McCreevy rejects blame for rising prices

The Minister for Finance, Mr McCreevy, has hit back at claims that the Government is responsible for making Ireland the most …

The Minister for Finance, Mr McCreevy, has hit back at claims that the Government is responsible for making Ireland the most expensive state in Europe.

Speaking at a pensions conference in Dublin yesterday, the Minister said a large part of the inflation rate could be blamed on uncompetitive practices in businesses and the professions.

A report from State industrial policy agency Forfás has said Ireland is likely to become the most expensive country in the euro zone this year.

Opposition parties blame Government-imposed increases in service charges and VAT, while the National Competitiveness Council (NCC) has called on the Government to avoid further increases in indirect taxes and charges this year and next.

READ MORE

However, Mr McCreevy criticised drinks companies and publicans for taking advantage of increases in excise duties to bring in additional price hikes.

He said inflation was one of the consequences of Ireland's economic success and referred to an academic study which suggested that 60 per cent of consumers were not aware of the prices of goods they were buying.

On the issue of pensions, Mr McCreevy said decisions relating to public service pensions had the potential to determine the future of budgetary policy. Any progress on implementing the recommendations of the Commission on Public Service Pensions, which produced its final report in 2001, will be made "within the context of the budgetary constraints we now face", he said.

Mr McCreevy said the challenge for the State, as the largest employer, was to ensure budgetary sustainability in the long-run, while still providing an acceptable income in retirement.

At the Irish Congress of Trade Unions (ICTU) conference "Pensions: Everybody's Business", Mr McCreevy stressed there was "no room for complacency" with regard to pension planning.

Public service and social welfare pensions now cost the Exchequer about 5 per cent of GNP. Maintaining the present level of provision is expected to cost 8 per cent of GNP in 2026 and 12.5 per cent of GNP in 2056.

The Minister said Ireland would only be able to avoid the difficulties being experienced by countries like France and Austria, where pension cuts have given rise to major protests, by adopting the right policies now.

These include the State's commitment to pay 1 per cent of GNP to the National Pensions Reserve Fund (NPRF) each year, he said.

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics