€1.5bn ‘will not be used to buy votes’

Finance Minister Michael Noonan insisted the Government was not trying to “buy” the next election as he revealed the October budget would showcase a €1.5bn tax cut and spending boost.

Opposition parties accused the Coalition of using today’s spring economic statement as a launch pad for the general election campaign.

Mr Noonan said the €1.5bn “wriggle room” money would be split evenly between easing the burden of the universal social charge (USC) and other tax rates and improving spending on public services.

The spring statement will set out expected growth rates for the next five years and predicts that 2016 will see more people return to Ireland emigrate from it.

“Under the new European rules even if you have it you can’t always spend it, so we will have some fiscal space and it will be somewhere between €1bn and €1.5bn, but that will be divided equally between expenditure measures and tax measures,” he said.

“We are constrained then with the new European fiscal rules. It’s no longer a case of ‘if it I have it I will spend it’, as Charlie McCreevy would say. That was bad economics even though it might have been good politics at the time.”

According to the minister, the economy is growing very strongly at 4.8% last year.

“We are predicting an average of growth of 3.25% from now until 2020 and obviously that generates quite a lot of additional tax ‘buoyancy’ as they call it.”

“We need to give people back money in their personal taxes, USC, and income tax. We need to reduce those. We will continue as we did last year on another phase of reduction in the next budget, but there are expenditure requirements as well because many of the services didn’t have sufficient funds so we will hope to make progress on them.”

The finance minister said spring statement and October budget were not about buying votes with an election having to be held in the next 11 months.

“We have to be prudent, we have to ensure that we never again return to the boom and bust model,” he said.

“There is no point in trying to buy an election and going bust the year after the election. What we are talking about now is a very detailed economic paper mapping out the growth potential of the economy from now until 2020 and the manner in which the government will use those resources.”

However, Fianna Fail finance spokesman Michael McGrath expressed concern that the spring statement was about spin rather than substance.

“What this Government appear to be intent on doing is turning the normal process of economic planning into a platform to boost their re-election prospects,” he said.

“Since January hardly a day has gone by without a selective leak from the Government as to various pre-election goodies, we will discover whether there is any substance to this spin.”

Mr Noonan made his comments in Limerick where he visited the Regeneron plant in Raheen.

The biopharmaceutical company, which is located on one the sites of the old Dell manufacturing unit, has hired 150 full time staff at its new facility, Regeneron’s first facility outside the United States.

The €275m investment in the production facility, within an 11.88-hectare site at Raheen Business Park, is on track to begin operations in 2016.

In addition to the 150 full-time staff in place already, the site is expected to see employment rise to more than 300 people including scientists, engineers, technicians, and administrative personnel.

Already, 1,200 construction personnel have worked on-site over the course of the past year.

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