FINANCE MINISTER PASCHAL Donohoe has said there might be “more work in our economy than we have people to do it” in 2018.
Speaking to reporters at the National Economic Dialogue at Dublin Castle today, he said the Fiscal Advisory Council are not seeing overheating in any key markets at the moment, particularly in the employment and housing market.
But what they did raise is the vista that if certain trends, particularly in our labour market continue into 2018 the way they have in 2017, then we might get to a point next year that we have more work in our economy than we have people to do it.
I have recognised that this is a possibility that could occur in the future that we need to take account of.
Yesterday, Taoiseach Leo Varadkar said he wants to cut income tax in October’s Budget, stating that he is “determined” to find the resources for income tax cuts for “hard-working” families.
Tax cuts
“I agree fully with what the Taoiseach said yesterday, and I have said this on a number of occasions. That tax reform and tax reduction is going to be a valuable part of how we generate more work in our country in the future.
“But we’re going to make all of those choices inside the requirements that we have, to make resources available on at least a two to one basis, in relation to the split between expenditure and taxation,” said Donohoe.
It stipulates in the confidence and supply deal between Fine Gael and Fianna Fáil that the government must split available resources on a two-thirds to one-third basis in favour of public spending over tax cuts.
Fine Gael needs Fianna Fáil to support the Budget in order for it to pass.
“So for both the Taoiseach and I it is about doing things and making changes which are affordable not just in the year which we announce them, but beyond.”
However, he said that as Ireland is part of an open economy there are “many different moving parts to it”, adding that they need to be wary of what the next year might bring.
Ireland’s tax receipts and expenditure outputs for the first half of this year should be out soon, said the minister, adding that by all accounts things are looking good.
The very commitment I’ve made in relation to reducing our deficit in 2018 is an example of trying to make sure our financial resources are moving in a different place to how our labour market or other markets can move next year.
He again reiterated the government’s position on using the sale of AIB shares to pay-off Ireland’s debt, stating:
The reason why I’ve made that commitment is a determination to make sure that as our economy is going in a certain way, we’re building up buffers in the future.
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