The Minister for Finance, Mr McCreevy, has again moved to dampen expectations of a substantial tax give-away in the forthcoming Budget, stressing that the Government is determined to be prudent with the public finances.
Mr McCreevy said yesterday that the Government intended to pursue policies that would leave the public finances on a sound footing while providing sustainable improvements in public services and a lower tax burden.
"The Minister for Finance is often expected to do the impossible; to provide substantial tax cuts, to provide significant additional resources for new or expanding public services and to reduce borrowing to a level which will allow for sustained reductions in our debt," he said.
He told the Leinster Society of Chartered Accountants that the Government would not be taking "the easy option" and that people's expectations must accept this reality.
"Short-term fixes are not part of the picture. We should all remember this," the Minister told his audience. Mr McCreevy said greater control of public expenditure was required to ensure that the Government could achieve its "ambitions" in relation to tax concessions, while also eliminating borrowing. "We are all well aware that there are many economic and social priorities which have to be addressed.
"Despite our record levels of economic growth and the increased income that this has brought, there are still pressing needs which can only be met properly by Government intervention through programmes in health, education and social welfare.
"The 4 per cent increase in current public spending as provided by our target will allow for real increases in such essential social and economic services." The Minister accepted that the current strong economic performance could give rise to heightened expectations.
But he also suggested that the nature of Ireland's economic success could, if allowed, sow the seeds of future failure. "The dizzy heights of our current growth rates may generate an unrealistic set of expectations in relation to a dramatic enhancement of public services that could undermine the conditions necessary for further economic and employment growth."
Meanwhile he said that labour shortages in certain sectors pose the most imminent threat to the economy.
Tackling the needs of the labour market, he said, was now a key feature of Ireland's continuing economic success story and would require a very careful approach in the formation of budgetary and other policies over the next few years.
