Labour upbeat on Noonan budget comments

The Labour Party has welcomed comments from Finance Minister Michael Noonan, in which he left open the possibility of reducing the €3.1bn budget adjustment — if this can be done while sticking to the target of cutting the deficit to 5% of GDP.

A senior Labour source said the party was “encouraged” by the words of Mr Noonan, who wrote in the Irish Examiner yesterday that the size of the budget adjustment should not be decided until much closer to the Oct 15 budget date.

His comments represent a softening from the position of Taoiseach Enda Kenny, who told the MacGill Summer School last week that he wanted to “finish the job” of introducing the spending cuts and tax hikes that were signalled.

Easing up on austerity measures now, Mr Kenny said, “would jeopardise everything we have worked for”.

Mr Noonan wrote: “The Government is committed to meeting our agreed deficit target for 2014 but the actual size of the adjustment which will best position the country for growth and jobs will not be decided until nearer budget day.”

Labour is arguing that the Government should use the €1bn savings in interest repayments from the promissory note deal to ease the pressure on citizens.

The €3.1bn adjustment for 2014 was committed to in the Coalition’s three-year spending plan, agreed with the troika. However, Labour leader Eamon Gilmore argued that the targets set and agreed to had been expressed in percentage terms, not in terms of a quantity of money. If forecasts indicate the Government is on course to surpass the deficit reduction target, then the adjustment should be smaller, he said.

The Labour source said the party was in agreement with Mr Noonan that things should not be decided until all indicators are available before budget day. He added that “all of the Cabinet and Government ministers realise people have to get a bit of a break”.

Labour is under pressure to put its policy stamp on the budget. It has lost five TDs from its parliamentary party, as well as a number of councillors. Mr Gilmore has been warned the leak of members from the party “will turn to a flood” if the same policies are pursued.

A movement known as “Campaign for Labour Policies” plans to hold a fringe meeting to coincide with the party’s conference in November. A spokesman said about 30 members attended its first AGM over the weekend.

Spokesman Neil Warner said “the loss in recent weeks of many very valuable and talented members of the Labour Party reflects the growing despair of many party members at the complete absence of Labour values or vision in the policies of the current government.

“The party leadership must act now to change this if it does not want this growing leak of party members to turn into a flood.”