Michael Noonan confident State will recoup €29.5bn spent on bailout of banks

Minister for Finance Michael Noonan has again expressed confidence that all taxpayers' money spent on the bailout of the banks will be recouped.

He also told the Dáil the biggest risk to the economy was the approach once taken by the now Opposition that “If I have it I’ll spend it”, or “Even if I don’t have it I’ll spend it.”

But he would be able to introduce an expansionary budget each year until 2020 and he believed two million people would be at work by next year. Net emigration would end next year with net inward migration replacing it from 2017.

Introducing his spring economic statement to the Dáil, Mr Noonan said the value of the State's investment in Irish banks continued to rise and the sale on Monday of 25 per cent of Permanent TSB "further improves the position".

He told the Dáil the exit strategy was about recovering the full cost of the taxpayers’ investment in the financial institutions and using the proceeds to reduce the State’s debt further.

Anglo Irish Bank

Some €29.5 billion had been invested on saving AIB, Bank of Ireland and PTSB. "I am now confident that all the taxpayers' money invested in AIB, Bank of Ireland and Permanent TSB will be fully recovered," he said. "This is unlike the €34 billion the Fianna Fáil-Green Party government put into Anglo Irish Bank."

He also said he would begin discussions next month with the six main lenders in Irish banking on the issue. “I look forward to hearing their plans for reducing interest rates.”

Mr Noonan said that because of the economic downturn, “we have essentially lost a decade in terms of economic growth and job creation”, but now “citizens of the State” could be hopeful about a steady, stable future.

This was not guaranteed, however. “We must never again implement the boom- and-bust model,” he said and “by far the biggest risk” was a return to the ways of the past.

200,000 new jobs

The Department of Finance predicts 4 per cent growth for this year and 3.25 per cent annually until the end of the decade, he said.

“My department is forecasting we will pass the two million people in employment mark next year, replacing all of the jobs lost during the downturn,” he said, adding that a total of 200,000 new jobs would be created by 2020, including 10,000 in the financial services sector.

A “renewed construction sector” could meet the demand for 5,000 homes a year over the next 15 years, Mr Noonan pledged.

The deficit was reduced from €15 billion to €4.5 billion since the Government came into office and his department predicted the deficit would be down to 2.3 per cent this year.

A different set of EU rules would then apply, designed Mr Noonan said, “to ensure that the days of ‘If I have it, I’ll spend it’ are over”.

The Minister said he would be in a position to implement another expansionary budget this year and every year until 2020, if this was deemed “prudent and appropriate”.

Mr Noonan told the House between €1.2 billion and €1.5 billion would be available for tax reductions and investment in public services. He said the Coalition agreed it would be split evenly between tax cuts and expenditure increases.

“Current indications are that a similar amount of space will be available in later years while still ensuring the achievement of a balanced budget before the end of the decade,” he said.

The Minister repeated that the Government would make an announcement “in the coming weeks” on measures to deal with those in mortgage difficulties. He said 115,000 mortgage holders in difficulties had made agreements to restructure their debt. But there were more than 37,000 mortgage accountsin long-term arrears of over two years. “The Government is actively considering a range of options to strengthen the mortgage arrears framework in order to ensure that families in long-term arrears can find a solution.”

Mr Noonan also highlighted Irish Water’s plans to invest €5.5 billion between 2014 and 2021 to ensure access to reliable, high-quality drinking water and sewerage services. This would also ensure that “our economy can continue to facilitate and attract water-intensive industries – ICT, pharmachemical companies and agrifood”, all of which provided more than 200,000 jobs.

“The investment is also required to prevent the massive wastage of water through leaks and to ensure a reliable safe water supply for all our citizens.”