Public sector pay rises to cost an extra £163m

Pay increases for teachers and civil servants will cost the Exchequer an additional £163 million (€207 million) under the terms of the Programme for Prosperity and Fairness.

Announcing the 2000 revised estimates yesterday, the Minister for Finance, Mr McCreevy, said the most significant increase in public spending since the Budget was the additional costs of public service pay under the new programme.

The money will go towards paying the 3 per cent additional agreed rise for so-called early settlers under the agreement. These are mainly teachers and civil servants who felt they had fallen behind groups such as nurses and the Garda during the previous agreement, Partnership 2000.

The 3 per cent payment is in addition to the 5.5 per cent due to all public servants on October 1st this year. However, the amount is still under dispute.

Primary teachers have voted narrowly to accept the agreement but both large secondary unions, ASTI and the TUI voted to reject it. Nevertheless, their members are likely to be tied into this amount.

The Minister warned yesterday that additional increases will not be contemplated. "Controlling expenditure within prudent limits is a crucial element in the Government's budgetary and economic strategy. Commitments in the new programme and the National Development Plan will raise spending as high as is prudent. Anyone seeking to add to these commitments will have no support from me."

He added that the Programme is dependant on achieving average annual GNP growth of about 5.6 per cent a year over the period of the agreement. The Minister also restated his commitment to maintaining significant budgetary surpluses in each year.

According to Mr McCreevy, average annual net expenditure is now running at 4.46 per cent from its 1997 base. "While ideally current expenditure would be within a 4 per cent limit, I am satisfied that the benefits which will flow from the new Programme more than justify the Government's acceptance of a growth rate for net current expenditure which is above 4 per cent."

However, this measure includes the central fund or debt interest payments which have been falling and is an annualised average. On an annual basis spending has been running at a far higher rate.

The Minister also increased capital expenditure for 2000. Capital spending is now set to rise at 34 per cent over 1999 compared with an estimate of 26 per cent at the time of the Budget.

The extra money is being spent on a variety of projects including a lease purchase of the Department of Justice, Equality and Law Reform building on St Stephen's Green for £29 million, with the same amount going on multimedia developments and £8 million on Sports Campus Ireland. The Battle of the Boyne commemoration site will cost £8 million and the agricultural and eventing exhibition centre at Punchestown £5.5 million.