Businesses urge public spending curbs

THREE major business groupings yesterday called on the Government to curb public spending.

Presenting their pre Budget submissions, the Irish Business and Employers Confederation (IBEC), the Irish Small and Medium Enterprises Association (ISME) and the Irish Bankers' Federation (IBF) all called on the Government to hold or rein back public spending.

The IBF and IBEC both called for better control on Government borrowing. The IBF said the Government should aim for a zero borrowing requirement in 1997. It emphasised that this would prepare the economy for the expected fall in EU transfers to Ireland in coming years.

IBEC called on the Government to contain the overrun in current spending. "The current budget must be kept in surplus in 1997 and beyond," its submission said. It also argued for the Exchequer Borrowing Requirement and the general Government deficit to be kept significantly below the limits set by Maastricht.

ISME pointed out that gross public spending had exceeded budget targets by more than £500 million during the last six budgets.

The small firms' pressure group said £500 million would have funded a lot of tax cuts and called on the Government not to increase public spending in the next Budget.

"Annual interest payments by governments changed little through the period," ISME said. "Excluding such interest payments, current public spending rose almost four times as fast as retail inflation in the five years ending 1995," it added.

IBEC and the IBF also called for general tax cuts. According to the IBF, funds available for tax cuts should be directed at employee PRSI and increases in personal allowances. This is the best chance of a moderate, non inflationary successor to the PCW being negotiated, its submission states.

IBEC also proposes the lowering of employers' PRSI, which it says will help maintain employment and generate new jobs. It also argues for integrating employees' PRSI into general taxation.

Other IBEC proposals include increasing PAYE and PRSI allowances, widening the standard rate tax band and reducing the rates. It is also lobbying for the introduction of an employers' PRSI allowance, with particular attention paid to the sectors most exposed to sterling.

IBEC's full submission later in the autumn will outline its proposals on corporation and capital gains tax in more detail.

The bankers' federation also called for spending in Government Departments to be more closely monitored. According to the IBF, demographic changes are reducing the cost of some services. "For example, the fall in the number of children is reducing the cost of child benefits, other social welfare payments and the cost of education," it states.

"Budgets for Departments which are beneficiaries of this dividend should be adjusted and proposals for the disposal or allocation of these resources should receive the same Cabinet scrutiny as all other proposals for increased expenditure."

The IBF repeats that there should be a level playing field for savings products and that An Post enjoys "unfair competitive advantages".