Too early to say if €2bn in savings needed in October budget, says Kenny

Taoiseach Enda Kenny has said it is too early to say if tax and spending adjustments of €2 billion will be required in October's budget to meet Government targets. "You cannot answer the question now because you have no final view of the national accounts until later in the year."

Mr Kenny was responding to Independent TD Catherine Murphy, who said the idea of a further cut of €2 billion would strike terror into those who had already been ravaged by years of austerity.

“With the national debt figure standing at €203 billion, it is the understatement of the century to say it is alarmingly high. It is very much the elephant in the room and, until it is addressed, we will constantly be putting out budgetary fires.’’

The Taoiseach welcomed the input from the Irish Fiscal Advisory Council (Ifac) which has advised against adjustments of less than €2 billion.

"The Government's fiscal adjustment plans are in line with the requirements of the new fiscal framework. I am advised by the Department of Finance that the Government is not going beyond the minimum requirements of that new fiscal framework . . . and I understand that the Department of Finance would specifically query the conclusion that the Ifac has reached."

He added that it was the rules of the EU fiscal compact treaty that required Ireland to attain the medium-term objective of a structurally balanced budget by 2018. "Under the treaty, the European Commission sets out what is called the calendar of convergence and not the Irish authorities, as suggested by the Ifac.''

Mr Kenny said the Government had an agreed economic plan setting out specific targets to have the deficit reduced below 3 per cent by 2015 and eliminated by 2018.

“And so by balancing the books by 2018 . . . we no longer have to borrow to fund the day-to-day services provided by the State. That would make Ireland obviously far more attractive for jobs and investment and keep our debt very much under control.”

Ms Murphy said her attention had been drawn to the commitment by Mr Kenny in the lead up to the local elections that Fine Gael councillors would reduce the property tax by 15 per cent. She asked if the commitment could be delivered on given that the local government fund had been decimated.

Mr Kenny said Fine Gael’s commitment was that its elected members would not vote for an increase in commercial rates and reduce the property tax where that was possible, with a clear indication it would not be possible in all cases. The newly elected councils were getting down to preparing their budgets for next year.

Ms Murphy said if one walked into a shop advertising a 15 per cent reduction on all goods, only to find there was just one small rail where that reduction applied, one would be a disappointed customer. One would probably not return to the shop. “This is the kind of thing that gives politics a bad name.”

Mr Kenny repeated that Fine Gael had been very clear with its members that it would not be possible in all cases.