Coalition parties divided over key budget decisions

Fresh budget divisions have emerged within the Coalition as political parties hold a series of Autumn meetings ahead of the new Dáil term this week.

Labour sources are insisting figures due this week on economic growth should provide scope to quickly settle the overall fiscal target for Budget 2014 on October 15th.

Fine Gael’s clear preference, however, is to wait until next month, when exchequer returns for September are known. There was no comment on the matter from the Government spokesman. “This is entirely a matter for Cabinet discussion and Cabinet decision.”

The quarrel over the timing of decisions comes amid tension between the two parties over the scale of the fiscal retrenchment to be undertaken. Labour says spending cutbacks and tax increases next year should not exceed €2.5 billion, undercutting by €600 million the €3.1 billion target set out in Ireland’s agreements with the troika. The party is keen to disperse some of the benefit next year from the deal to scrap the Anglo promissory notes.

Benefits cap
The notion of a British-style "cap" on welfare benefits received a cold response from Labour yesterday, where it was dismissed as unworkable.

A statement from the Department of Social Protection said it was "self-evident that a family with more child dependants, for example, or with caring requirements, will receive more than a family with none and so on."

Although Fine Gael is sceptical of Labour's approach in the budget talks, it might still accept a target slightly below €3.1 billion, but only on condition deficit targets in the troika deal are well beaten.

However, there is still some doubt in Fine Gael as to whether any political gain can be derived from a modest cut from the agreed target and concern to avoid antagonising the troika, which wants the Government to maintain the €3.1 billion to boost investor confidence as it exits the bailout.

The Central Statistics Office plans to release a new batch of "quarterly national accounts" on Thursday, data which will set out the growth performance of the economy in the period from April to June. Such figures will be closely watched as they will be central to the growth forecast in Budget 2014. The view in Labour is that the way should then be clear to rapidly settle on the overall fiscal target.

Different view
A different view prevails in Fine Gael. The party believes it would be better to wait longer because this first October budget is taking place six weeks earlier than the usual December budget, to comply with new EU rules. This means the budget must already be finalised in the absence of exchequer returns from the pivotal month of November, so Fine Gael believes it would be better to wait until the returns from September are in.

The talks between Ministers are set to intensify this week following the return of Minister for Public Expenditure Brendan Howlin from official business in China.

In preparation for the return of the Dáil on Wednesday following the summer recess, the Fine Gael, Labour and Fianna Fáil parliamentary parties gather today for their annual autumn meetings.

The Fine Gael “think-in” takes place over two days in Killenard, Co Laois, while the Labour gathering in Enfield, Co Meath, also concludes tomorrow. The two-day Fianna Fáil meeting is in Waterford.