Tuesday, 24 April 2012
Question 130: To ask the Minister for Public Expenditure and Reform if he will report on his meeting with Ajai Chopra, the European deputy director of the IMF, the ECB's chief economist Klaus Masuch and Istvan Szekely of the European Commission on 17 April 2012; and if he will make a statement on the matter. [20293/12]
I propose to take Questions Nos. 118 and 130 together.
I met with the troika delegation on 17 April together with my colleague, the Minister for Finance, Deputy Michael Noonan, and a number of senior officials from our Departments. The purpose of the meeting was to exchange views on how the programme is progressing in terms of meeting our targets since the previous quarterly review.
This is the troika's sixth quarterly review and the primary focus is to evaluate our performance against the targets set for the end of the first quarter of 2012 and to assess progress on targets due in the coming quarter. There has been a series of meetings held with the troika to appraise all the elements of the programme covering fiscal developments, the macro-economic outlook, progress on commitments regarding restructuring the financial sector and structural reform. These meetings will conclude on Thursday, 26 April with a further meeting between the principals, Minister Noonan and myself.
Verification of the relevant quarterly targets forms a key part of the mission and the Government has repeatedly stated that meeting these conditions on time and on target is the best way to ensure we emerge successfully from this programme, which is our primary focus. It is important to build confidence in the State's ability to manage its debt and deficit to enable us to return with confidence to the financial markets for funding in as timely a manner as possible. This is one of the principal objectives of the programme. The Government's commitment to the programme does not stop us from seeking and agreeing changes to aspects of the programme. We have already done this successfully and the Government will continue to do so at the appropriate time.
Following each review mission, and arising from detailed and lengthy discussions with the troika team during it, revised versions of the programme documents, including the memorandum of understanding on specific economic policy conditionality, are prepared by officials of my Department and the Department of Finance along with officials from the Central Bank in conjunction with the external partners. It would be premature at this stage to comment on the possible outcome of these discussions, but I am satisfied there will be a positive outcome to the review.
It is also important to note that the relevant programme documents are made publicly available at the end of the process.
The Minister said he discussed the macroeconomic outlook with the troika. The discussions are continuing until Thursday. Is there any recognition on the part of the troika, given the deteriorating economic situation in Europe, the fact that this is the third quarter in a row with economic contraction across Europe and there has been a return of the debt crisis, that its austerity agenda is not working, either here or in Europe, and that alternative strategies need to be considered? It was reported prior to the meeting that they would discuss in detail so-called labour activation measures. In his discussions with the troika either at this meeting or at previous meetings, was the decision to cut the lone parent payment once a child reached the age of seven years considered a labour activation measure? Lone parents maintain that the plan to cut off payments after the child has reached the age of seven years will, in fact, drive lone parents out of the workplace and into full dependency on social welfare. Was this matter discussed with the troika?
Of course the macroeconomic situation was discussed with the troika. We discussed the specific details of our own economy and also the position of this economy within the European context and in the global context, which is very important. The objective of this programme is to get us back to normal funding. The Government's yardstick is always the question of whether it is working. Deputy Boyd Barrett was not here when I replied to the first questions today and described the disciplines we are required to impose upon ourselves because we cannot continue to borrow at our current rate of borrowing. Even Deputy Boyd Barrett understands this. However, this is not the complete strategy because it requires other elements. We need to work towards a balanced budget and a deficit target of 3% by 2015 and a deficit target this year of 8.6%, as a stepping stone towards that target, with a target of 7.5% next year and so on. Of itself this is important but it is not the only strategy; stimulus is also necessary. The Government has worked on looking at the areas of stimulus, such as the use of the National Pensions Reserve Fund, the establishment of the NewERA entity and the establishment of the Strategic Investment Fund. We have concluded negotiations with the troika for the use of one third of the proceeds of State assets sales for productive job-creation purposes. We have also engaged with the pension funds to see if more can be invested here. A range of initiatives has been devised to stimulate the economy as well as working on the balanced budget approach which we need to do at the same time.
I can only comment that as the austerity agenda is rolled out across the rest of Europe, it is becoming increasingly clear that the damage done to the peripheral countries is now spreading to the core and is completely depressing the European economy in all parts. It is disappointing if there is not some discussion about the implications.
I specifically asked the Minister whether cuts directed at lone parents were discussed as so-called labour activation measures. I refer to the cut in the lone parent allowance once a child has reached seven years. Was this proposal conceived as a so-called labour activation measure?