State could seek budget savings of up to €6bn

THE Government could look to save up to €6 billion in next month’s emergency budget — a dramatic escalation on previous estimates.

But no sooner had a cabinet minister revealed the figure than the Government attempted to play down the issue, insisting a final decision had yet to be taken.

The cabinet held a special meeting yesterday as part of a process to hammer out the package of tax increases and spending cuts that will be introduced in the April 7 budget. Earlier this month, Taoiseach Brian Cowen said the Government would seek to save about €4.5bn in the budget to plug the hole in the public finances.

But speaking following the meeting, Agriculture Minister Brendan Smith revealed the figure was higher. “We are talking about €5bn to €6bn,” Mr Smith told RTÉ’s The Week in Politics programme.

However, the Government attempted to play down his comments after the programme had been recorded. A government spokesman, speaking on Mr Smith’s behalf, insisted no decisions had yet been made on the final figure.

Political and social justice groups warned the Government that it risked taking too much money out of the economy if it aimed for savings of €4.5bn or more.

“It will be administering too much medicine and the danger is that they will kill the patient,” Labour leader Eamon Gilmore said. He argued that the Government should be looking to save no more than €2.5bn this year.

Religious group CORI urged the Government to borrow more money and avoid making major cuts.

“This crisis is so severe that we cannot ‘cut’ our way out,” CORI spokesman Fr Sean Healy said. “CORI acknowledges that cuts will be necessary but the core of any effective strategy has to be investment.”

Both he and Mr Gilmore were speaking before Mr Smith mentioned the higher figure. Mr Smith acknowledged the Government would have to get the balance right: “We don’t want to take too much out of the economy and have a further deflationary effect.”

Meanwhile, Mr Gilmore urged the Taoiseach to “pick up the phone” to union leaders in a bid to avert next Monday’s planned strike. “I don’t think a national strike is good for the country, and I think that the Government, the Taoiseach in particular, needs to take the initiative, call the trade union leaders, find out what it will take to have that strike postponed or put off, and I think he needs to do that this week,” he said.

A government spokesman said while “informal” contacts had been maintained with the unions, it was a matter for themselves whether to strike.