Noonan’s desire for pre-election easing of EU spending rules needs to be examined carefully – McGrath
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12/03/2015 09:33
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Fianna Fáil Finance Spokesperson Michael McGrath has said efforts by the Minister for Finance to secure an easing of EU spending rules for Ireland ‘to give me budgetary space to make decisions for the 2016 budget that I’ll be introducing in October’ need to be carefully examined by the Fiscal Advisory Council to assess whether it is an appropriate step or merely represents a way of facilitating a pre-election spending splurge by the government.

Deputy McGrath commented, “The Minister seems determined all of a sudden to be able to spend more money in next year’s budget even if this is contrary to the rules which Ireland and other countries signed up to as part of the European Fiscal Compact. There will be an obvious suspicion that is to facilitate a pre-election spending splurge on current expenditure and pet projects in constituencies where government seats are vulnerable rather than to invest in long term job supporting initiatives.

“The expenditure rules are in place to ensure stability in the public finances over the long term. There may well be a good case for Ireland to be given permission to raise expenditure in certain areas to deal with under investment, particularly arising from cuts to the capital budget over the last six years.  In fact, the rules as set out in January 2012 already appear to allow some flexibility to take account of expected future growth rates rather than simply looking at recent historic growth rates as the Minister implies.

“I believe the Minister should ask the Fiscal Advisory Council, which is the independent body established under statute to ‘independently assess, and comment publicly on, whether the Government is meeting its own stated budgetary targets and objectives’ and to ‘monitor compliance with legislated fiscal rules’ to assess the impact of the expenditure rule on the budgetary position in upcoming years. In addition, the insight of the Fiscal Council on the appropriateness of deviating from these rules should be established. This issue is far too important to be dictated by the short term considerations of an unpopular coalition government seeking to improve its electoral prospects.”