Significant increases in social welfare rates are to be announced in next month's Budget, in addition to the Government's announcement yesterday that it plans to spend €2.5 billion more next year on services and investment. An overall increase of 6 per cent in spending is provided for in the Estimates for 2005, published yesterday, and this will increase following the Budget welfare package. Mark Hennessy, Political Correspondent, reports.
Health spending will rise by 9 per cent and the education budget by 8 per cent, but the Minister for Finance, Mr Cowen, said spending had to be kept pegged to inflation and tax growth.
Although the threat of higher oil prices, a falling dollar and a weakening US economy could affect the Republic's expected 5 per cent growth figures, Mr Cowen described the outlook as "fairly positive".
Presenting his first Book of Estimates, the Minister adopted a deliberately cautious approach. "We should be as prudent with taxpayers' money as with our own," he said last night.
The Minister said the Government's careful moves should be noted: "I hope that they will dispel the critique that I am trying to buy the next general election."
Ruling out rash spending increases, he said: "An expenditure spree in a buoyant economy would simply overheat our economy, lead to inflationary pressures and excessive wage demands and cause serious damage to our international competitiveness. We have come too far to expose ourselves to such a threat."
Besides the social welfare rises, the Minister will also use next month's Budget to reveal the shape of the Government's overhauled public capital programme and a multi-annual plan to improve services for the disabled. A significant tax package is also expected, with increases likely in personal tax credits and the standard-rate income-tax band.
The determination of his predecessor, Mr Charlie McCreevy, to cut 5,000 jobs from the civil and public service will be more difficult to achieve, since the Government will need to hire 2,000 more staff to fulfil commitments announced yesterday.
Questioned about the jobs embargo, Mr Cowen insisted that it remained in place and that he would expect Ministers to find savings elsewhere. "It has not been abandoned," he said.
Extra health spending is a central focus of the package.Two hundred thousand people will be able to visit GPs free under a new type of medical card, although the Minister for Health, Ms Harney, has not yet agreed fees with the Irish Medical Organisation.
The new cards will not cover prescription charges, although they will ensure that holders avoid bills for hospital tests once they are referred there by their doctors.
Visiting accident and emergency (A&E) units without a GP's note will in future cost €55, while higher fees for using private hospital beds in public hospitals will be imposed from next year.
Meanwhile, 30,000 more people will be given the full medical card. Acute medical units, costing €70 million, will be used to keep patients suffering from heart complaints and other illnesses out of A&Es. An extra €290 million will be spent on disability services, thus providing 760 extra places for people with intellectual disabilities, including 270 residential places.
While education received a significant overall increase of 8 per cent , the country's universities and institutes of technology complained about their 6 per cent budget increase and warned of cutbacks next year.
Higher education spending will provide for the recruitment of additional special needs assistants in classrooms and extra help for school drop-outs.
Meanwhile, the Department of the Environment and Local Government has received a 6 per cent budget increase and has been given €1.13 billion to build 13,000 social and affordable homes next year.
The Minister said that the decision not to honour a pledge to meet the United Nations overseas development aid budget targets by 2007 was justifiable.
The overseas development aid budget will rise to €535 million next year and reach 0.5 per cent of Gross National Product by 2007, rather than the 0.7 per cent promised by the Taoiseach in a UN speech.
Following the ending of prison officer overtime by the Minister for Justice, Mr McDowell, the Prison Services pay bill will rise by 18 per cent next year to €260 million.
However, this still yields savings for the State since it covers benchmarking and Sustaining Progress entitlements. In 2003 prison officers earned €59 million in overtime.
The exchequer will be €700 million in deficit by the end of the year, Mr Cowen expected, instead of the €2.3 billion predicted on last year.