IBEC's pre-budget submission have been branded as "self-serving and economically unsound" by the Labour Party's spokesman on Finance, Mr Brendan Howlin.
In its pre-Budget submission published today, IBEC said the increase in current public spending would be a serious threat to economic stability unless corrective action was taken.
The employers organisation urged the Government to peg spending to the rate of economic growth as the current rate of spending was unsustainable.
It called on Mr McCreevy to resist the temptation to raise taxes to balance the books and instead look for a greater return from spending.
Responding, Mr Howlin said IBEC was claiming that expenditure on infrastructure should be fully financed by the current budget surplus. "Since IBEC are opposed to tax increases, this means cutting current expenditure."
"What IBEC are saying is that vital public services should be cut back to pay for infrastructure," Mr Howlin continued. "That is like trying to pay for your house without taking out a mortgage. It makes no sense. The logical course is for the Government to borrow money to invest in capital projects that will yield a return over many decades," he said.
IBEC's submission conceded there was room for spending rises in priority areas such as health but said these must be accommodated under a strict overall spending envelope. "Simply throwing more money at public service problem areas is not the answer," it said.
IBEC recommended that income tax bands and tax credits should be increased by the expected rate of inflation. Specifically there should be no increase in employer's or employee's PRSI, it advised.
