Michael McGrath rules out austerity as he takes up public expenditure ministry

The Government “will not be going down the road” of austerity and introducing cuts to public spending and services, despite a €30 billion deficit this year, Michael McGrath, the new Public Expenditure has said.
Michael McGrath rules out austerity as he takes up public expenditure ministry
Stimulus rather than austerity is the plan, says Michael McGrath.
Stimulus rather than austerity is the plan, says Michael McGrath.

The Government “will not be going down the road” of austerity and introducing cuts to public spending and services, despite a €30 billion deficit this year, Michael McGrath, the new Public Expenditure has said.

In an interview with the Irish Examiner, Mr McGrath, the Cork South Central TD made clear while the country is “looking at an enormous budget deficit this year,” stimulus rather than austerity is his plan.

Speaking as he intends taking up the reigns of the public finances this morning, Mr McGrath said the best way of gradually reducing that over time is to grow the economy.

“The reason why we have such a deficit is because for three months large sections of our economy were shut down and are only gradually re-opening. We have to address the damage done during that time,” he said.

Mr McGrath said: “Nobody can give a guarantee that there won’t be tough decisions made but the determination of government is to have an investment led recovery which will start with July’s jobs initiative.”

“So the focus is on repairing the economy, the focus is not on cuts but no one can guarantee that there won’t be difficult decisions to be made but I do not envisage a situation where we will be cutting services and current spending” he said clearly.

“That is not a road we intend going down. The focus will be on recovery and stimulus and I think we can travel a long way on the road by pursuing that strategy,” he added.

One of the first major issues Mr McGrath will have to address is a new public sector pay deal, and he has spoken of his desire to see a new deal negotiated later this year.

“I do think it is important we have stability in terms of public pay policy. There will be a requirement for a new agreement but it is important that a new agreed position on public pay is reached. We have a huge regard for our public servants during the covid pandemic. Hopefully, an agreement can be reached in the months ahead,” he said.

“The current agreement is coming to an end, we want it to come to an orderly end and the hope is we can negotiate a new deal,” he added, suggesting there will be no rowing back on the commitment to pay the next round of 2% pay increases in October, despite the huge budget deficit.

Mr McGrath also spoke of the moment he was appointed to Cabinet by Micheál Martin.

“I got the phonecall to head over to government buildings. When I went in, the Taoiseach was very comfortable sitting at his new desk. We had a chat for a few minutes, he told me what he wanted me to serve as and I was delighted to accept,” he said.

“It is an extraordinary moment in your career and it was surreal to be in that situation. As the day went on and you travel with other new ministers by bus to the Convention Centre and then to Dublin Castle it is a remarkable experience, a day I’ll never forget and a very proud day for my whole family,” he added.

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