THE GOVERNMENT is refusing to rule out cuts of more than €4 billion in the budget in December if it is to reduce its deficit target by 2014.
Minister for Finance Brian Lenihan said in early September that overall savings in Government expenditure in 2011 would be more than the €3 billion projected in the Stability Programme update last December.
Yesterday, however, the Department of Finance said the extent of that adjustment would depend on the latest economic figures and their projections as to what percentage of national income the deficit would reach.
Officials said although economic activity measures have been encouraging, the impact of deflation has been higher than expected. They would not draw a line on the upper limit of the cuts and would not specifically rule out the possibility of cuts of more than €4 billion, or even of €4.5 billion, in the budget.
Exchequer figures for the end of September, which are due to be released today, are expected to show the budget deficit is worse than previously forecast. They will underline the need for deeper cuts.
The prospect of larger budgetary cuts was reinforced by comments by Minister for Community Affairs Pat Carey last night.
Mr Carey said there was no "point in trying to sugar the pill" and accepted the Government would have to examine every area of expenditure and income in its efforts to reduce the deficit.
He said the four-year budgetary plan, due for publication next month, would be informed by recommendations of the Commission for Taxation and the McCarthy report - as well as the OECD, the European Commission, the International Monetary Fund and the European Central Bank.
Speaking on RTÉ's The Week in Politics, Mr Carey said technology could be in place for the comprehensive metering of water within 18 months, thus paving the way for water charges within four years.
On a possible property tax, he said there are "some discussions around site values that [ have] got to be explored".
However, two senior Green Party members - Trevor Sargent and Dan Boyle - insisted that charges could not be introduced without each home being metered.
"Water charges will not happen this year. It does not make any sense," Mr Sargent insisted. "If you do not have meters, it works against the principle of saving water."
A Government source said it was almost certain that water charges would be in place by the end of the four-year plan.
Mr Boyle, his party's finance spokesman, also said cuts above €3 billion would be required for the next four years. Last December's stability programme envisaged cuts of €3 billion for 2011 and 2012, €2.5 billion for 2013 and €2 billion for 2014.
Separately, The Irish Times understands plans are under way for a radical voluntary redundancy programme in the HSE, involving several thousand managerial and and administrative personnel.
Outline discussions on the proposal were held between Minister for Health Mary Harney and senior HSE executives at a meeting last Thursday which dealt with the organisation's proposals for reform under the Croke Park deal. A voluntary redundancy programme would not be in breach of the agreement, which rules out only compulsory lay-offs.
Ms Harney said on Saturday that deeper cuts above the €600 million originally forecast in the health sector could be on the cards, with patient services being adversely affected, unless the Croke Park reforms were delivered.
Both Fine Gael and Labour yesterday described as posturing comments by Taoiseach Brian Cowen that he would welcome proposals from "all political parties for the four-year austerity plan for the economy".
Mr Cowen said he would arrange for a designated official from the Department of Finance to be available to the Opposition to facilitate their ideas and proposals.
Fine Gael health spokesman Dr James O'Reilly said the electorate had not given any party in Dáil Éireann a mandate for such a plan.
Labour deputy leader Joan Burton said Labour wanted briefings only on a pre-election basis, as happened in Britain this year, and not in the context of a four-year plan. "We do not believe that the Government has the mandate or the authority to decide on the budget for four years."