A FURTHER €3 billion of spending cuts and taxes will be introduced in the next budget under the Programme for Government agreed between Fine Gael and Labour.
It will be the first slice in a €9bn adjustment between now and 2015, with a property tax and water charges to be introduced within that time frame.
Fine Gael and Labour will stick to the broad thrust of the outgoing Government’s adjustment plan for the next two years.
The way was cleared for the two parties to form a coalition after the Fine Gael parliamentary party and a Labour delegate conference separately backed the programme yesterday.
Party leaders Enda Kenny and Eamon Gilmore will now concentrate on the formation of cabinet, with new ministers to be announced when the Dáil resumes on Wednesday. Fine Gael is expected to get 10 ministers and Labour five.
The Department of Finance is to be split in two, with Fine Gael’s Michael Noonan set to be named Minister for Finance and Taxation and Labour’s Joan Burton expected to be Minister for Public Expenditure and Reform.
The two ministers will join Taoiseach Mr Kenny and Tánaiste Mr Gilmore on an "economic management council" that will oversee every major economic decision.
Mr Gilmore hailed this as proof that the new Government would not be a "coalition in the old sense" but a "partnership Government".
But the two parties were immediately criticised after declaring they would stick with the outgoing Government’s fiscal adjustment plans for 2011 and 2012.
The parties say they believe this "appropriate...in order to enhance international credibility".
This means virtually all of the €6bn in cuts and taxes imposed by Fianna Fáil and the Greens in the December budget will remain intact.
Fine Gael and Labour have pledged, however, to "review" the universal social charge. They will reverse the €1 cut to the minimum wage.
They will stick to the objectives of the EU-IMF bailout, but seek to renegotiate its terms to get a cheaper deal.
There is no detail on how much more money the two parties are prepared to pump into the banks, however, with stress tests awaited to determine this.
Elsewhere, the parties have compromised on the length of the adjustment period, agreeing on 2015 as the deadline to get the deficit to 3% of GDP.
They have also compromised on public service job cuts, in what will be seen as a Labour win. Instead of cutting 30,000 jobs, they have settled on between 18,000 and 25,000.
Labour has also got its strategic investment bank, while Fine Gael got its way with proposals to abolish the HSE and sell non-strategic state assets.
Mr Kenny said there wasn’t "any triumphalism" about sealing a deal because of the challenges facing the coalition. Mr Gilmore said there wouldn’t be "any honeymoon" for the coalition.
But Sinn Féin president Gerry Adams said the deal was "bad news" for low and middle-income families.
"What I have heard so far of the Fine Gael/Labour programme indicates that they will broadly implement Fianna Fáil’s four-year plan," he said.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Monday, March 07, 2011
