Expansionist Budget plan rekindles FG-Labour spat
THE prospect of the first expansionary budget since 2007 has been the catalyst for a major spat between Fine Gael and Labour over the "prom note" spoils and what one top-level Labour source called "Fine Gael's stupid Dutch auction on tax".
Senior members of Labour are furious at FG's "co-ordinated" attempt to "seize the tax cuts agenda". In the first Budget memo, brought to the Cabinet last week, Finance Minister Michael Noonan's first point was that "the Government had a great deal of room to play with surrounding the use of the €1bn gain from the promissory note deal".
One senior figure told the Sunday Independent that "Noonan was very ebullient, there is a lot of flexibility around".
The Cabinet was then given a range of options, from using the €1bn to pay down debt to easing back on cuts to using the windfall to reduce tax and invest in infrastructure.
Significantly, in the wake of last week's meeting, a co-ordinated series of articles by Fine Gael ministers including Richard Bruton and Ciaran Cannon attacking the social protection spend has called for tax cuts in the next Budget.
One senior Labour source said: "Fine Gael have decided it's going to be tax cuts and are telling Labour to back off, this is ours."
The source added: "It's co-ordinated – it's the old FG tactic of treating your government partners as though they were the opposition."
However, FG was warned by a top-level figure that "Labour is not going to be backed into a corner on this".
A source close to the Cabinet said: "Labour believe in tax cuts, but we support tax cuts for the squeezed middle, not for the top 10 per cent like Richard obviously does."
They added: "Noonan is the one behind this media campaign. Richard and the others are just the front men to give the thing a soft, inoffensive profile. Noonan is the mind behind this little game."
The Sunday Independent was also told that a key factor in the Fine Gael offensive is that "the party has been spooked by recent polling data showing Fine Gael is leaking support in the squeezed middle to Fianna Fail". Recent polls have seen Fine Gael consistently slipping behind Fianna Fail, and the party was down to 24 per cent in the most recent Irish Times/MRBI poll.
A Labour source close to the Cabinet said: "It is quite clear this is poll-driven."
Mr Noonan was also dragged into the Labour counter-offensive as senior Labour figures expressed concerns at the ongoing failure to secure a resolution to the banking crisis.
The Sunday Independent has also learnt that the Budget is likely to feature major infrastructural announcements.
One source said that "the Taoiseach's people have been going around hounding departments, getting people to put together lists of projects. The big push is on".