Fianna Fail this morning outlined how it plans to finance its spending commitments on health and infrastructure.
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Mr Charlie McCreevy outlining his party’s five-year financial plan
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Party spokesperson on Finance, Mr Charlie McCreevy presented a five-year projection which predicts the Government finances being marginally in surplus in 2007.
The plan estimates tax revenue returns will increase from €30.3 billion per annum in 2002 to €44.3 billion in 2007 although no increases in the tax bands are forecast in the plan.
"We have proven how lower taxes can increase revenue to fund public services. The evidence of the last five years speaks for itself, with total tax revenue up 54 per cent", he said.
Fianna Fail estimate that the cost of their pre-election pledges - 2,000 extra gardai, extra teachers, a school building and renovation programme and a €200 per week pension - is just under €5 billion per annum with a further €2 billion for capital projects.
Mr McCreevy’s plan suggests using the the National Development Finance Agency (NDFA) - proposed in Fianna Fail’s election manifesto yesterday - to raise €2 billion per annum from 2003 though a combination of bonds and borrowing. This will be directed at the cost of capital projects under the National Development Plan and the Health Strategy.
This plan does not constitute borrowing because the finance raised by the agency will not show up on the Exchequer balance sheet under European terms, according to Mr McCreevy.
"These ‘borrowings’ that this agency will do will not count against the Exchequer because its is like a local authority borrowing away from the Exchequer," he said. Only €1 billion of the NDFA's annual expenditure will show up as Government borrowing.
Mr McCreevy said when Europe comes to assess the Government finances, whether NDFA finance arrangements are treated as ‘borrowing’ will depend on how much risk is involved.
NDFA funding will concentrate on four key areas; national roads, public transport, schools and health facilities.
Mr McCreevy said a number of combinations would determine the level of NDFA involvement, including whether the agency would design, build, maintain, operate or manage the project.
When asked would this result in the Government renting facilities from developers, Mr McCreevy said the involvement of private companies in managing State projects was already under way in a five-school building development.
This agency will link the "oodles of [pensions fund] money looking for big investments" and the infrastructural deficit currently in the State, said Mr McCreevy.
On the second day of General Election campaigning, Mr McCreevy also criticised the policies of Fine Gael and Labour, saying if these parties were returned to Government, it could cost thousands of jobs through a return to high borrowing and high taxes.
Fianna Fail’s economic plan proposes "less spending, less tax, and less borrowing than the parties that want to form a Fine Gael/Labour/Green Government", he added.
Mr McCreevy said diverting National Pension Reserve Fund contributions would not be tolerated and the party’s economic plan shows 1 per cent of GDP will be allocated to the fund annually.
Yesterday, Labour unveiled its economic plan which suggested diverting three quarters of the contributions to the pensions fund for five years to finance capital projects. This would serve today’s pensioners, not just tomorrow’s the party claimed.
