SFA urges restraint on public spending

The Small Firms Association has urged the Minister for Finance Charlie McCreevy to maintain a strong hold on public spending and to resist demands for increases in public expenditure by backbench TD's and "high-spending" Government departments.

The SFA said that funds from once off sources should be invested where they have the highest economic and social return and not simply given up to assuage the feelings of backbenchers in the wake of recent election results.

SFA Director Pat Delaney said: "The Minister must maintain a firm hand on expenditure and prioritise and deliver a service based on necessity, quality and value for money. These must remain the benchmarks for any increases in public expenditure. There is little point in increasing health expenditure by €1bn when the output is only €300m in increased service.

"From a competitive perspective Ireland is now in the frame as a high cost location to do business. Any faltering by the Minister on his stated position to maintain control of public expenditure will be used by business at home and abroad as reasons why not to invest in Ireland."

"It is imperative that expenditure growth and tax revenue growth are kept in line. The use of funds from once off payments rather than continuous revenue flows will have only the superficial effect of flattering the exchequer balance. The SFA is of the view that the use of such funds to increase current spending is wasteful and will only delay the inevitable decision and requirement to bring Government expenditure and tax revenue growth into line with each other."

"What is required is urgent and focussed management in the public sector, not increases in spending. In the past, public expenditure demands have been high and met by the buoyancy of tax revenues. Expenditure overruns were easily accommodated rather than managed.

"There can be no return to this type of economic management. We must remember that the problems of the past were rooted in excessive Government spending. The Minister must resist any calls, which will lead us back to where we came from in the 1980's and 1990's."