Fine Gael roll back on proposal for rainy day cash

Finance Minister Michael Noonan has rolled back on plans for a €2.5bn ‘rainy day fund’ for any shocks to the economy and admitted this will not be part of Fine Gael’s specific spending promises in the election campaign.

As the coalition party launches its long-term economic spending plans today, it faces questions over floating the idea of a ‘phantom’ economic reserve fund to voters.

Mr Noonan, who first mooted the idea last week, was forced into an embarrassing U-turn yesterday and conceded that Fine Gael would not be specifically allocating it as part of the party’s €12bn planned spend over the next five years.

As disagreement continues about how much ‘fiscal space’ or spending power the next government has, Taoiseach Enda Kenny also tried to shut down debate on the matter by declaring he would not be getting “into economic jargon here because the vast majority of people don’t actually understand”.

Fine Gael is expected to face accusations today of hitting the lower paid, as it unveils proposals to bring people earning as little as €13,000 a year into the PRSI net. Such a scenario could see people earning as little as €250 a week paying PRSI for the first time.

Senior party sources insisted this would offset proposed cuts in USC for all workers and result in extended dental and maternity benefit for workers. Every single taxpayer will be better off under the proposals, the party will say.

The party will outline today how it wants to spend €12bn on tax cuts and on public services with an estimated 30:70 split between the two areas.

Any talk of a rainy day fund would come from the public sector spend, but would not be specifically allocated under the plan, said sources.

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Mr Noonan said: “If in 2019, there’s some kind of unexpected shock and our growth rates are going down, we’ll have money we can spend, for example investment in capital, so that we can keep people at work and keep demand up in the economy.

“The key to it is that we are not going to allocate it in advance because we don’t want to fall into the traps other governments fell into…We will see how circumstances go and we will have the fallback position if things go wrong.”

As the gun was fired yesterday on what will be one of the shortest general election campaigns ever, Mr Noonan moved to blame confusion over spending available to the next government on his officials, saying figures were based on Department of Finance projections, which were “independent” of the presiding minister.

One Labour minister last week had accused Fine Gael of changing their tax figures on a daily basis.

Health Minister Leo Varadkar told RTÉ last night he did not agree with the Fiscal Advisory Council’s conclusion that just €3.2bn was available to spend over the next five years. He also said he did not want to “get into figures”. Fianna Fáil said that officials with the council and the department needed to clarify confusion about the figures.

Taoiseach Enda Kenny yesterday used Twitter to announce the election date on Friday, February 26, after seeking permission from the president to dissolve the Dáil. While facing opposition accusations of hiding from the media, his officials have stressed that he will be participating in a number of live televised debates and will be available to the press daily during the campaign for questions.

Nearly 500 candidates are competing for 158 seats across 40 constituencies and party leaders will be campaigning nationwide over the next few weeks.

Elsewhere, Labour today will announce its jobs promises for the next five years, with a commitment to create 150,000 new jobs by 2018 and 50,000 new apprenticeships and training places costing €131m by 2021.

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