THE SHORTFALL in public finances the Government may need to make up in next month’s supplemental budget could conceivably be between €5 billion and €6 billion, it has been divulged.
In comments to RTÉ which he later said were inadvertently made, Minister for Agriculture Brendan Smith disclosed figures for the combined total of savings and tax revenue being sought that were significantly higher than the figure of €4.5 billion previously disclosed.
Mr Smith appeared on The Week in Politics – which was pre-recorded yesterday afternoon – following a special pre-budget Cabinet meeting in Government Buildings.
Asked how much money the Government needed to find in the budget, he replied: “We are talking about five to six billion, naturally the March [exchequer] returns will be influential.”
He added: “We don’t want to take too much out of the economy and have a further deflationary effect. There is a very delicate balance in regard to the possibility of increased taxation and reduced expenditure.”
Mr Smith and Government officials moved to clarify his comments within hours, saying he had been mistaken in specifying an amount being sought as no decision has yet been made in that regard.
However, separate sources in Government confirmed that the €5 billion-€6 billion figure referred to the upper limit of what might be required, if the March exchequer figures were as poor as the end of February returns.
The sources said that represented the “in extremis” position and that a figure of around €4.5 billion was more likely, as over-austere savings and tax measures could have an adverse impact on the economy.
The Government spokesman said that Mr Smith’s comments had been made inadvertently.
“The Minister clarified that no decision has been made as to the upper limits of cuts or the lower limits because the inputs from the appropriate agencies into the collation of the figures have not yet been finalised,” he said.
Inputs yet to be made included the end-of-March exchequer figures, as well as contributions from the ESRI, the NTMA and other agencies, added the spokesman.
Fine Gael deputy leader Richard Bruton said that last night’s incident involving Mr Smith was “the latest confirmation that there is no clear strategy behind what the Government is doing.
“With the budget just weeks away, the Government still has not confirmed the basis of its tax forecasts for the coming year. Unfortunately, as this incident demonstrates, that sort of leadership is not being provided,” said Mr Bruton.
Speaking earlier, the Labour leader Eamon Gilmore argued that even the €4.5 billion that Taoiseach Brian Cowen has publicly stated is being sought was some €2 billion higher than the economy could bear.
“If the Government attempts to make an adjustment this year of that order, the danger is that it will be administering too much medicine and will kill the patient,” said Mr Gilmore.
The economy could bear no more than a further €2.5 billion in savings in 2009, he told RTÉ Radio 1’s This Week.
Yesterday’s Cabinet meeting lasted five hours and is one of a series being held in the run-up to the budget on April 7th. It is understood that yesterday’s meeting did not address specific taxes or cuts but rather concentrated on the macro-economic situation.
Minister for Social and Family Affairs Mary Hanafin also acknowledged this weekend that there would be cuts in her budget. Minister for the Environment John Gormley also scotched weekend media reports that the Government may breach the borrowing limits agreed with the European Commission in January.
“The 9.5 per cent figure is what we have to adhere to. We cannot go back and say that we are not going to adhere to it,” he said.