More cutbacks ahead, warns McCreevy
The Minister’s warning came yesterday after an economic think-tank forecast Government debt of 1 billion this year unless further measures are taken to bring public spending fully under control.
Mr McCreevy has already saved 300m in a round of cuts and increased charges. He said he was determined to return a small Budget surplus at the end of this year.
“We have to live within our means,” he said, “and we’ll do whatever is necessary to get sound public finances.”
Mr McCreevy will finalise details of the latest package of cuts at today’s Cabinet meeting, which are aimed at saving more than 300m.
The series of cuts and increased charges, such as the hike in college registration fees, are aimed at reducing increases in public spending from 21% to 14%.
However, the ESRI has predicted a deficit of up to 1bn unless public finances are brought fully under control. It said that lower than expected income tax receipts and current expenditure increases are the main cause of the deteriorating State coffers.
Mr McCreevy and Taoiseach Bertie Ahern also called on all workers yesterday to be realistic in their wage demands at a time when Government revenues were shrinking.
Mr Ahern also said there was no way the State could pay public service workers the 1bn benchmarking wage bill in the next 18 months.
The pronouncement sparked fury among unions who said this would make it difficult to form a new partnership agreement.
Irish Congress of Trade Union’s general secretary David Begg said the country still ranked 14th in the EU in terms of take home pay per hour and all pay increases needed to be implemented quickly.
“Given what is being said it may not be possible to do a new deal. It’s not really enough to say this is as good as it gets,” Mr Begg said.
It also emerged yesterday that more than 500m has been wiped off the value of the National Pensions Reserve Fund in recent months.
The nosedive in the value of pension fund investments, aimed at setting aside money for pension in the years ahead, cancels out any interest gains made in the last year.
However, despite the decreases, Mr McCreevy said he had total confidence in those appointed to manage the funds.
He also ruled out deferring payments to the pension reverse fund despite the stormy economic conditions.
The fund is to be set aside between 2025 and 2055 to meet the pension needs of what is projected to be a much older population.
