Spring Statement: ‘Giveaway budgets for next five years’
The Coalition has between €1.2bn and €1.5bn extra to spend next year, details of which will be decided on in October’s budget.
Delivering the spring economic statement, the minister said the extra money would be spent equally between tax cuts and investment in public services.
Mr Noonan said: “This is just the start of the recovery and the figures tally with what I see on the ground: More people are working; people have more income in their pockets; people are more confident about the future; businesses are being created and are expanding.”
A return to the ‘if I have it, I’ll spend it’ years was by far the biggest risk to the economy, he warned.
While not outlining detailed spending plans for next year, the Coalition set out a number of targets. More than 2m people will be employed for the first time in recent years in 2016, Mr Noonan said.
‘Expansionary’ budgets will also be announced this year and every year up until 2020, it was added.
The economic statement sets out plans by the Coalition to spend between €1.2bn and €1.5bn extra next year, dividing it up between tax cuts and increases in public service spending.
The same amount of extra funding potentially is expected to be available every year up until 2020, Mr Noonan signalled.
It was also announced that measures to ease mortgage arrears for families will be unveiled in the coming weeks. A range of solutions will be linked to the insolvency services.
Mr Noonan also reiterated his plan to drag in the six main banks in May to hear their plans on reducing mortgage interest rates.
His department is now forecasting a deficit of 2.3% this year, compared to a previous target of 3%. This will likely increase Ireland’s position and make the country more attractive for investors. Fiscal rules on what Ireland can spend in future years have also been relaxed by Brussels.
The economic statement factored in the possibility of Irish Water remaining on Government books, which would amount to an extra €2.3bn in debt by the end of 2020. However, if Irish Water passes a European test as an independent company by the summer, these funds would then become available to the Government.
Separately, the Cabinet has agreed to open talks with unions on restoring pay cuts forced on workers during the crash. Public Expenditure Minister Brendan Howlin made a cautious statement on the talks: “I believe that all public servants fully understand that we are not discussing the immediate restoration of pay reductions, but a more gradual and sustainable approach in line with the improvements in the economy under this Government.”
The talks will begin next month with a deal expected before October’s budget.
While committing to investing in public services yesterday with the planned increased spending, Mr Howlin would only say: “This increase will allow Government to deal with underlying demographic pressures in key areas such as social protection, education, and health. It will also allow us to target enhancements in key public services.”
He said a spending review by his department — to be published in June — will outline areas for investment up until 2020.
Commenting on his own working life, Mr Noonan told RTÉ he “always punched in more than 12 hours” a day in his department and that — if his health stood up — he hoped to stand in the general election.
Taoiseach Enda Kenny said the spring statement was an opportunity to set out where the Government “wants the country to be over the next number of years, to look back at the progress made and ahead to the challenges yet to come”.
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