News Fionnan Sheahan

Monday 22 September 2014

Fionnan Sheahan: Idea of cross-party consensus on budget plan is not credible

Published 13/10/2010 | 05:00

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Green Party leader John Gormley wants to achieve "consensus" on the four-year super budget. Unfortunately for him, Taoiseach Brian Cowen is less enthused by the prospect of sitting down with the opposition parties to thrash out their views on the way ahead.

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Besides, there's precious little agreement across the key questions being asked of the political parties on a range of issues at the moment.

Within the coalition parties of Fianna Fail and the Greens, there's still plenty of ground to be covered before the Government itself signs off on the four-year plan or even December's Budget.

Black Thursday on the banking front followed by the announcement of the necessity for the detailed four-year plan has thrown pretty much every potential item of tax hikes or spending cuts back on to the agenda

The package for this year will definitely be well above €3bn -- probably heading past the €4bn mark and on upwards.

Among the issues to watch is the coalition's approach to water charges. While the Green Party has promised no water charges until meters are installed in houses, government sources admit there is ongoing debt about "when and how" the water tax will be introduced.

The focus on the budgetary choices is putting a greater degree of pressure on the opposition parties to set out how they would fix the deficit.

Fine Gael appears to be relishing the challenge of showing it is up to the task. But the party's notion of taking the entire 2011 adjustment out of current spending is now gone by the wayside.

The Labour Party consistently argues that it has put forward its budgetary proposals, but falls down consistently on the credibility test.

Likewise, Sinn Fein's proposals are decidedly implausible.

Gormley's idealistic view of the parties coming together isn't matched by the reality of where the political system is at on a budgetary analysis, which is anything but common.

Here's where the parties agree to disagree.

- €3bn in cuts and taxes in December's budget

Fianna Fail: Finance Minister Brian Lenihan says it will be considerably more than €3bn, probably meaning it will be €4.5bn to €5bn.

Green Party: Same as Fianna Fail.

Fine Gael: Not yet decided on a figure around €3bn yet, but it agrees it has to be more. Leo Varadkar advocates a €6bn adjustment next year.

Labour Party: Not decided on a figure above €3bn.

Sinn Fein: Believes it's possible to reduce by €4bn next year, but not by cutting frontline public services. Instead it proposes to save €1bn from halting "wasteful spending" and hopes to raise €3bn from taxes targeted at higher earners.

- Reduce the deficit to 3pc by 2014

Fianna Fail: Yes and frontload reductions in opening years.

Green Party: Yes.

Fine Gael: Yes and frontload reductions in opening years.

Labour Party: Yes, but Pat Rabbitte says the party would "like" to do it.

Sinn Fein: No, reduce the deficit by 2016.

- Capital spending

Fianna Fail: Reduce by more than €1bn, which may stretch up to €1.5bn.

Green Party: Arguing against mothballing large-scale projects like Metro North, which will only cost small amounts in early years.

Fine Gael: Ruled out capital cuts when the figure was only €3bn, but now revisiting.

Labour Party: One-third of the cuts to come from capital.

Sinn Fein: Not in favour of cutting capital spending at all.

- Current spending

Fianna Fail: Looking at €1.5bn at least, with big hits on health and social welfare. Committed to Croke Park agreement of no cuts to public-sector pay -- but only if there is delivery on reforms.

Green Party: Again fighting to protect education spending, in particular.

Fine Gael: Revising figures again. Claimed all €3bn could be taken from day-to-day spending, thus advocating a follow through on Colm McCarthy's Bord Snip report.

Labour Party: No cuts to social welfare payments, the dole or child benefit, but want to eradicate inefficiencies.

Sinn Fein: No cuts to frontline public services.

- Water charges

Fianna Fail: Technically signed up to water charges only when meters are installed, but there are doubts over when and how and speculation of a flat-rate charge.

Green Party: Firmly of the view there can't be water charges until meters are installed, when householders would get a free allowance and pay the top-up.

Fine Gael: No water charges until metering is introduced and not paying the tax through the 34 local authorities.

Labour Party: Finally signed up to water charges, once meters are installed, after being opposed until now.

Sinn Fein: No water charges.

- Taxation

Fianna Fail: Tax hikes of up to €1bn. Lenihan is keen to bring in a new universal social charge and there will be a widening of the tax base with details still to be thrashed out, such as income tax rises of 1pc on both rates.

Green Party: Pushing for fairness and Dan Boyle is still arguing for refundable tax credits.

Fine Gael: Ruled out tax hikes this year when the figure was only €3bn, but now revisiting. Policy of broadening the tax base but using the proceeds to finance reduction in employers' PRSI. Broad strategy of 4:1 rule on spending cuts to tax increases.

Labour Party: Higher rate of tax for those earning over €100,000, but don't tamper with existing rates.

Sinn Fein: Standardise all discretionary tax reliefs, a third 48pc tax rate on incomes over €100,000, abolish the PRSI ceiling and increase Capital Gains Tax to 40pc.

Irish Independent

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