Unions warn McCreevy to leave PSRI unchanged

The Minister for Finance, Mr McCreevy, has been warned by  unions he must not tamper with the PSRI system when he unveils Budget 2004 tomorrow. On the eve of his seventh Budget, employers have told the Minister competitiveness must be a priority.

ICTU General Secretary Mr David Begg said: "The worrying thing is that he will raise the ceiling at one level and cut back on benefits on the other side of it.

"We have a commitment in Sustaining Progress to the development of a fully-inclusive social insurance model and we think frankly that he should leave it alone until we get through that work."

Director of the employers' group IBEC, Mr Turlough O'Sullivan, said this evening that increasing Ireland's competitiveness is a "key objective" and that inflation must be reduced to the European average. If Mr McCreevy increases taxes on businesses or individuals he will damage competitiveness and then "we're in real trouble", Mr O'Sullivan said.

Yesterday, Mr McCreevy was warned not to introduce new "stealth taxes" in the Budget after a report said Ireland was the joint most expensive country in the euro area for consumer goods and services.

The National Competitiveness Council (NCC) also said Ireland was among the most expensive for utilities such as waste disposal and electricity.

In its annual report, Competitiveness Challenge, the council advised Mr McCreevy, not to impose further tax increases on the old reliables of alcohol and tobacco or more stealthily on public services.

Only by doing this can Ireland's inflation rate come into line with the euro-area target of 2 per cent, the council said.

The annual competitiveness report benchmarks Ireland's competitiveness against 15 other advanced countries. The 2003 report ranked Ireland as the joint most expensive country in the euro area for consumer goods and services, along with Finland.

The Minister will deliver his Budget speech in the Dail at 3.45 tomorrow afternoon. This morning it was revealed that a major five-year programme of investment in Irish schools, roads and infrastructure is expected to be included in the Budget.

While cigarettes, alcohol and petrol may face small tax rises, Mr McCreevy is expected to use the increase in revenue to fund long-term spending priorities.

Five-year programmes are understood to have been agreed with several Government departments, with €1 billion expected to be spent on upgrading primary schools in that period.

Spending on roads will rise to €7 billion over the next five years when funds from public/private partnerships are included.  Substantial investment is also expected to be outlined in other key areas including the environment.