Limit on spending now boom is over, says McCreevy
Finance Minister Charlie McCreevy has stressed the need for government spending to be limited following the end of the boom times.
He said exchequer expenditure next year would go up by just 5% – to €40.4bn, declaring the necessity to “create the conditions necessary for the Irish economy to be strongly positioned to benefit from future economic recovery“.
Mr McCreevy said voted expenditure was expected to be €40.4billion, representing an increase of €1.9bn or 5%t from this year.
The moves tonight looked like leading to cut-backs in public services as well as higher fees and charges – particularly in the area of health.
The main allocations set out by Mr McCreevy today are €10bn for health, an increase of more than €700m, with rises also for education and investment.
But public service pay increases were set to eat into those amounts, and while overall spending will go up by €1.9bn, the increase in the sum allocated to public service pay increases is €1.1bn.
He intends to raise more than €90m in revenue from a number of key departments – agriculture, education, foreign affairs, health and environment.
This is likely to result in an increase in public charges.
Mr McCreevy said he was committed to honouring pay benchmarking in the public sector but stressed, too, that payments were dependent on compliance with the terms of a Sustaining Progress Agreement.
The minister described as a priority the continuation of the process of prudent management of public expenditure to protect the significant economic gains Ireland had made over recent years.
He said “a tighter approach and greater prioritisation of spending” was required to protect Ireland’s economy, and added: “It is simply unsustainable to continue to increase spending without regard to the resources available to fund it.”
Taoiseach Bertie Ahern, said of the figures: “As an ongoing programme of sustained investment over many years, it will transform our country.
“To people who have lost their jobs or who are concerned about that prospect, to people who have to wait too long for hospital treatment, to people who are stuck in traffic gridlock, to people who are isolated on the margins of our society through lack of opportunity, I believe the plans we have published today offer hope.
“It is this sustained investment – the fruits of prudent management – that has ensured that public investment in Ireland has been nearly double or more than double the European average in each of the past six years.”
And the McCreevy estimates were said by cabinet colleague Dermot Ahern to be setting “the strategic policy for the coming few years in keeping taxation low and nurturing growth”.
He declared the government agenda was a simple one – to hold on to the gains Ireland had made in recent years.
The Communications and Marine and Natural Resources Minister added: “There can be no going back to the 1980s. We just can not risk the concomitant increases in taxation and borrowing which ruined this economy in the 1980s.
“Because to take the wrong decisions now is to put people on the dole queues - it’s as simple as that.
“We need to continue with the policies which have served us well; keeping public spending increases in line with the increases in resources; keeping debt low and keeping taxation low.”
Mr Ahern said in times of economic downturn the Irish government message was clear – “what we have, we hold“.
He recalled that less than 20 years ago, the unemployment rate had stood at 19.6%. Now it was at 4.5%.
“Today – after three years of global economic downturn, the national debt is half the Eurozone average. We have shown the world Ireland did not go the way of many of the other tiger economies.”
The McCreevy policy line was also buoyed by figures issued an hour before his estimates announcement, showing the inflation rate at its lowest point - 2.3% – in four years, though still high by European standards.
But the Labour Party forecast the effect of the estimates would be to force up inflation in areas of education and health.
Kathleen Lynch commented: “The new inflation rate will be very cold comfort for thousands of consumers and low-income families who are about to be hammered by more cutbacks and stealth taxes in the Budget and the Book of Estimates today.
“There is nothing in these figures to cushion the blow of cutbacks and stealth taxes which are about to be imposed on ordinary working families.“
