Fianna Fáil Finance spokesperson Michael McGrath has described a proposal from Michael Noonan to establish a “Contingency and Reserve Fund” as half-baked and indicative of muddled thinking on the Minister’s part.
Deputy McGrath, “The Minister doesn’t seem to fully understand what he is proposing. On the one hand he says “Our Long Term Economic Plan will leave a quarter of the available fiscal space unallocated as a ‘Contingency and Stability Reserve.” On the other hand he says “if there is no shock and things are running strongly, I would be prepared if I was there to allocate (it) to investment in infrastructure”.
In other words he could dip in to the funds when he wanted to. This is not a genuine rainy day fund. He is just building up a slush fund to spend closer to the next election. The proposal simply does not stack up.
“Fianna Fáil has proposed a far more structured approach. This would involve clear rules around when money is put in to a Rainy Day Fund and when it could be taken out. Any corporation tax receipts over and above a baseline figure would be put away and could only be used if there was an economic downturn as measured by a rise of 1% in unemployment.
“This is just the latest example of muddled thinking from Fine Gael on the economy.
“Before Christmas the party advocated applying PRSI to people earning €13,000 while claiming they want to make work pay.
“Fine Gael has also flip-flopped on whether they will actually abolish the USC or not.
“At the Ard Fheis last weekend Minister Noonan told us: “what we are promising on USC is over five years we’ll abolish it and it will take less than 30pc of the available fiscal space. The remaining fiscal space will be used for expenditure”.
“The Minister has not done his sums on this. Abolishing USC and implementing promised changes to inheritance tax and the self-employed will eat up far more than 30% of the maximum available fiscal space.
“The Minister simply cannot keep his promises on tax, keeping 25% of the fiscal space as a contingency and allocating 70% of it to expenditure. These sums do not add up.
“Labour perform u-turns after the election, Fine Gael seem to be managing before it has even been called,” concluded Deputy McGrath.