Urgent reform of public expenditure is essential for Ireland to maintain its competitive position, the business and employers' body IBEC warned yesterday in its pre-election report on the economy.
IBEC director general Mr Turlough O'Sullivan said there was a 22 per cent rise in Government expenditure last year, which could rise to nearly 40 per cent over two years when this year was taken into account. "Most of this increase will go on day-to-day expenditure and, according to IBEC, this is a recipe for disaster," he said.
IBEC recommended that the private sector should take over a number of public services such as secretarial services, payroll, maintenance, IT, training and catering. "Some services by the State could be better handled by the private sector," said Mr Brendan Butler, IBEC's director of enterprise.
There was growing evidence that Ireland had begun to lose its way over the past 12 to 18 months, said Mr Butler, citing lower than projected tax revenues, rising insurance costs, a 48 per cent rise in notified redundancies, a 19 per cent rise in electricity costs and a 14.5 per cent rise in manufacturing earnings.
"Adjusted for inflation, Irish wage rates are rising at seven times the EU average," he said.
IBEC has also called for the implementation of the National Spatial Strategy to ensure that infrastructure is planned on a long-term, strategic basis and the establishment of a National Infrastructural Agency to prioritise infrastructure.
Any future Government should take steps to reduce insurance costs, rationalise the number of regulators, "competitiveness-proof" any new legislation, develop e-Government to enhance the State's competitiveness and rationalise the plethora of agencies and organisations offering support to the enterprise sector.
Mr O'Sullivan said the 12.5 per cent rate of corporation tax should be retained and issued a strong "hands-off" warning to any future Government which tried to change the reduction in employers' PRSI.
IBEC said it had put a series of questions to each political party on key economic and social issues facing Ireland and would provide details of the answers to its 7,000 members before the election.
