Monday 19 February 2018

Taoiseach Enda Kenny makes state-of-nation address

REVEALED: Troika officials attended secret meetings here five weeks before bail out

Taoiseach Enda Kenny preparing for his speech
Taoiseach Enda Kenny preparing for his speech
Senator Paddy Burke Cathaoirleach of the Seanad, Tanaiste Eamon Gilmore, Taoiseach Enda Kenny and Ceann Comhairle Sean Barrett switch on the Leinster House Christmas tree lights

Taoiseach Enda Kenny is addressing the Irish people tonight.

The address comes as we exit the EU/IMF/ECB bailout.

During the address, the Taoiseach is expected to acknowledge the economic recovery isn't being felt in people's day-to-day lives, but will be if the public stays the course with the Government's economic policies.

THE Government is also expected this week to promise to end austerity by 2016 -- right in time for the next General Election.

The Coalition's economic plan for the country up to the end of the decade will say there will be no more need for bailout-style adjustment packages of tax hikes and spending cuts after 2015.

From then on, budgets will be tight, and spending increases in some areas may have to be paid for by cutbacks elsewhere. Likewise, any tax cuts would have to be covered by broadening of the base in other areas.

As the country officially exits the EU-IMF programme bailout today, details are also emerging for the first time of discussions between members of the Troika and the Department of Finance ahead of the bailout.

The Sunday Independent can reveal that key officials from the ECB and the European Commission Troika mission attended high-level meetings in the Department of Finance five weeks before the dramatic €67.5bn bailout in November 2010.

The new economic strategy will contain commitments to meet the debt reduction targets required under the EU Fiscal Treaty approved by voters last year.

The plan will also say borrowing will no longer be necessary by 2018 and the budget will be balanced in pure cash terms by 2020.

The Medium Term Economic Strategy will also commit to tax cuts within the lifetime of the Government, if economic growth allows.

The relief in the tax burden will be targeted at squeezed middle-income workers, earning between €30,000 and €60,000.

On top of the €2.5bn worth of taxes and cuts in 2014, there's another €2bn package of adjustments to come in Budget 2015. At that stage, the Government is saying the era of austerity, which began in 2008, will be over.

"No austerity after 2015," a government source told the Sunday Independent.

In 2016, 2017 and 2018, budgets will be tight. But there will be enough funds to cover the estimated €500m a year to keep up with demographic pressures in health, social welfare and education.

The cost of interest payments on the national debt will also have to be covered.

A small amount of funding will be left over for spending increases or tax cuts. Any further funding required will have to be made up in taxes or cuts in other areas.

"After that, the Government will have to make very hard choices," a government source said.

Also by 2016, the unemployment level is predicted to be down to 10 per cent. The Government is setting a target of full employment in the economy by 2020 -- although this will still mean an unemployment rate of six per cent.

The Coalition is already committed to bringing down the deficit to 3 per cent of national income by 2015. Then it will have to achieve a balance in the "structural deficit" by 2018, by getting that figure down to zero.

This is the requirement to show there would be a balanced budget, if factors such as the current rate of unemployment did not exist.

The Government will be aiming in the strategy to have a balanced budget in actual cash terms in 2020, so that it will not need to borrow to pay for everyday spending.

"There will be no borrowing at all," a government source said.

The Irish Fiscal Advisory Council has already predicted the line of major austerity budgets will end in 2015 or 2016, but the Government will be more definite.

The independent advisory body also suggested that there could be an expansion in public spending by 2017 or 2018.

The economic plan will go to the Cabinet on Tuesday and is expected to be published either that afternoon or on Wednesday.

The 40-page document will say there are other sectoral plans to follow.

Enda Kenny was working with his key advisers, including speechwriter Miriam O'Callaghan, over the course of the weekend.

His key message will be to thank the people of the country for helping to get the country out of the bailout and remind people there is more to do to restore the public finances.

The keynote address will be filmed in a meeting room beside the Taoiseach's office in Government Buildings.

RTE TV crews will move in this morning from 11am to begin setting up for the filming. The Taoiseach will go through a couple of rehearsals later in the day.

The address will last six to seven minutes and will either be filmed live or pre-recorded shortly beforehand.

But there are still questions around Ireland's entry into the bailout three years ago.

A full five weeks before the bailout, discussions took place between the principal players in what would become the Troika delegation and the Department of Finance.

The revelations of these meetings raise new questions over how Ireland ended up being forced into a bailout and why the Fianna Fail-led government continued to deny any talks were taking place before the State entered a rescue programme.

The Department of Finance has insisted that there were no discussions on a potential bailout "in advance".

Fionnan Sheahan, Michael Brennan, Nick Webb

Irish Independent

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