Greens warn of capital expenditure cuts

EXTRA budget cuts above the €3 billion already signalled must come from the capital expenditure programme, the Greens warned last night.

As the Dáil prepared to return from its 81-day summer break this Wednesday, the junior coalition party insisted frontline services could not bear the brunt of more savings.

Finance Minister Brian Lenihan caused concern in recent weeks when he said cuts of €3bn previously signalled would be just the minimum needed to stick to the Government’s plans to bring borrowing down within EU limits.

The capital expenditure programme — money set aside for roads and building projects — has already been ear-marked for €1bn of those savings, with public expenditure and tax increases expected to make up the other €2bn.

However, economists have warned that taking that much out of the economy may weaken the situation further on the back of the country registering negative growth of 1.2% in gross domestic product in the second quarter, following a modest recovery at the beginning of the year. Green Party chairman Dan Boyle made it clear services should not suffer extra cutbacks in the December 7 Budget.

“If it goes above €3bn then we will have to look at the capital expenditure programme’s capacity to look for additional savings,” he said.

Mr Boyle said he did not know how high the cutbacks would eventually be.

“I’d be surprised if it reaches €4bn, but you can’t rule anything in or out at this stage,” he said.

Fine Gael enterprise spokesperson Richard Bruton said raiding the capital programme would be short-sighted.

“They have already cut it by half and I just find it inexplicable that the Greens and Fianna Fáil fail to see that the key to streamlining Government spending is to reform public services.

“It is just so short-sighted to go for cutting capital expenditure again, which will just mean worse infrastructure for the industry we have,” he said.

The move to try and limit further cuts to services at the expense of the capital programme may put the Greens on a collision course with their Coalition partners. The last Dáil term ended amid tension between the parties as some Fianna Fáil backbenchers accused the Coalition of being dominated by a “Green agenda” which saw rebellions over animal welfare reforms.

Green leader John Gormley has made it clear he expected to see movement on reforming corporate donations to political parties by Christmas, but some Fianna Fáilers expressed concern about this key plank of the Greens’ renegotiated Programme for Government.