Michael Noonan (Limerick East, Fine Gael)
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Question 46: To ask the Minister for Finance when he became aware that a budgetary adjustment of €7.5 billion in the next four budgets was insufficient to restore confidence in the bond markets; and if he will make a statement on the matter. [41891/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Our expenditure is well in excess of our revenues and this gap, currently being filled by borrowing, needs to be reduced to a sustainable level. This is not just to ensure we retain market confidence but also because it is sensible economic policy. The more we borrow, the higher the cost of servicing our debt and the fewer resources we have to direct elsewhere. My Department monitors continually the economic and budgetary position and data are constantly being assessed as they emerge. In this regard, I am kept fully informed of emerging trends. Based on data that became available over the summer months, in addition to second-quarter economic data published by the CSO in September, which were disappointing, a downward revision of future growth prospects was warranted.

With regard to when I became aware that a larger adjustment than that signalled at budget time last year might be necessary, this gradually became clearer as more economic data emerged. This development, coupled with the clarification on 30 September of the extent of support required for the banking sector and a further refinement of economic forecasts, led to a strengthening of the view that additional consolidation would be required if the 3% deficit target were to be achieved by 2014.

I outlined in my statement on banking in this House on 30 September that the Government's commitment to adhering to the 3% of GDP deficit reduction target by 2014 had not changed and I made it clear that we would make an additional significant consolidation effort in 2011 over and above the already announced target of €3 billion. As the Deputy is aware, towards the end of October I announced that an overall adjustment of €15 billion over the next four years is warranted to achieve the target deficit of 3% of GDP by 2014. During October, my officials briefed Opposition spokespersons on the emerging trends based on various economic and budgetary scenarios. Furthermore, my Department set out last week the up-to-date economic and budgetary position including the scale of the 2011 adjustment and the likely annual breakdown based on current assessments.

Achieving, in a fair and sensible manner, the necessary next step in the multi-annual adjustment is what Government is now focusing upon and we will publish our four-year budgetary plan later in the month.

Michael Noonan (Limerick East, Fine Gael)
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Until approximately five weeks ago, the Minister was holding to the €7.5 billion correction. Then, like a thunder clap, it jumped to €15 billion. He is now telling us for the first time he saw the emerging trends over the summer and was coming around to forming a firm opinion when the CSO figures became available in September. Did it ever strike him that he should have shared this information with the House and public rather than making a sudden announcement as if he had only discovered the requirement over the Corn Flakes in the morning?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The reason behind the increase in the consolidation required is outlined in the information note on the economic and budgetary outlook Deputy Noonan received last week. It was published last week. The main reason is a smaller economy with lower than expected levels of nominal growth. I was certainly not prepared to suddenly announce a departure from the existing target without the most careful reflection on all the emerging economic data. I made that point clear on Question Time on the last occasion.

Michael Noonan (Limerick East, Fine Gael)
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Does the Minister recall the infamous meeting in Galway, which I believe is in the annals of political history for reasons other than those to which I refer? On his arrival in Galway, the Minister said he believed the correction of €3 billion, bringing the figure of €7.5 billion to more than €11 billion, was a minimum. It now transpires the Minister was forming a view at that time that he would have to double the figure and did not tell anybody. He seems to be working on the basis of telling us he is sharing information with the Opposition, yet every time we take his figures at face value, they change.

We found out yesterday that a correction that was an absolute given, the €7.5 billion correction, will now have to be in the order of €15 billion.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Yesterday?

Michael Noonan (Limerick East, Fine Gael)
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Yes. We found out yesterday that it is no longer a given but another moveable feast. It was presented to us as an absolute certainty yesterday that the correction over four years would be €15 billion. We have been working on this information. Furthermore, there was an attempt to browbeat the Opposition into agreeing to the figure. We met the Commissioner yesterday and he said new arrangements in Europe are such that growth rates must be assessed annually and that the figure of €15 billion must be renegotiated with the Irish Government annually. It could go up or down. Our first revision will be on 29 November, which is three weeks away. The body language I noted was that the Commissioner might be marking it down on that date. How can the Minister come in here with his innocent demeanour and give us assurances when every time he does so the figures move within a couple of days?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Every time the Deputy refers to body language on the part of officials or Commissioners, I become suspicious. Body language is used here as a cover for the substitution of the Deputy's opinion. He drew an inference from the Commissioner's body language and did something similar in regard to his encounter with my officials. He inferred from their body language that they wanted a greater adjustment than €6 billion and that they wanted one of €7 billion at the time in question. The Deputy should not infer anything from body language.

As far as the forecasts are concerned, forecasts are just forecasts. The original stability and growth plan and original €7.5 billion target were agreed with the Commission. When I spoke in Galway - the Deputy referred to an interview I did when I arrived there - I made it clear the figure was a minimum figure and that it was agreed with the Commission. The figure of €6 billion is also the current figure and is agreed with the Commission as the appropriate front-loading value for next year. The figure of €15 billion is our best assessment of the central case scenario over the four-year period. We are planning on that basis and, clearly, we will discuss the plan with the Commission in due course when the Government has concluded its deliberations. Any figures the Commission intends to publish on 29 November, of course, will be consistent with the plan.

Michael Noonan (Limerick East, Fine Gael)
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We will know the Commission's estimate of Irish growth on 29 November and we will not have to look at the runes or body language. The Minister's officials told me and my colleagues categorically that the correction they were seeking was €7 billion for 2011. That can be supported by the briefing they gave to other parties, who were briefed separately. The officials withdrew that figure afterwards under political pressure from the Government, including the Minister for Finance. I will repeat this inside and outside the House and take on any of them any day. The Minister should not have put pressure on his civil servants because we went to the Department of Finance to be briefed on the basis that the information given would not be filtered through the political side, in other words, by the Minister and his office. We found out subsequently that it was being filtered by him and his office because it was he who authorised the press statement that rebutted my figure, not the Secretary General of the Department of Finance.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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These are sensitive matters.

Michael Noonan (Limerick East, Fine Gael)
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It is not sensitive. The Minister should not stand up here and lie about my position.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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My officials outlined to the Deputy three different scenarios.

Michael Noonan (Limerick East, Fine Gael)
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That is not correct.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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When it was put to him that they preferred one, he referred to body language as the basis for his conviction.

Michael Noonan (Limerick East, Fine Gael)
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I did not.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy did.

Michael Noonan (Limerick East, Fine Gael)
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The told me categorically what was the adjustment.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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That is the position. There was no political pressure exerted.

Michael Noonan (Limerick East, Fine Gael)
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The Minister behaved disgracefully. He interfered-----

Brendan Howlin (Wexford, Labour)
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The Deputy should allow the Minister to conclude.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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If the Deputy speaks to my officials, he will find no such direction.

Michael Noonan (Limerick East, Fine Gael)
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I am speaking to the Minister.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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He will find no such direction.

Michael Noonan (Limerick East, Fine Gael)
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Who authorised the press statement?

Brendan Howlin (Wexford, Labour)
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The Deputy should not shout down Members of the House.

Michael Noonan (Limerick East, Fine Gael)
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Who authorised the press statement that rebutted my view? It was the Minister, not the Secretary General.

Brendan Howlin (Wexford, Labour)
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Please, Deputy Noonan, we do not shout down Members of the House. The Deputy should allow the Minister to reply in an orderly fashion to the question put.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy has moved his ground to a core allegation that I interfered with my officials and gave them a direction.

Michael Noonan (Limerick East, Fine Gael)
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He did.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I did not give them a direction.

Michael Noonan (Limerick East, Fine Gael)
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Who wrote the press statement? Who authorised it? It was the Minister.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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We can return to the press statement at a later stage by way of supplementary questions if the Deputy wishes