Taoiseach Bertie Ahern last night ruled out a Government spending splurge in the run-up to the general election, insisting excessive expenditure now would lead us back to "the bad old days of reckless budgetary management". Miriam Donohoe, Political Staff, reports.
In a statement issued as the Cabinet gathered for a pre-Budget meeting in Dublin, Mr Ahern said unnecessarily high spending now would damage the economy's prospects tomorrow and result in high borrowing and punitive taxation.
Mr Ahern said critical judgments have to be made on what is a prudent level of spending in any one year. "The fact that next year is an election year will not sway our judgment," he added.
Mr Ahern, Minister for Finance Brian Cowen and Cabinet ministers met yesterday to discuss the substantive elements of the Budget to be published on December 6th. The special one-day meeting followed the publication of the Estimates last Thursday in which the Government unveiled plans for a 7 per cent increase in public service spending in 2007.
Additional spending measures to be announced in the Budget are expected to bring spending to about 10 per cent higher than this year, keeping it in line with Mr Cowen's pledge for responsible spending rises.
Last week's Estimates provided for €1.3 billion next year for local authority social and voluntary housing, €2.3 billion for transport investment, €1.5 billion for roads, €8 billion for education and €142 million for childcare provision. The Estimates also provided for an allocation of €14 billion on health in 2007.
The Cabinet yesterday signed off on various Budget provisions including raising the old age pension to over €200 a week for the first time, something Mr Ahern signalled at the Fianna Fáil ardfheis earlier this month. Minister were warned yesterday that it had to be "steady as she goes" between now and the general election early next summer and were told that the Government would not be introducing measures that would put them at risk of losing votes. Equally, they were told that the Government did not want to be seen to "buy votes" between now and the summer.
A possible reduction in the top rate of tax was not discussed at yesterday's meeting but will be decided between Mr Cowen, Tánaiste Michael McDowell and Mr Ahern nearer Budget Day. Mr McDowell and deputy PD leader Liz O'Donnell have signalled in recent weeks that the PDs will be pushing for a cut in the top rate as promised in the Programme for Government.
However, Mr Cowen is in favour of increasing personal tax credits and tax bands rather than tax cuts.
In a clear effort to rule out speculation that the Government may try to buy votes in next year's election, Mr Ahern said "a prudent, stability-orientated approach, which has been the cornerstone of the country's economic success, will be maintained." He said the Estimates, along with the Budget, and the National Development Plan to be launched in January, are part of a costed plan. "To build a stronger, fairer Ireland, we must first of all sustain a strong economy."
Mr Ahern added: "We must continue to invest in social supports and the physical infrastructure we need to develop communities locally and the economy nationally. This is what we are doing."
Mr Ahern said the Government plan is not just for one year "but for a generation".
"A stronger economy will ensure that over a lifetime this generation of Irish people will have the opportunities and the quality of life that are comparable to the most advanced countries in the world.
"That is why the Government will be maintaining the prudent, stability-orientated approach which has been the cornerstone of our economic success and which has enabled us to generate the resources necessary to tackle poverty and social inequalities," he said.