The Government has averted a major pay battle this summer by promising a review of the negotiating system for the public service in the next national agreement. It has also promised to curb inflation and target low to middle earners with tax cuts in the forthcoming Budget.
The Government has repeated it will use this year's Exchequer surplus, up to £1 billion, to pay off part of the national debt. Savings in national debt-handling would go towards social inclusion.
Intensive consultations took place with the ICTU and IBEC before yesterday's general review of Partnership 2000 in Dublin Castle, to prepare the way for a "renewal" of social partnership instead of the anticipated showdown. The Taoiseach, Mr Ahern, said there had been "a very good exchange".
He said he had made it clear that public service claims under the Programme for Competitiveness and Work could not be reopened, but he had agreed "to look at parameters for the next national agreement".
Mr Ahern promised to address trade union concerns that excess profit-taking in some sectors was fuelling inflation. This includes a proposal made by the ICTU general secretary, Mr Peter Cassells, yesterday that the Government should establish a freephone line which the public could use to report profiteers to the Office of the Director of Consumer Affairs. The Taoiseach, the Tanaiste, Ms Harney, and the Minister for Finance, Mr McCreevy, promised the Budget would focus on low- and middle-income earners. Mr Ahern and Ms Harney also said the national minimum wage would be implemented on schedule. The director-general of IBEC, Mr John Dunne, and the IFA president, Mr Tom Parlon, welcomed the outcome of yesterday's meeting.
Mr McCreevy insisted yesterday that the Exchequer surplus this year (estimated at £1 billion) would be used to pay off part of the national debt rather than on public sector pay rises. Speaking after the publication of the National Treasury Management Agency's annual report, Mr McCreevy insisted the money could not be used for any other purpose, in line with the commitment given to the EU when the pound was revalued earlier this year.
But he said millions of pounds in savings in national debt repayments expected to arise as a result of monetary union would be directed towards social inclusion measures and taxation cuts as well as cutting debt levels.
The NTMA forecast yesterday that those savings would amount to £80 million next year, rising to £250 million by 2002 and £500 million by 2010.