Ronan Costello
Editor
The University Times has received an excerpt of a letter which reveals that former Minister for Finance Brian Lenihan and Central Bank governor Patrick Honohan had explicitly promised the IMF that the government would increase the student contribution from 2012-2014. The excerpt comes from a letter written to Dominique Strauss Kahn, who was then head of the IMF. The letter appears in the appendix to the memorandum of understanding between the then government and the IMF.
Both Fine Gael and Labour were aware of this promise before the general election. Minister for Education Ruairí Quinn signed the USI pledge not to increase the student contribution in the knowledge that the Fianna Fáil government had made these guarantees with the EU, ECB and IMF troika.
This aspect of the agreement, like all aspects of it, are up for negotiation and the troika has consistently said that the Irish government can make the necessary savings in whatever way it sees fit. Thus, the current Fine Gael/Labour government is not completely tied to guarantees made by the previous government.
However, The University Times has learned that Minister Quinn, while briefing Labour party colleagues, stated that he preferred an incremental increase to the student contribution over the period outlined in the excerpt below. This would suggest that Minister Quinn intends to adhere to the promise made by Fianna Fáil.
The excerpt:
To secure our fiscal targets, a number of fiscal measures have been identifiedfor 2012–14. We will continue to rely on expenditure savings (€6.1 billion), led by current spending (€4.9 billion), as outlined in the National Recovery Plan. We are targeting further reductions in public sector numbers, social benefits and programme spending, and have anchored the prospective savings by publishing multi-year expenditure ceilings by Vote Group through 2014. We are also planning to move towards full cost-recovery in the provision of water services and ensuring a greater student contribution towards tertiary education, while ensuring that lower-income groups remain supported. In addition, we will accelerate the process of placing the pension systems on a path consistent with long-term sustainability of public finances. On the tax side, we will build on the base-broadening measures outlined above and establish a sound basis for sub-national finances through a new residential-property based site value tax. The Finance Bill 2012 will contain necessary provisions to bring into effect the already signalled VAT increases in 2013 and 2014.
Additional reporting by Rónán Burtenshaw, Deputy Editor. This excerpt was received through correspondence with USI.
