The Irish Independent reports that tensions in Cabinet over the impact of austerity have emerged strongly after "off-message" remarks by a senior Labour figure at the weekend.
Fine Gael ministers insisted the Government must stick to plans for cuts and taxes after Labour deputy leader Joan Burton signalled people have been pushed to their limits by austerity.
The warning from the Social Protection Minster comes as President Michael D Higgins echoed criticisms of austerity from within the junior coalition partner. Labour sources pointed out that Ms Burton and others were only making similar points to those made by the President in his speech to the European Parliament last week, and again over the weekend.
But their comments come in the wake of the Meath East by-election meltdown -- when Labour came fifth.
Rank-and-file Labour TDs have demanded that their ministers assert themselves and the party's policies more in Government.
However, senior Fine Gael figures say more tough medicine is required to get the country back on track and boost investor confidence.
Ms Burton -- who said she believed "we have reached the limits of austerity" -- has been warned that any attempts to ease up on austerity will put Ireland's greater economic recovery at risk.
Meanwhile, the Irish Independent has learned detailed preparations for next year's Budget -- which takes place this October rather than December -- have been stalled until the €300m in public sector pay savings envisaged by the Croke Park deal are achieved.
It is understood the Economic Management Council (EMC) -- comprising Taoiseach Enda Kenny, Tanaiste Eamon Gilmore, Finance Minister Michael Noonan and Public Spending Minister Brendan Howlin – have agreed not to begin detailed discussions on next year's Budget until it is clear this year's targets will be met.
And one Fine Gael source told the Irish Independent that the only way recovery will come about is if budgetary targets of cuts and taxes are adhered to – not by easing up on austerity.
"It's worrying how quickly some people forget that we're still in a bailout programme borrowing a billion a month from the troika because nobody else has been willing to lend to us at affordable rates," said the senior Government source.
"The only feasible way for Ireland to finance more investment in job creation is to implement the planned savings in public sector pay and social welfare.
"Those EU countries that can afford to borrow more to support growth should do so. Unfortunately, Ireland is not one of them – we still have the biggest budget deficit of any eurozone country, including Greece."
Ms Burton has already raised the possibility of reducing the amount of cuts and taxes in this year's Budget, using the €1bn saved as a result of the promissory note deal.
Many in Fine Gael are opposed to this, and Labour sources said Ms Burton had already made similar points in the wake of the deal.
Sources close to Ms Burton also said there is no rift with Mr Gilmore, and those close to Mr Gilmore said many in Labour had been making similar points recently.
But, in an interview, Ms Burton said a move out of the Department of Foreign Affairs by Mr Gilmore would be "widely welcomed in the Labour Party".
Communications Minister Pat Rabbitte said, "we are at a tipping point" with austerity but said the Coalition must press on with its plans in order to exit the bailout at the end of the year.
Labour sources also said President Michael D Higgins made similar points in his speech to the European Parliament last week, when he criticised austerity and the approach of EU leaders to the economic crisis.
But Transport Minister Leo Varadkar said "austerity is working", pointing out that the deficit is down and there is growth in the economy.
He said one more tough budget is needed for Ireland to exit the bailout programme and regain economic sovereignty.
The uncertainty created by the rejection of the Croke Park II agreement has stalled preparations of next year's Budget, with detailed discussions on hold until the €300m in public sector pay savings envisaged by the Croke Park deal are achieved.
"We've agreed to discuss next year's Budget when we're confident this year's Budget is being fully implemented and we're meeting our deficit and growth targets," a source said, adding the "logical sequence" means this cannot be done until the Croke Park savings are found.
The Irish Independent also reports that the entire state pension would be means-tested under proposals laid out in a radical new report to be published by the Government today.
It also raises the prospect of means-testing the free travel scheme and the allowance given to pensioners to help pay energy and telephone bills.
However, the report from the Organisation for Economic Co-operation and Development (OECD) also considers increasing pension payouts in the coming years.
The Irish Independent has learnt the radical report also proposes increasing the retirement age further, in line with increased life expectancy.
But it also says an "adjustment" – or increase – of pensions after years of cuts and freezes needs to be considered.
The report proposes a number of options to reform the state pension scheme, including:
• Introducing either a universal pension regardless of contributions or a lifetime's work, or else a means-tested pension scheme.
• Means-testing the household benefits package – the ESB, gas and telephone allowances – and the free travel scheme.
• Increasing or decreasing the state pension for late or early retirement, to encourage people to stay in work longer.
• Linking retirement age, which will be 68 by 2028, to life expectancy after that date. This means payouts by the State will not extend significantly.
• Bringing more "flexibility" in allowing retirees to combine their state pension and wages from work, to encourage people to stay in employment longer.
The means-testing of the state pension is one of the more radical reforms contained in the document, and would have to be costed carefully.
Given the attachment to the state pension, it is also likely to be hugely contentious politically and any changes – if the report's proposals were adopted – could be kicked down the road. The report by the Paris-based think-tank also notes Irish pensions are generous by international standards.
But sources said that its reference to "adjustments" was likely to mean increases rather than cuts as the cost of living rose. The hikes would be in line with any wage increases and inflation – and while this is unlikely to happen in the short term due to the economic crisis, it could be adopted if the economy improves.
The Irish Independent last week revealed that the report, commissioned by Social Protection Minister Joan Burton, suggested that up to a million workers without a pension would be forced to take one out for the first time. It notes than the changes to the state pension would be best done alongside these measures.
Workers, employers and the State should contribute 15pc of salary to the scheme, it said.
But when dealing with the State pension, it says Ireland should look at significant structural reform.
It says that at a "minimum", all contributions made by workers should be honoured.
However, it goes on to recommend two of the best options from three in the report – a universal basic pension or a means-tested basic pension.
The universal proposal would be financed by taxes, contributions or a combination of both.
However, it would be available to the entire population and would give everyone the same flat-rate payment.
This could be "complemented" with either mandatory private pensions or automatic enrolment into private pension scheme.
As part of this, the household benefits package and free travel scheme could be changed into a cash payment and merged with the pension or else means-tested and given to people who need it.
The other option is a single means-tested pension financed from "general revenue", but the details would have to be hammered out. This would also be complemented by mandatory participation in private pension schemes.
The Irish Times reports that
new EU rules on mortgage lending designed to give better protection to consumers
and tighten up lending standards are expected to come into force by 2015, as
negotiation on a key piece of legislation enters its final stage in Brussels.
The Minister said there was no urgency to agree
an alternative plan as the cuts did not have to be implemented until July. “I
would have much preferred obviously if it had went through on the vote because
it is much easier to deal with on that basis. The fortunate thing is that the
decision was taken in April – it is a good distance to July,” he said.
The Minister said the Government would ask the
troika for permission to delay the introduction of water charges from January
2014 until the following October during its review of Ireland bailout programme.
The troika’s tenth review begins today, with officials arriving in Dublin.
The Irish Examiner reports that oil exploration drilling programmes off the Irish coast are expected to increase materially in the coming years, according to Davy Stockbrokers, who view the entry of Kosmos Energy as a potential game changer in Irish oil exploration.Dallas-based Kosmos — already a partner with Tullow Oil in Ghana and with Fastnet Oil & Gas in Morocco — has taken 85% majority positions in two Europa Oil & Gas licensing prospects in the Porcupine Basin off the Kerry coast in return for funding a 3D seismic study and initial drilling costs.
Davy analyst Job Langbroek said the farm-in by Kosmos is a significant moment for the Irish offshore exploration industry. He said it also reflects well on Providence Resources who have been a leading advocates of the merits of the Porcupine Basin.
“This is important because of Kosmos’s acknowledged expertise in Atlantic margin plays and the pathfinder role it has played in the past in other jurisdictions. It could potentially signal a bout of material interest in the Irish offshore by the global industry.
“Kosmos has farmed into three separate licence options. Two of these licence options (11/7 and 11/8) are held by Europa Oil and Gas, and a third licence option (11/5) is held by Antrim Energy.
“The Europa farm-in includes a fully carried 3D seismic programme and, if election is made to convert to a full exploration licence, a carry value of up to $200m (€152m) spread between two wells. For this, Kosmos will earn an 85% interest,” he said.
Mr Langbroek acknowledges Kosmos is a leading explorer for Cretaceous-aged fan systems in the Atlantic margin.
“It was one of the first companies to spot the opportunity offshore Ghana, which subsequently led to the 500m-barrel-plus Jubilee discovery,” he added.
Mr Langbroek said the outcome of the Kosmos farm-in will, hopefully, ultimately be more wells along the western seaboard.
“With a strong likelihood of a multi-well programme in the Celtic Sea in the coming years, activity levels in the Irish offshore look set to increase materially,” he said.
The massive Eirik Raude drilling rig is currently engaged in a €125m drilling programme at the Dunquin prospect, 150km off the coast of Kerry, for operator ExxonMobil who have 27.5% in the prospect as does Eni, Repsolholds a 25% stake, Providence 16% and Sosina has a 4% interest.
Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.
© Copyright 2011 by Finfacts.com