POLITICAL REACTION:THE GOVERNMENT no longer understands the "psychology of the country", Fine Gael spokesman on finance Michael Noonan said following a briefing from Minister for Finance Brian Lenihan.
Mr Noonan said the Coalition seemed to have deferred publication of profiles for the next four budgets until after the Donegal South West byelection. “My biggest problem is the fact that they don’t seem to understand the psychology of the country any longer. They don’t realise that the people are really pining for hope and confidence, and some optimism.”
He described as peculiar the Government’s treatment of the promissory notes issued to cover the bank bailout, insisting a two-year “interest holiday” would create uncertainty on the international markets.
“I’m afraid I came out with very little confidence that the Government really get it. They don’t seem to have any strategy to provide certainty or confidence or hope or optimism to the people of Ireland, and that’s what the people are looking for now,” Mr Noonan said.
“And they need to know that as well as chopping and cutting and fiscal corrections, that there is a strategy for growth and for the creation of jobs. And there is no sign that the Government is conscious of this.”
However, Mr Noonan said he was pleased the Government had decided to reduce the deficit below 10 per cent. He said the financial markets needed such a signal in order to encourage lending after Christmas.
Labour Party finance spokeswoman Joan Burton, who also attended the briefing, said Mr Lenihan wants to impose a “€6 billion hit” on the economy. “We feel therefore that the kind of adjustment that’s been mentioned today is really unacceptably risky in terms of jobs and in terms of economic recovery.”
She added it was hard to understand how growth of 1.75 per cent could be achieved following such an adjustment. Ms Burton claimed Mr Lenihan implied he was expecting further falls in employment and significant emigration. “We feel that the scale of adjustment that’s proposed today for 2011 may simply risk killing the patient and we do not feel that this level of adjustment quite frankly is achievable.”
Ms Burton said her party believed an adjustment of somewhere in the region of €4.5 billion, “give or take”, would represent a better balance between the twin goals of deficit reduction and achieving economic growth. The Government had provided only “headline outlines” to the Opposition, she said.
Sinn Féin’s finance spokesman Arthur Morgan, who was also briefed, said “cutting the economy to death” would not make it grow.
Mr Morgan said the “orthodoxy of austerity” had failed and the deficit could be reduced “without castrating public services”. He said Mr Lenihan had unveiled a plan to cut spending, but not a strategy to cut the deficit. “If spending cuts could fix the problem, the problem would be fixed by now,” he said.
“Last year we were told a €7.5 billion adjustment would be made in the economy up to 2014, now it will be €15 billion. We were told €3 billion would be taken out in 2011, now we are told it will be €6 billion.”
