Will Finance Minister Noonan explain the €5.4bn fiscal space discrepancy before the election starts?

1 February 2016
By Bryan Smyth
bryan@TheCork.ie

Fianna Fáil Spokesperson on Finance Michael McGrath (based in Carrigaline, Co Cork) has called on the Minister for Finance to explain the staggering €5.4bn difference between his department’s estimate of the likely fiscal space available to the next government and the estimate of the Fiscal Advisory Council.

Deputy Michael McGrath is Fianna Fail spokesman on Finance
Deputy Michael McGrath is Fianna Fail spokesman on Finance

Deputy McGrath commented, “It is essential that the financial parameters facing the country over the next five years are clarified and agreed before the election proper kicks off. Otherwise, the debate will have no solid foundation and voters will not be able to make informed choices. Last October, the Department of Finance estimated the net fiscal space (after taking account of demographics, Lansdowne Road Agreement etc.) available to the government at €8.6bn.

“Not indexing the taxation system would add a further €2bn and the possible easing of Ireland’s fiscal target by the European Commission could add a further €1.5bn. Adding these three together is presumably where FG and Labour are getting their estimate of fiscal space of €12bn. Based on their various commitments, it seems clear they intend to use all of this and more.

“Not indexing the tax system is a choice the next government can make. The additional leeway of €1.5bn should not be factored in since it isn’t even approved by the European Commission yet. However, I am deeply concerned that, excluding those two issues, the Fiscal Advisory Council’s estimate of the fiscal space (€3.2bn) is a whopping €5.4bn less than the government’s (€8.6bn). Given that the entire election debate will be about the choices the next government will make, how can we possibly embark on that debate until this massive discrepancy is fully explained?

“The Fiscal Advisory Council is saying that its estimate of €3.2bn takes account of the need to fully provide for demographics and to maintain public services at current levels. The Department of Finance says its estimate of €8.6bn already takes these matters into account. This €5.4bn difference cannot be simply ignored.

“I am today calling on Minister Michael Noonan to reconcile his Department’s estimate with the estimate of the Fiscal Advisory Council. Otherwise, the entire election debate could well be based on false numbers. The Irish people deserve better than that as we embark on a crucial election.”

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