A SENIOR Fine Gael minister says any spare money in upcoming budgets should be used for capital investment rather than tax cuts or reversing public sector pay reductions.
In a speech this morning, Transport Minister Leo Varadkar said: "We should not reduce taxes until we know that any reductions can be sustained into 2015 and beyond.”
He is echoing comments made by Finance Minister Michael Noonan earlier this week. Mr Noonan said “if there is spare cash around, we should use that money for investment purposes to grow the economy and get people back to work”.
Mr Varadkar also the Transport Ireland Conference any spare cash should not be used to “avoid making unpopular or difficult decisions that need to be made and will generate long-term savings, whether it is public service pay and pensions or other areas of day-to-day spending”.
“Rather, we should use it to invest in jobs and growth,” the Dublin West TD said. “The most effective way to do this is, in my opinion, boosting capital spending. Investment in school buildings, health care facilities, flood relief works, roads, railways can create much-needed jobs and quickly if done through the traditional exchequer route.
“In the last few weeks, there has been an interesting debate going on about the limits of austerity, the content of the budget in October and what we might do with any flexibility afforded to us by the deal on the promissory notes. I have not entered into this debate up until now as there are many moving parts and we do not yet know how the economy will perform in the coming months. There are a lot of variables and it is too early to make budgetary decisions now.”
“But I will say this. While tax cuts would be most welcome particularly for those on middle incomes who end up paying high rates of income tax on modest salaries, we should not reduce taxes until we know that any reductions can be sustained into 2015 and beyond.”
He said increased capital spending would improve employment, particularly in the construction section where jobs are needed.
“I believe an increase in capital budgets could be very effective when it comes to increasing employment and improving the conditions for long-term growth and recovery. And that is an objective we all share.”