Why is the government planning to slash its interest rate?
The finance minister has been in touch with the EU and the International Monetary Fund over the last two weeks, he has told the Senate finance committee.
It is not just about making sure that we are meeting our obligations but also what we have to do to make sure that people are able to pay the bills that are due to them.
The government is planning to reduce the government’s annual interest rate from 2.5% to 1% and its borrowing rate from 5% to 3%.
That will reduce the burden on the Treasury, it will also reduce the pressure on the banking sector, he said.
In the longer term, it’s important that we keep that fiscal stimulus in place, he told senators.
“We know that a 1% increase in the borrowing rate and the government taking on some of the debt that it’s taking on now can only lead to a further decline in GDP.”
The budget, announced last month, was intended to be a modest increase in spending but some of that was spent on the tax system, he added.
That includes a 2% increase to the top rate of tax, the rate on higher earners who are earning more than £150,000 a year, and a 2.25% increase on personal allowances.
What we know for certain is that we have not done enough to help people who are struggling, and that the next Budget will reflect that, he warned.
There are some important changes that we need to make.
One is the Government’s plan to make the budget debt-free by 2020, he continued.
This is very important.
I have made clear to the Government that they need to come to terms with the debt they have, and they need, if they are to come out on top, to make a very substantial change in the way they think about their finances.
They need to be willing to take on more debt and to put it to a higher degree of debt service, and this Budget is the first step in that process.
We will have a Budget for the next Parliament, which will have to deal with a series of different issues.
He added that the Government was prepared to work with the European Union on its debt crisis and the IMF on the Greek debt.
Senator Fitzgerald said the budget would be a “significant” piece of legislation.
However, he also highlighted the importance of ensuring that the Budget reflected the Government spending plans.
Mr McAlpine said the Government had “an enormous amount of debt”, and that its debt was “more than double the size of our GDP”.
The Government will also be investing in infrastructure to help meet its commitments, he pointed out.
On climate change, he described the Government as “not a country that is necessarily climate-friendly”.
He said the new government’s policies were “clearly a shift from the old government’s policy”, and “that will require a new approach”.
In his speech, the finance minister said the Budget would be an “opportunity to change course and get back to delivering on the promises that have been made in the Budget”.
“While the Budget is important, it is not the only thing that matters.”
It is a small price to pay for achieving our economic objectives and delivering on our commitments,” he said, adding that the “resolute commitment” to the Budget “will allow us to deliver the Budget and continue to deliver on the commitments made in this Budget”.