Statements on finances under scrutiny

FINANCE Minister Charlie McCreevy was accused of misrepresenting the state of the nation’s finances before the general election.

Figures from the Department of Finance show there will be a 500 million euro shortfall in tax revenue this year and economic growth will be slower than expected while inflation will be higher than predicted.

In light of these figures, the honesty of the Government over the state of the economy was questioned by Fine Gael.

The gloomy outlook contrasts starkly with the picture painted by Minister McCreevy in May, when he said the overall budgetary projections remained the same as published.

Minister McCreevy also said that after the first three months of the year, spending plans were still in line with what was predicted.

“I can confirm that there are no significant overruns projected and no cutbacks whatsoever are being planned, secretly or otherwise,” he said on May 13.

In its Economic Review and Outlook yesterday, the Department of Finance cut its economic growth forecast, stating it expected the economy to pick up at a slower pace than was predicted at budget time.

It also showed that Government spending was running out of control in the first seven months of the year, up by over a fifth on 2001 and well in excess of budget allocations.

FG Deputy Leader Richard Bruton said it was unforgivable that Minister McCreevy had misrepresented the country’s true financial position prior to the election. He called on the minister to now publish the projected expenditure of each government department for this year.

“Barely had the election completed and the minister was cutting back left, right and centre in relation to key services, including the health service. Often the most vulnerable people have been suffering as a result of these cutbacks.

“I think a bit of honesty would be the first thing that would help from this Government because they now are lecturing people that they need to reduce their expectations, where it was the Government itself who did more than anyone else to pump up those expectations by telling them they could have these great bonanzas that were ahead,” Deputy Bruton said.

The Labour Party predicted that higher taxes would be imposed in the next budget as the public finances would be in such a poor state by the end of this year.

Labour frontbencher Pat Rabbitte said further additional savage cuts in public spending were on the way. It was now inevitable that the Government would record a budget deficit at the end of the year and would need to borrow to balance the books, Deputy Rabbitte said.

But in line with Minister McCreevy’s consistent argument that he would record a budget surplus, Junior Minister Willie O’Dea did not accept that there would be a deficit at the end of the year. The Junior Justice Minister also denied that it was inevitable that taxes would be increased next year.