Cowen defends plans to slash €6bn in Budget
Taoiseach Brian Cowen tonight insisted there were no soft options as the Government unveiled plans for a €6bn slash-and-burn budget.
Taxpayers face €1.5bn in extra levies next year while state-run services and benefits will be savagely cut by €4.5bn.
And in an attempt to restore international confidence, Mr Cowen said Ireland was now half way through the battle for economic survival.
“We’ve turned a corner – I don’t accept that we’re wrong,” Mr Cowen told RTE.
The shaky coalition Government will try to impose the cuts, the most drastic in Irish history, with only a three seat majority and four outstanding by-elections.
The four-year budget outlook estimates the beleaguered economy will grow by 1.75% next year.
But the devastating impact of the downturn was laid bare with officials warning the record 400,000-plus unemployment levels will remain for another 12 months. Dole queues will only ease as an estimated 100,000 people emigrate by 2014.
The plan aims to secure two thirds of the economic and fiscal correction by the end of next year.
It is targeting an unprecedented €15bn of savings to restore the Exchequer deficit to 3% of the value of the economy by 2014 – twice last year’s estimates.
“Let’s be clear. Unless we make these changes and allow the economy to grow ... then we put at risk all the gains we’ve made and I’m not prepared to contemplate that,” Mr Cowen said.
“And anyone who suggests in the opposition that there is some easy soft option - let’s be clear, if things work out better, there won’t be as much adjustment.”
Speculation has centred on sweeping cuts to services, including welfare, education and health., with water and property charges among possible new taxes.
And the efforts to calm investors’ fears appeared to have little effect with the cost of borrowing on international bond markets hitting a new high again of 7.8%.
Fine Gael accused the coalition Government of having no plan to protect jobs and public services over the next four years.
Michael Noonan, finance spokesman, said: “Fianna Fáil and the Greens don’t get it.
“The country needs hope, optimism and the confidence that only a jobs and growth economic plan in parallel with the fiscal correction would deliver.”
Joan Burton, Labour’s finance spokeswoman, said €6bn cuts in one year was misguided, and excessively risky.
“It is an unwise, and unacceptable risk to the economy, to jobs and to the living standards of Irish families,” she said.
The December 7 Budget will be the fourth time since October 2008 that the Fianna Fáil/Green Party coalition government has been forced to introduce harsh measures to tackle the black hole in the public finances.
A more detailed four-year plan will also be unveiled later this month.
Figures so far show the Government is targeting savings of €3-4bn in 2012, €3-3.5bn in 2013 and €2-2.5bn in 2014.
Mr Lenihan said: “I want to stress again the strength of the Government’s resolve to return the country to a sustainable fiscal position. I am well aware that such measures will impact on the living standards of everybody.
“But our spending and revenues must be more closely aligned. This is the only way to ensure the future economic well-being of our society.”
The plan also revealed that interest payments to cover money for the bank bail-outs will not take hold for several years.
Key projections from the pre-budget outlook include:
:: Domestic demand is likely to fall once again next year, although at a slower pace than over the past three years.
:: Gross Domestic Product will be 1.75% while Gross National Product will be 1%.
:: Exports would jump by 5% next year.
Anger over potential cuts spilled out onto the streets of Dublin yesterday when around 16,000 students protested at possible plans to double university fees. It ended in violence as riot police clashed with militant groups.
