Political reaction:Fianna Fáil was accused of gross economic mismanagement and spurious election promises by Opposition parties yesterday in response to the pre-Budget Outlook, published by Minister for Finance Brian Cowen.
Fine Gael finance spokesman Richard Bruton said the outlook confirmed that the debt-fuelled property boom cultivated by Fianna Fáil had come to an end and he forecast five rocky years of economic mismanagement and broken Government promises ahead.
"This Government has built its reputation for good economic management on the back of a debt-fuelled property boom. The figures reveal that this tax bonanza, which has so effectively concealed mismanagement by the Government, is now coming to an end. The Department of Finance's projection for tax collection in 2008 is €2.2 billion lower than predicted last year at budget time," he said.
Mr Bruton said it was a far cry from the pledge that the Minister made before the general election that he would "operate a responsible fiscal policy characterised by budget surpluses and a declining debt burden".
"It is now entirely clear that Fianna Fáil's promises made before the last general election are only a pipe dream. The €2 billion needed to pay for them in 2008 is not there. This again will be a Government of broken promises, just as its predecessor was.
"The Minister is now anticipating that voted current spending will increase by almost 8 per cent on Budget Day, when you add in the unallocated reserve of €1,500 million, which has been slipped into today's figures. This exceeds the rate of growth in the economy by 45 per cent. The pattern we have got used to is continuing - high spending without delivering the efficiencies or quality services at the frontline. It is simply not sustainable," he added.
Labour Party finance spokeswoman Joan Burton said the slowing economy would be a real test of Fianna Fáil's priorities and the Government's capacity to make hard decisions, as the outlook showed that the era of the pre-election splurge was over.
She pointed out that the estimated increase in the exchequer pay and pension bill for 2008 was €1.1 billion, up 6.1 per cent.
"What is the position for 2009 and 2010? Will public-sector pay and pensions take up nearly all of the projected increase? What happens to promises to improve pensions, health, education and other election spending commitments or are we to have a public-sector pay freeze and/or a recruitment embargo?
"During the election campaign, we argued that, if growth was lower than expected, Labour would protect the health service, the NDP and the most vulnerable people in our society. What will Fianna Fáil do? Will they once again cut home help hours, causing hugely expensive bottlenecks in the acute hospital services? Will they make the vulnerable bear the brunt of tougher times?" she asked.
Sinn Féin's spokesman on economic affairs, Arthur Morgan, said the outlook proved the argument made by Sinn Féin in response to Fianna Fáil's pre-election tax cutting promises that it would not be possible to cut taxes and to maintain public services.
"Today's Pre-Budget Outlook states that tax receipts will be 2 per cent below the Budget day target, clearly proving economic arguments made by Sinn Féin in the run up to the election. Government cannot, with the impending slowdown in economic growth and the developments in property and construction, afford to cut taxes and maintain, let alone improve, public services."
Mr Morgan said that the outlook amounted to an admission that the Government had got it wrong on one of the most crucial issues with respect to the management of public finances. "Clearly, a failure to make a proper assessment of the impact of a slowdown in the property and construction sector was among the primary reasons for the inaccuracy of projections," he said.
