There will be a rise of only 2 per cent in total Government expenditure next year, the Minister for Finance, Mr McCreevy, said today as revealed his Budget estimates.
The rise is below expectations and below the current rate of inflation. It compares to a targeted increase this year of 14.3 per cent, with fears that the actual rise could be close to 20 per cent.
In announcing a total, current and capital, gross allocation of €36.7 billion for next year, Mr McCreevy noted this was nearly double the amount spent in 1997.
Mr McCreevy's figures do not account for benchmarking and social welfare rate increases which will be revealed on Budget Day in December.
"While we can still afford to invest in our public services we also have to make difficult decisions about programmes of a lower priority", Mr McCreevy told a press conference in Dublin.
Sixty-five per cent of available resources will be devoted to Health, Social & Family Affairs and Education. Health will get €8.9 billion, up 6 per cent on 2002; Social & Family Affairs has been allocated €9.7 billion, up 3 per cent on 2002; and Education receives €5.6 billion, up 3 per cent on 2002.
The Department of Transport has been allocated a spend of €1.818 billion for 2004 up two per cent on this year. This figure includes a total of €668 million for public transport, an increase of €2.9 million or one third of a percentage point compared to this year.
Mr McCreevy acknowledged there would be cutbacks in some services next year but said this was inevitable if the "Government wanted to put resources into key priority areas while at the same time achieving a sustainable match between revenue and spending".
He said it would be up to individual ministers to decide how money was allocated within each department.
One of the casualties of the Budget Estimates is the first-time house-buyers' grant.
It was earlier confirmed there will be no extension of medical card eligibility next year, despite Fianna Fáil's manifesto pledge to give medical cards to 200,000 extra people in the lifetime of the Government.
The replacing of old, out-of-date schools will also be put on hold and road and rail projects will be deferred.