Delegates contradict party policy by applauding Begg's view on pay deal

Benchmarking debate: Fine Gael delegates indicated unease with the party's opposition to the benchmarking pay deal by applauding the head of the ICTU, Mr David Begg, when he attacked the deal's critics.

A guest speaker at the party's one-day conference, Mr Begg also said he favoured EU tax harmonisation because eastern European states would inevitably seek to undercut Ireland's low 12.5 per cent corporate tax rate.

Mr Begg said the rate should be increased towards 20 per cent but said that companies should be given tax credits to carry out research and development work.

Speaking to journalists, Mr Begg said the Government should respond to the unexpected surge in capital gains tax revenue by reversing social welfare cuts mooted in the Budget Estimates.

"The first thing that comes to mind is the area of cutbacks to the area of social welfare. That's an opportunity to review that decision." He said the amount of hardship involved was "probably disproportionate" to any saving that would be made by the Government. Mr Begg told the conference that there was no sense of proportion in the debate on benchmarking. Defending the deal, he said half the €305 million expenditure on the award next year would be returned to the Exchequer in the form of taxes.

Noting a recent Irish Management Institute survey which showed that the average senior manager received a pay increase of some €36,000 this year, he said the salary of a typical nurse at Galway hospital would rise to €35,000 with the benchmarking pay rise of €25 per week.

"It is a commentary on our society that an increase in excess of what that nurse gets is not the subject of any comment," he said. Delegates greeted the remarks with applause.

The chief economist of the IBEC business lobby, Mr David Croughan, rejected the suggestion to cut the corporate tax rate. "We would be extremely concerned if there was any hint of an increase in corporate tax. It would take an extremely brave person to risk tampering with that." He said IBEC was against a carbon tax. It favoured tax credits for research and development and believed the Government should encourage entrepreneurs with business expansion schemes.

A Galway delegate attacked IBEC for not including childcare in its pre-Budget submission, but Mr Croughan said the body had a long track record of lobbying strongly for better childcare facilities for workers.

Mr Begg and Mr Croughan were among a number of speakers at the 2½-hour morning session on the Budget which was chaired by the MEP and former TD, Ms Avril Doyle.

Titled "Competing Voices, Tough Choices", the wide-ranging debate also heard from Mr John Mark McCafferty of the St Vincent de Paul; Mr John Doolan, the CEO of the Disability Federation of Ireland; the chief executive of ISME, Mr Mark Fielding, and the CEO of Concern, Mr Tom Arnold.

Mr McCafferty said calls for help to the Society of St Vincent de Paul were increasing rapidly.