Monday 11 December 2017

Budget 2012: Cuts greater than €3.6bn 'counterproductive' says Rabbitte

Fionnan Sheahan and Sarah Collins and reporters

THE Labour Party today refused to back Finance Minister Michael Noonan's confirmation that there is more pain than expected coming in the budget.

Mr Noonan said earlier this week that the package of cuts and taxes will probably go above the existing predicted figure of €3.6bn.

However, speaking on RTE's Morning Ireland this morning, Communications Minister Pat Rabbitte said he does not believe budget cuts and taxes should be any higher.

"€3.6bn is going to impose hardship on very many people. I do not agree we should go further than planned. We have to get growth back in this economy and given that we have taken €20m out of the economy since the crash, to go further than planned would be counterproductive," Mr Rabbitte said.

"It would impose more pain unnecessarily on people who can least bare it and I think it would be counterproductive to getting the economy back on the road to recovery."

Mr Rabbitte also acknowledged cabinet discussions on the budget would be very challenging. "It's going to be extremely difficult. It's very easy to rime off figures and say we should go for more than planned. You sit around the table on the figures in front of you in social welfare, in health, in education, in justice and see how difficult it is to bring home what we have committed too."

The differing views coming from Fine Gael and the Labour Party are undermining the Government's efforts to prepare the public for a tougher budget.

However, a Labour spokesman said there was "no difference between the government parties" on the matter.

"The overriding government target is to get the deficit down to 8.6pc of GDP in 2012.

"The manner in which we get to that figure is not yet clear as we await critical information such as tax returns for October and November.

"In the meantime no decision has been made," the spokesman said.

Mr Rabbitte's remarks were described as "an expression of his optimism that this could be achieved through a €3.6bn adjustment".

However, a government spokesman said Mr Noonan's view of more than €3.6bn probably being needed was the official position.

"The Government intends to achieve the 8.6pc target in this year's budget and as outlined by the Minister for Finance the correction required to achieve that target will probably exceed €3.6bn," the spokesman said.

Confirming the budget package would be higher than previously anticipated, Mr Noonan said two days ago his "own thinking is we probably need a little more" than €3.6bn to reach the borrowing targets agreed under the bailout.

Following Mr Noonan's comments, government sources said the Coalition has been preparing the ground for months to go above the previous estimate of cuts, by raising that prospect.

"That wasn't done accidentally. You can safely say for the first time it will be above €3.6bn," a source said.

Meanwhile, Taoiseach Enda Kenny told the EU's top official yesterday that Ireland could be an example to other countries in financial crisis.

Mr Kenny got the thumbs-up from the European Commission president Jose Manuel Barroso for the country's performance under the bailout. And he said he was hopeful that Ireland can be the first of the countries to emerge from the EU/IMF loan plan.

Irish Independent

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