Go-ahead from EU for more generous budget
Opposition parties warned the Coalition not to use the extra leeway allowed by the European Commission to try and buy votes.
The move by the commission to loosen spending controls still needs approval from other eurozone governments, but Finance Minister Michael Noonan said he was confident of receiving this.
“We are quite optimistic that we will get the fiscal space that we require,” Mr Noonan told RTÉ.
The Fiscal Advisory Council has estimated that the relaxation of rules could give the Government another €700m to spend in the October budget.
With a general election having to be held within the next 12 months, opposition parties have welcomed the commission’s decision, but cautioned against the Coalition using the extra money for political advantage.
Sinn Féin finance spokesperson Pearse Doherty warned against using the extra money to fund tax cuts for the better off. “This wouldn’t have happened if there was not a general election coming in the next number of months.
“This is not coming out of some great desire to fix and improve people’s economic circumstances. It’s deeply embarrassing for Government because it’s the first time they’ve asked for this flexibility, and the reason they’re doing it is to allow tax cuts for high earners.
“The Fiscal Advisory Council has said this extra space amounts to about €700m, but the big problem here in my view is the Government has already committed to €400m in tax cuts for high earners.
“We would feel that money needs to be put into health, education, pensions, where there are major crises, and that’s where the clash is,” Mr Doherty said.
Fianna Fáil finance spokesperson Michael McGrath said he would need to examine the details of the deal, but urged the Government to use the windfall wisely.
“Obviously the timing of this announcement is of concern as it will be giving a budget increase just before a general election, but I do accept there is a need for some form of increase.
“I do accept there is a need to have some sort of increase next year. While I am concerned at any loosening of the purse strings before the next election, and raised the issue a number of weeks ago, I am somewhat relieved by what the Fiscal Advisory Council said recently about how there is a need for some increase,” Mr McGrath said.
The council had expressed concern that the way the EU calculates the Expenditure Benchmark — which is the amount of allowable rises in Government spending — could mean no scope for increases in spending without the proposed changes.
Under the loosening of limits agreed with the commission, Ireland’s planned increase will remain within the EU rules controlling spending by eurozone governments.
The council, which has expressed unease at some of the Government’s economic decisions in the past, said it backed the move to seek a more relaxed approach to spending limits.
The IMF also threw its weight behind the measures in its review of how the Irish economy was doing. The Department of Finance insists the changes are in accordance with the Fiscal Responsibility Act 2012 which states that increases in spending must be sustainable.
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