Irish ministers defend budget after media, public lambasting

DUBLIN Thu Dec 6, 2012 11:59am EST

Ireland's Finance Minister Michael Noonan presents the budget to waiting media at the Government Buildings in Dublin December 5, 2012. REUTERS/Cathal McNaughton

Ireland's Finance Minister Michael Noonan presents the budget to waiting media at the Government Buildings in Dublin December 5, 2012.

Credit: Reuters/Cathal McNaughton

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DUBLIN (Reuters) - Ireland's budget ministers defended a sixth round of austerity in little over four years on Thursday, after they were ridiculed by the tabloid press and berated on live radio by angry voters.

Finance minister Michael Noonan, who was pictured holding a sign saying 'Christmas cancelled' on one front page while dressed in a superimposed Santa Claus suit, took to the airwaves for a now familiar post-budget grilling from listeners.

Joined by spending minister Brendan Howlin of the junior coalition Labour party, Noonan was criticized for imposing a politically toxic property tax, increasing prescription charges, cutting child benefit and slashing carers' allowances.

The pair introduced the measures as part of a 3.5 billion euro budget adjustment required under the terms of Ireland's EU/IMF bailout, trying the patience of people in a country which has so far avoided large-scale protests.

"Shame on you!", Carolyn Akintola, a carer who looks after her sick mother despite being wheelchair-bound herself, shouted down the phone at the ministers after estimating that allowance cuts would leave her over 500 euros worse off next year.

"You and your ilk know family carers will never, ever, ever abandon the people we love, and you take full advantage of it."

Others told the ministers that the cuts would leave their children with little choice but to join the growing number of emigrants, while one listener warned Howlin that he should enjoy his time in power because Labour would never see it again.

Labour is now the fourth-most popular party in the country according to opinion polls after emerging from elections last year in second place. While Noonan's Fine Gael party remain the most popular, its support dropped sharply in a poll last week.

"CREDIT POSITIVE"

With a budget deficit still among the highest in Europe at 8.2 percent of gross domestic product (GDP), Noonan said he had no option but to cut spending further and hike taxes, and he was backed in that assessment by ratings agency Moody's.

The government is desperate to convince Moody's, the only credit rating agency to have downgraded Ireland to junk, that its gradual return to bond markets and economic growth should at least see it lift its negative outlook on the country.

"It (the budget) is balanced in terms of measures. The cuts in capital expenditure are obviously negative, but overall it was very much in line with Moody's expectations," the agency's lead European sovereign analyst, Dietmar Hornung, told Reuters.

"It's credit positive but ratings neutral because compliance with the fiscal targets is something that we anticipate for Ireland, and that's one of the credit strengths of the country... The risks are still tilted to the downside."

European Central Bank chief Mario Draghi added his approval, saying the steps showed a commitment to restoring sound fiscal conditions, while U.S. Secretary of State Hillary Clinton, on a visit to Dublin, praised Ireland's resilience.

In parliament, however, opposition politicians also zeroed in on the most severe cuts, particularly those aimed at carers.

While the government has a record majority and passed the first series of budget votes without dissent on Wednesday, it will vote on the more sensitive issues in the coming weeks and may have to find ways to soothe the concerns of some of its backbenchers.

"We have had the magnanimity in the past to correct things that were wrong. I can't say what's right or what's wrong at this point until I have a full picture, but instinctively, I think there are things wrong in it," said Labour chairman Colm Keaveney.

(Reporting by Padraic Halpin; Editing by Hugh Lawson)

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Comments (1)
DeanMJackson wrote:
The article reads, “Ireland’s budget ministers defended a sixth round of austerity in little over four years on Thursday, after they were ridiculed by the tabloid press and berated on live radio by angry voters.”

Isn’t it amazing that we are seeing before our very eyes politicians in EVERY Western nation (except Iceland, who is now into recovery because they allowed market processes to take place) INTENTIONALLY sabotaging their respective economies with the bogus austerity policy. Ladies and gentlemen, you now have proof of what I’ve been telling you for some time here at Reuters: Western politicians (and their hack, paid-off economists) are intentionally maintaining their economies on “stall mode”, otherwise four years ago they would have implemented the solution to the economic downturn they know is the only solution: Raise interest rates (Iceland has increased interest rates five times in the past year.).

The rise in interest rates to their true market levels will achieve three important objectives:

(1) clear the malinvestments of the last 20 years;

(2) with malinvestment off the accountant books, the real general price level can be known; and

(3) with the real general price level known and the higher interest rates to encourage persons to restrict present consumption for the greater consumption that investment offers, the higher rate of return on investment will naturally lead persons to save for investment.

Maintaining low interest rates certainly makes borrowing credit cheap, but what’s the use of cheap credit when there is no expected return on a potential investment, hence a dearth of investment? Remember, the “Law of Marginal Utility” also operates with interest rates.

So why are Western politicians sabotaging their respective economies? Well, the less robust Western economies are, the fewer dollars/Euros/Pounds goes to China, which is in the process of a massive military buildup.

Now you know why the Great Depression lasted so long: So fewer American dollars and British pounds would go to Nazi Germany and Imperial Japan, who were both massively building up their militaries throughout the 1930s.

Dec 06, 2012 12:46pm EST  --  Report as abuse
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