Category: Archive

McCreevy under fire after memo reveals budget woes

February 16, 2011

By Staff Reporter

The memo was drawn up in June — just weeks after the general election — and details substantial cuts in spending in areas like education, environment, health and social welfare between now and 2005.
It also indicates that new taxes are on the way in the Dec. 4 budget.
Details of the memo were published in the Sunday Tribune newspaper. It comes as the government is already on the defensive about cutbacks on budget overruns this year, calling them “adjustments.”
In a statement, the government said it is believed that the confidential material regarding the country’s finances was released inadvertently by the Department of Foreign Affairs in response to a request under the Freedom of Information laws.
“The relevant procedures are being reviewed as a matter of urgency,” the statement said.
The government is seeking to cut back spending to hold budget spending increases to 14.5 percent this year. Ministerial spending had soared by 27 percent.
McCreevy received a hostile reception on the “Late Late Show” at the weekend and was booed as he walked into the studio. That was before the details of the cuts memo emerged.
It is very unusual for highly secret government memoranda of this kind to be leaked.
The leaking has led to McCreevy being accused of allegedly deceiving voters just before the May 17 poll when he told a press conference: “I can confirm that there are no significant overruns projected and no cutbacks whatsoever are being planned, secretly or otherwise.”
The huge budget overruns for this year and the new leaked memo on cuts in future years has led to calls for the minister’s resignation by Labor Party finance spokesman Brendan Howlin, who said there has been an “unprecedented level of deceit and duplicity.”
“No matter what gloss or double-speak Bertie Ahern or Charlie McCreevy or anybody else puts on it, the people of Ireland know they were sold a pup, they know they were conned with absolute deceit in the general election,” Howlin said.
Transport Minister Seamus Brennan, meanwhile, categorically denied there had been a coverup and the electorate had been misled. He said the “so-called cuts” being sought were cutbacks in plans and projections for expansions in services.
“We made it quite clear that things were slowing down, things were going to get difficult,” he told RTE. “Programs are being slowed but more and more money is being spent.” He likened it to a car slowing from 120 to 100 mph.
The document, a memorandum on budgetary strategy for 2003-2005, says ministers should prepare their estimates on the basis of a reduction of euro 900 million next year in “existing levels of services” to leave a budget “envelope” of euro 1.9 billion to meet priority spending programs.
There is no provision in the figures for public pay increases or implementation of any part of the euro 1.5 billion benchmarking pay increases for public servants.
Budgets would be limited to a 7.9 percent increase next year, followed by increases of 6.1 in 2004 and 5.9 in ’05.
Any personal tax reliefs would have to be funded by increased taxes on the “old reliables” like petrol, cigarettes and alcohol.
The memo warns that any excess over spending limits “would have to be funded through significant increases in taxation and public sector charges.” It points out that, apart from their political difficulties, these would have unavoidable adverse effects on inflation and wage developments.

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