Sunday 27 May 2018

Fresh concerns for impact of pay deal on finances

The European Commission has expressed fresh concern about the impact of the recent Garda pay deal on the State's finances. (Stock photo)
The European Commission has expressed fresh concern about the impact of the recent Garda pay deal on the State's finances. (Stock photo)
Niall O'Connor

Niall O'Connor

The European Commission has expressed fresh concern about the impact of the recent Garda pay deal on the State's finances.

In a report to TDs and senators, the commission said "growing pressure to raise public sector wages may further reduce the Government's rooms of manoeuvre" on the back of the €50m Labour Court deal.

Officials also raised the decision to bring forward to April a €1,000 pay increase for public sector workers earning less than €65,000.

The surveillance report, issued to members of the finance committee last night, warned of what it described as "increased, and partly volatile, tax revenues" which have been used to fund permanent increases in expenditure.

Much of the substance of the report has already been communicated to the Cabinet.

There is praise for what the commission described as Ireland's "resilience to shocks" which officials say "feature high on the Government's agenda".

However, some of the warnings in relation to housing will raise concern.

Despite praising the decision to set up a housing ministry, the commission said the undersupply of housing is having negative social consequences.

There is also a warning over the introduction of the 4pc cap on rents.

Such initiatives, the commission says, have had a negative impact on the market in other countries.

On health, officials say "public healthcare expenditure continues to creep upwards".

It adds: "Better planning could improve control of the healthcare budget."

In relation to banking, the commission is critical of the Fianna Fáil bill which has allowed the central bank to cap interest rates on variable rate mortgages.

There are also warnings, which have been made repeatedly in the past, over the impact the suspension of water charges may have on investment.

Irish Independent

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