herald

Monday 21 April 2014

Budget wasn't tough enough warns Troika

THE Government's Budget last month may not have been tough enough, says the Troika.

Finance Minister Michael Noonan and his Cabinet colleagues drew up the measures using projections which were too optimistic, a draft European Commission report has indicated.

Budget 2013 raised €1.25bn in new taxes and cut Government spending by €2.25bn -- but the Troika believes it didn't go far enough.

The details were contained in a draft report from the European Commission as part of its winter review of Ireland's performance under the bailout programme.

It says the Department of Finance is "more optimistic" on GDP growth than the commission throughout the 2012 to 2015 period, with an annual average difference of 0.3 percentage points.

Based on the Troika's forecasts, the "planned adjustment effort over the forecast period may not be sufficient to reach the deficit targets", it adds.

The document shows the commission has cut its growth forecast for Ireland for 2013 from GDP growth of 1.4pc to 1.1pc.

Elsewhere in the 72-page leaked document, seen by the Herald, there was bad news for struggling homeowners, while Health Minister James Reilly was encouraged to tackle high salaries within the health sector.

The Troika is concerned that:

•Ordinary mortgage holders may not be able to fully access insolvency measures.

•Ireland is getting poor value for money from its health spending.

•Public sector salary scales and allowances should be tackled.

•Further reductions in numbers employed within the public sector may compromise the delivery of services.







Meters

It comes as the Government published the bill that will enable the introduction of water charges.

The Water Services Bill 2013 says that domestic water charges can be introduced from January 1, 2014. It says that the company that will be responsible for installing waters meters will be a subsidiary of Bord Gais Eireann, called Uisce Eireann (Irish Water).

It will have the power to install meters in all domestic properties and will not need planning permission or permission from roads authorities to do so.

In the leaked Troika report, concerns were raised about Ireland's new personal insolvency legislation.

The laws, due to come into operation next month, have been championed as offering hope that families could be relieved of crushing debt.

Under the legislation, a person with debts of between €20,000 and €3m will be able to enter a personal insolvency arrangement with lenders.

But the Troika -- made up of the ECB, the IMF and the European Commission -- believes the €3m threshold may be "unduly high", given that the average mortgage debt is around €300,000.

"(It) could induce banks, lawyers and insolvency practitioners to focus on big-ticket cases rather than process the smaller but much more numerous cases of average debtors, who are likely to be facing greater distress," the report states.

comurphy@herald.ie



Opinion

Entertainment News