Cowen's early Budget to boost first-time buyers (Irish Independent)
The Government will announce a range of new measures to help first-time homebuyers in a Budget being dramatically brought forward by nearly two months.
The targeting of first-time buyers is an attempt to kick-start the flagging property market.
It will be part of a range of "stimulation packages" aimed at various sectors of the economy to reverse the deepening downturn, the Irish Independent learned last night.
The plan is to get first-time buyers back into the market through a range of incentives, and the provision of assistance in getting a mortgage.
The measures will be formally outlined on Budget Day, which has been brought forward by almost two months following an unprecedented Government announcement yesterday.
Finance Minister Brian Lenihan said Budget 2009 had been moved forward to Tuesday, October 14, to "ensure stability in the public finances".
He said the move would "give clarity and confidence to investors and taxpayers alike and provide a sound base for economic recovery".
The decision was welcomed by business organisations and financial market economists, who said the economy was facing recession and badly needed a fiscal boost.
Mr Lenihan also fired a warning shot at unions and public sector workers, in particular, warning that they needed to face up to "realities" in their wage demands.
The minister also admitted for the first time that the Government will probably exceed European borrowing limits both in 2008 and 2009.
The Irish Independent understands the Government was anxious to present the Budget ahead of October 31, the deadline for tax returns from the self-employed.
These are expected to result in a further serious deterioration in the public finances.
The dramatic move to bring forward the Budget, which has never happened before, came as new figures confirmed the biggest annual jump in unemployment since records began.
It also comes on top of Exchequer results which revealed a massive €8.4bn black hole in the Government's finances for the first eight months of the year.
The Government has already breached the 3pc borrowing guideline contained in the EU Stability and Growth Pact -- a huge embarrassment for the former Celtic Tiger economy.
Mr Lenihan accepted that the final year shortfall would be "at least €5bn", bringing total Exchequer borrowing to over €10bn for the year.
EU rules would allow us to borrow a maximum of around €9bn in order to comply with regulations aimed at supporting the value of the euro.
Mr Lenihan said the €5bn shortfall in the tax take meant the Government was "likely" to exceed the borrowing limit.
One reason for bringing forward the Budget date may be to seek an urgent decision from the EU Commission, in the form of EU approval for borrowing to cover what is expected to be an even bigger deficit next year.
The Minister said the Government faced its toughest economic test in 20 years -- since Ray McSharry was Minister for Finance. "The circumstances are different but I would accept the challenge is similar," he said.
Fine Gael finance spokesman Richard Bruton said the Government had finally woken up to the scale of the crisis, but had "squandered valuable time and sabotaged Ireland's ability to weather the downturn".
Labour Party finance spokesperson Joan Burton called for the Dail to return next week so ministers could be quizzed about spending.
"We now need a National Recovery Programme that sets out a road map for recovery, including committing to essential long-term investment in infrastructure," she said.
Turlough O'Sullivan, the director general of the main employers' body, IBEC, said: "The Government needs to [encourage] the social partners to revive the national partnership negotiations and to put in place a moderate agreement."
Small-companies group ISME, a fierce Government critic, said: "At last, the Government has seen the light." It urged maintenance of the National Development Plan and a public pay freeze.
Rossa White, economist at Davy Research, described the move as "positive."
"Cutbacks are inevitable, but we do not expect any increase in taxes," he said. "We presume the Government will negotiate as much leeway above the 3pc (EU borrowing) limit as possible to provide a fiscal injection."
Dermot O'Leary, chief economist at Goodbody Stockbrokers, said the spending-focused thrust of the plan was evidence that the Government hadn't "abandoned its ambitions for a tax culture that will encourage both work and enterprise".
The Minister said any tax changes would not come into effect until January 2009 -- although Budget Day changes in the price of alcohol, fuel or cigarettes would be immediate.
The reference to "environmental challenges" was viewed as a possible sign the Government is going to introduce a carbon tax in this Budget.