Factbox: Key economic policies of Ireland’s opposition parties

DUBLIN (BestGrowthStock) – Ireland’s government is expected to be thrown out of office in the next parliamentary election, likely in the Spring.

A coalition of the center-right Fine Gael and the leftwing Labor parties is likely to form the next government.

Here are some of their key economic policies.

BUDGETARY TARGETS

Both Fine Gael and Labor accept that Ireland must reduce its budget deficit, currently the biggest in the European Union relative to gross domestic product (GDP), to within the EU’s 3 percent limit by 2014.

The parties accept that an adjustment of 15 billion euros is required between now and 2014 and Fine Gael has supported frontloading savings, saying the 6 billion euros in adjustments earmarked by the current government are needed next year.

Labor has said it would prefer 2011 fiscal savings to be reduced to 4.5 billion euros, but its past record in government shows a party willing to keep investors on side.

If the 2011 budget is passed, as expected, then Fine Gael and Labor will implement its policies.

Despite its left-wing credentials, Labor has refused to back the trade unions’ view that the timetable for tackling the budget deficit should be extended until 2017.

Fine Gael has says it will come up with its own four-year budget plan next week.

BANKS

The government has insisted it will not force senior bondholders in banks to take a loss on their holdings because they rank on a par with depositors. But it is making subordinated bondholders in two nationalized lenders, Anglo Irish Bank and Irish Nationwide foot part of a near 46 billion euro bailout bill.

Fine Gael has said it would be prepared to make senior bondholders in banks take some of the hit for large losses at the lenders.

WHERE TO CUT

Fine Gael said it would prefer to rely on spending cuts rather than tax increases with a formula of three parts cuts to one part tax.

Fine Gael’s finance spokesman Michael Noonan told Reuters everything was on the table and that reductions in social welfare payments and increases in taxes could not be excluded. However he said Fine Gael would try to ringfence carers and people with disabilities from cuts.

The leader of the Labor party, Eamon Gilmore has said he would prefer an even split between additional taxes and lower spending to spread the burden of adjustments.

Labor’s tax proposals include a 48 percent rate for high earners, increasing tax on second homes and a new bank levy.

Payments into the Pension Reserve Fund would also be suspended under Labor, Gilmore said, while it supports social welfare cuts and reform.

Fine Gael backs a government deal forged with unions that promises no further wage reductions in the public sector.

But Noonan said the party would push through more job cuts than the government envisages under its current agreement, with some possibly achieved through compulsory redundancies.

Labor said it is supportive of a voluntary redundancy scheme in the public sector.

STIMULUS PACKAGE

In parallel with its austerity drive, Noonan said Fine Gael would invest up to 12 billion euros in the energy, telecoms, IT and construction sectors to stimulate growth.

The party would raise funds for the package by tapping the 24 billion euro national pension fund and getting state agencies with strong balance sheets — like energy companies Bord Gais and the ESB — to borrow against their own assets.

Noonan said he would then replenish the pension pot by selling some state assets in due course and would not rule out the sale of any particular agency, including the government’s 25 percent stake in former flag carrier Aer Lingus. Labor proposes taking 2 billion euros from the pension reserve fund to provide capital for a Strategic Investment Bank as a source of alternative funding for capital projects.

(Reporting by Lorraine Turner and Padraic Halpin; Editing by Jan Harvey)

Factbox: Key economic policies of Ireland’s opposition parties