THE GOVERNMENT will have to impose extra spending cuts on top of those announced in the Budget two months ago to cope with Ireland's falling tax revenues, Taoiseach Brian Cowen made clear last night.
"The scale of the task in front of us is underlined by the fact that we will have to take further corrective action in addition to the decisions already taken in the Budget," he told Fianna Fáil's Cairde Fáil dinner, the party's biggest social event of the year.
Ireland's tax revenues this year are down by nearly €8 billion: "This means we are budgeting for services in 2009 on the basis of a tax take equivalent to 2005. That is not a sustainable position into the future."
"Less available money for public spending also reinforces the imperative for pragmatic reforms. In the period ahead, we will act swiftly and decisively to reduce the gap between spending and income. We are already comprehensively reviewing all public expenditure to this end," said Mr Cowen.
Speaking after his return from meetings in Paris and Brussels, Mr Cowen urged the party's grassroots not to despair: "At a critical time like this, it is vital that we are not overcome by the immediate and many problems we face. We must regard them as challenges to be conquered rather than problems to fear. Ireland has made huge progress. We must now resolve to work together as a community to put things right, to get back on our feet and to return the country to a path of economic growth when the international situation improves again."
Fianna Fáil, he said, would "act decisively, with our partners in Government, in the long-term interests of the Irish people" to deal with the economic crisis "no matter how difficult the decisions".
"Working in co-operation with the social partners, we will do what is right to steer Ireland through these turbulent waters. We will not duck the hard issues. We will not court popularity for short-term gain. But we will offer real and sustainable answers to the enormous challenges we face.
"An unprecedented number of economic problems have come to pass in a short space of time. The most important thing is to emphasise the confidence we should have in ourselves and our ability to manage our way through the difficult period ahead."
A "plan for economic renewal" he said, will be drawn up in coming weeks with the social partners "to reposition the economy and set out a path to economic recovery", he went on.
Pointing to the role played by the European Central Bank during the current crisis, the Taoiseach said Ireland would have "had considerable difficulties managing this crisis had we to do so alone. I can only ask people to imagine the traumatic effect the collapse of any one of our own banks would have had on the real economy. Depending on the size of such a problem, the progress of a generation could have been wiped out in a very short time period. So when people tell me Europe does not matter, I say they are dangerously misguided."