THE Minister for Finance, Mr Quinn, has defended public sector pay, saying that there is "no question" that public expenditure is out of control.

Speaking after the Irish Small and Medium Enterprises' Association lunch, he also insisted that no decisions have been made on "any tax changes at the next Budget.

Earlier, Mr Quinn called for ISME to come into the national pay talks. The organisation had backed out of participating when it was excluded from the inner sanctum actually negotiating the future pay deals.

Mr Quinn told the ISME lunch that he "regretted" its decision not to participate. He added that the lobby group's decision to go to the High Court on the issue was "ill judged".

He said ISME should get back into the talks and into the system not from the steps of the High Court but from across the table.

He also told the delegates that the Budget, or other policy decisions, will not be focused on short term political benefits.

However, ISME chief executive Mr Frank Mulcahy insisted that ICTU, IBEC and civil services are clones and do not know what it is to take risks on a daily basis.

"The challenge for ISME now is to influence the process from the outside for the betterment of the whole community - not just the insiders," he said.

He said interest rates are now far lower than in 1993, while the 30 per cent rate for the first £50,000 of profits has radically transformed the tax environment for small and medium companies. "Of the 26,500 companies which reported a profit last year around 15,000 came in below £50,000," Mr Quinn said.