowen admits families will have to suffer pain
Taoiseach Brian Cowen at the press briefing on the supplementary Budget at Government Buildings yesterday evening
TAOISEACH Brian Cowen last night denied he took any "soft option" in a Budget that will have a crushing effect on working families.
Flanked by his Finance Minister and every member of the Cabinet, Mr Cowen admitted the Government had just delivered "one of the toughest Budgets of recent years", which would add to the burden of many.
"But the truth is that these were the steps that we had to take," he insisted. "For some it will feel like a step backward. But in order to go forward in the future, these steps are necessary."
But he added: "We can't let these tough times sap our spirit or drain our determination to fight." Mr Cowen predicted the recession would pass, and that Ireland could expect to see a return to growth by 2011.
He insisted that "overall, those who earn most will pay most". The changes were highly progressive in that regard, he added.
While he acknowledged that families were being asked to make sacrifices, the Government had effectively lost one-third of its tax revenues in the last year, he pointed out.
Finance Minister Brian Lenihan added: "We are all in this together. Everyone has to give something."
As pointed out in his speech, fairness was something that was very hard to adjudicate upon, he said. "You can't shuffle off responsibility to someone else."
The Government had set out a five-year plan to get Ireland back within the European stability and growth pact requirements, the Taoiseach said.
Overview
"We will continue to cut spending and raise taxes. The Commission on Taxation will report in July and will give us a systemic overview."
Mr Lenihan said Social and Family Affairs was the only department that would spend more money this year. International markets would see that Ireland had embarked on a clear road in terms of expenditure control.
"There is a wider question for markets to consider," he said.
"Our balance of payments has moved from a deficit of 6pc of GDP to practically an even balance and we anticipate a surplus next year.
"This economy is in no jeopardy in international terms. We are a member of the eurozone, one of the strongest currencies on earth," Mr Lenihan said.
He said the book value of the impaired loans of our major banks was €80-90bn, not the €400bn widely estimated internationally, nor the €900bn cited by one journal.
The strategy of the Government was to cleanse the banks of their bad assets to ensure they could resume lending.
The banks had to write off these loans now, through the new Government vehicle taking them over, to prevent a "paralysis of credit" eating into the viability of Irish businesses.
- Senan Molony Deputy Political Editor
