More cuts may be on way next year

THE Government is considering a series of drastic cost-cutting measures if the economy takes another hit next year.

These include reviewing eligibility for child benefit, increasing third level fees to 1,000, job cuts in the defence forces and slowing down the road-building programme.

The controversial plan was drawn up by the so-called Three Wise Men, a panel of experts appointed by the Government to help bring spending under control if economic growth deteriorates.

Measures outlined in yesterday’s Budget are based on growth predictions of 2.25% next year. However, many economists believe it will grow by just half that amount.

Many of the cost-cutting measures introduced by Finance Minister Charlie McCreevy in his sixth budget were suggested by the expert panel.

They said the bulk of these savings could be obtained through a cap on public sector recruitment, a pay freeze for public sector workers and a ban on new agencies being established. These extra cost-saving measures were suggested after the Government’s initial spending plans for 2003 were compiled in August this year.

Mr McCreevy said in his Budget speech that many of the committee’s proposals were taken on board. However, a number of proposals were sidelined.

Other recommended measures include cutting of grants to youth organisations and services for secondary schools by a total of €3m.

The expert group’s report also stated bluntly that funding increases for the health service “simply cannot be sustained.” It proposed health boards be radically re-structured and that control of employment be taken out of their hands altogether.

The report said further cost savings could be achieved through increases in bed charges, the cost of prescription drugs and an efficiency drive in the health boards.

The report also reveals the Government was planning to cut community job schemes by 24,000 to 15,000, a move strenuously denied by ministers earlier this year.

The expert group said a reduction of this size could not be achieved in a year and proposed a reduction of 4,000, which was subsequently accepted by the Government.

In environment, the group proposed the abolition of the first-time buyers’ grants and a major cut in environment funds.

The expert group, known officially as the Independent Estimates Review Committee, is similar to a group established by the Government in 1987, which became known as ‘An Bord Snip’. It includes former Central Bank governor Maurice O'Connell, former head of the Revenue Commissioners Dermot Quigley, and Kevin Bonner, former secretary general for the Enterprise Department.