The Government will be prudent about the State's finances in the next budget even though the general election will be then just months away, Minister for Finance Brian Cowen insisted yesterday.
Rejecting Opposition charges that Fianna Fáil and the Progressive Democrats intend to "buy" voters' affections, Mr Cowen said: "The election will take its course in the election campaign."
Speaking after the Cabinet's meeting in Avondale, Co Wicklow, the Minister said the 2007 budget would "be prudent, non-inflationary and leave room for manoeuvre in the event of an economic slowdown".
It would be "strategic and forward looking", keep labour taxes down, focus on creating high-technology jobs, and invest in public services, infrastructure and the national pension fund.
Both Mr Cowen and Taoiseach Bertie Ahern remained confident that recent poor opinion poll showings would be reversed by the time voters go to polling stations.
Mr Cowen said FF had risen 1 per cent in the last poll: "We would like to see that continuing between now and the remainder of the term. The important point to make is that there are no elections on the horizon."
Speaking to journalists before the meeting, the Taoiseach commented: "I think we are up one, but there is only one opinion poll that makes any difference and that is next July, or something."
Defending the Government's record, Mr Ahern said the FF/PD alliance had cut a billion euro off national debt interest payments and ensured that the State is in "full control of its national finances for the first time".
Fine Gael's criticisms were a nonsense, he said, "given that they were the people who doubled the national debt in four years. I'll take no lectures from a party that did that."
However, Mr Cowen emphasised that international issues outside of the Government's control could increasingly impact on the strength of the economy over the next year.
Inflation, he said, is now 2 per cent higher because of European Central Bank-ordered interest rate rises and higher oil prices, with the latter issue worsened by the current Middle East crisis.
"The headline inflation rate is 3.9 per cent. When you strip out mortgages and oil prices, it is more like 2 per cent. I keep stressing that. We can't dictate to the ECB and the oil producers what they should do."
Up to now, interest rates were "historically" low, he said. "We have never seen interest rates at these levels before. That has helped to spur development, both public and private."
He went on: "People have to be prudential and recognise that if there is a slight increase in interest rates in the coming 12 months then that is something they have to factor into their investment decisions."
Under FF and the PDs, he said, the State had enjoyed its "longest, fairest and broadest period of economic prosperity in history", with growth rates double the European Union average.
Six hundred thousand jobs have been created, €40 billion has been returned to the public in tax cuts, while labour taxes have been the lowest in the EU and the fairest.
Voters now have the right, he said, to "an open and honest debate" about the economic challenges ahead, he said.
Rejecting charges that the PDs are heading for electoral disaster, Tánaiste Mary Harney said: "The electorate won't lightly throw that away and vote for change for change's sake." The Government must get important messages out before the election and show improvements in justice and health, she said. "I think people will be very reluctant to change the winning formula."
