No ‘populist decisions’ in Budget 2004

MINISTER for Finance Charlie McCreevy will be giving extra money for social welfare benefits in next week’s Budget 2004, but it won’t be used to reverse 16 contentious cuts in welfare schemes.

Warning that the budget will avoid short-term populist measures, the Minister also said that benchmarking pay rises won’t be paid unless public servants fulfil their side of the deal.

But Minister McCreevy said the economy in general could not be priced out of the market with unrealistic wage increases.

“Going forward, moderate and predictable wage developments must continue to underpin our economic development,” he said.

Reiterating the Taoiseach’s threat that benchmarking pay increases are dependent on compliance with the terms of the agreement, Minister McCreevy said that the Government is committed to honouring the deal.

“If the conditions are not met in any sector, grade or organisation, then the payments will not be made in that area,” he said.

The Minister also stood by his previously stated commitment to allocate extra funding for social welfare in the budget. But this will not affect the 16 areas where Minister for Social Welfare Mary Coughlan has announced cutbacks and instead relates to possible increased rates in areas such as child benefit and pensions.

Last year the Minister topped up social welfare spending by €500 million on budget day. Similar increases this year would bring the social welfare spend, planned at €10.6 billion for 2004, above the €11 billion mark.

Speaking at the Smurfit Business School at University College Dublin yesterday, the Minister said the enlargement of the EU posed a real challenge to the economy.

“It is imperative that we maximise our competitiveness in order to meet this challenge and benefit fully from the opportunities it presents to us,” he said. “Unless we can get our price and cost increases down to EU levels with the least possible delay, we will continue to lose competitiveness and ultimately, jobs will be lost.”

The Minister said the budget will be strategic and set the scene for further economic recovery. “This Government believes firmly in taking the long-term view and making the choices that are in the long-term interest of the Irish people and the Irish economy. This means avoiding short-term, populist decisions and taking such difficult choices as have to be made.