Exchequer figures must raise alarm bells
Issued : Tuesday 2 October, 2007
Statement by Joan Burton TD
Minister for Social Protection
The Exchequer Returns for the first 9 months of the year are usually examined with particular care as they can be a valuable indicator of the probable outcome for the whole year. Today's figures confirm that the optimistic forecasts made in last December's Budget were an illusion and will not be sustained by the end of 2007. Already Tax receipts appear to be half a billion euro lower than anticipated and the accumulated deficit for the year to date is in excess of €3 billion which is 20 times the deficit for the same 9 months in 2006. (€136 million). Instead of a year end surplus the State will face a significant budget deficit that must worry everyone concerned with Ireland's financial health.
Fianna Fail in Government has always been addicted to pre election spending splurges and this year has proved to be no exception. This could be tolerated in a time of buoyant revenues but this year the Minister continued his wild spending with no regard to the many warning signs that he would enjoy no such buoyancy this year due to the decline in the housing market. Yet he carried on willfully solely for political gains. The tax yield from housing taxes is sharply down today's figures. Stamp duty is €400 million below expectations and other taxes including VAT are making a lesser contribution than expected due to the drop in the sale of goods associated with new homes. All these will inevitably reduce month by month for a long time but we have no sign that the Minister is prepared for the consequences.
Quite simply the budgetary picture presented by Minister Cowen last December no longer represents the true state of affairs and I want him to correct that immediately by presenting a more up to date picture and projection to the end of 2007 based on the present true position in the economy.
Many citizens will want to know if Brian Cowen has a Plan B in his desk drawer that will address the obvious drop in the economy's growth rate caused by the sharp drop in new housing output. He has promised that he will stick to the targets set in the capital programme but he needs now to examine if some projects can be accelerated to divert construction resources away from housing.
The Minister and his colleagues have to bear a lot of the responsibility for any downturn in public finances. It is their reckless disregard for the many warning signs internationally and the excessive degree of consumer debt that is now exposing us to potential difficulties.
For each of the past 3 years Brian Cowan has allowed spending to grow at a rate that was driven by political priorities and not at all on the level that could be sustained in the long term. If difficulties arise now he must show he has the capacity to put the national interest first. He might start by presenting to the public a true and honest assessment of the state of the economy and the public finances.
What the Green Party will make of the Budget negotiations in much tighter financial circumstances is difficult to assess. The challenge for the Greens will be whether or not they will seek to protect essential public services, while also securing funding for climate change programmes.
Dáil Eireann has had no opportunity to have any economic discussion since its return. In his budget reforms the Minister has abolished the practice of producing November estimates. This means that it could be very difficult to gauge the Minister's intentions in r elation to spending until the actual Budget day itself. I believe that it is now appropriate that the Minister conceded a full economic review of the estimates and the changes in our financial position as disclosed by today's exchequer returns.
