The Government will have to get better value for money across all areas of the public system, especially the Department of Health, the Minister for Finance, Mr McCreevy, has declared.
Producing a tough Book of Estimates, Mr McCreevy nevertheless warned that the Exchequer would be approximately €3 billion in the red despite the restrictions imposed yesterday.
"With the increases in spending in recent years - 40 per cent in the last two years alone - all departments are now operating from very high spending bases," he told a press conference.
"It is therefore appropriate to focus more attention now on the value we are getting in terms of the quality and quantity of public services following this considerable injection of public money."
Putting it up to the Minister for Health, Mr Martin, Mr McCreevy said the Exchequer was spending €9 billion on health.
"The Department of Health and its agencies are mandated to manage within their allocation. The cost of the general medical scheme has nearly doubled over the last two years. We can't go on increasing health budgets in this way. Every other department has had to take hits in order to prioritise health.
"We have to get effective management and get value for money. I don't believe that people are twice as sick as they were in 1997. We can't keep going like this. The Minister for Health and his officials are obliged to live within their allocation."
Rejecting suggestions that the voters were misled during the election campaign, Mr McCreevy said the Government would be faced with "tough choices", but "secretaries generals and ministers are paid to take tough choices.
"It is a bit like an election. You can only give one person your number one preference - even if you tell every candidate that you gave it to them. It is about making choices and hard choices."
The Government's much-touted health strategy, scheduled to cost €10 billion over 10 years, has effectively been put to one side for several years.
Keen to avoid a question on the issue, Mr McCreevy said: "The Minister for Health will have to deal with that. We all committed ourselves to the election manifesto also.
"There are many other areas that can't be addressed at the present time and they will not be able to be addressed next year and the year after that, but we intend to be in government for five years."
Despite continuing falls in tax revenues, the Minister for Finance insisted the Exchequer would be €750 million in deficit by year's end, a view disputed by some economists.
Following the mid-year "adjustment", he said spending would stay within the 14.3 per cent Budget day target laid down a year ago, although these estimates were dependent upon figures from line departments.
In stark contrast to earlier years, Mr McCreevy said both health and infrastructural spending were now considerably above the European Union average, having lagged behind for decades.
"We have had the highest rate of increase in public spending of all EU member-states. Our growth rates allowed us to spend more on public services, to implement significant tax reductions and to reduce our national debt.
"Clearly, however, as economic growth had moderated, we must bring our spending into line with increases in tax. While we can still afford to invest in public services we also have to make difficult decisions."
Despite the current economic difficulties, Mr McCreevy said he believed the country's future remained bright "if we hold our heads and don't do anything stupid - and I don't intend to allow us to do that."
Refusing to change the Special Savings Incentive Account scheme, the Minister said it had nothing to do with the drop in expected tax revenues, which are just 2.3 per cent above last year's figures, including inflation.
Asked how voters should feel faced with the Book of Estimates, Mr McCreevy said: "I don't know how they should feel but they will not feel any worse.Ninety-five per cent of the working population is working. Thousands of people are coming back.
"We have enormous economic success, therefore we must remain competitive. This is a very open economy. If we lose that, we will no longer be attractive. Governments don't make the money. The wealth is created out there," he said.