The Minister for Finance has defended yesterday's belt-tightening Book of Estimates and warned the economic outlook is poor for years to come.
Mr Charlie McCreevy also stood by his continued investment of public money in the national pensions scheme and the abolition of the first-time buyers' grant. He said there will be no changes in the SSIA scheme.
Speaking this morning, Mr McCreevy said the Government has increased public spending by nearly double in that past five years. Most of that money has gone on areas where it was needed like health, education, social welfare, increases in pensions and many other areas, he said.
"When times were bad years ago, we said if we got economic success, we would do all of these things, and that's where the money has gone. Now, when the economic flow to the Exchequer and the resources that we are going to get are not going to be the same as in recent years, we have to get our spending in line with our income.
"It's not just going to be for this year, it's going to be for future years also," Mr McCreevy said.
Although a total of €36.5 billion will be spent in capital and current spending next year, government departments will have to come to terms with the fact that they will have to curb their spending, he said.
The Special Savings and Investment Account (SSIA) scheme will not be changed in any way next year. Mr McCreevy said income tax would be down by €1.3 billion this year, of which €600 million was in corporation tax. Only a "small amount" of the decrease in revenue was down to the SSIAs.
Out of a total workforce of 1.8 million people, 1.2 million are availing of the scheme, he said. "The idea behind the special savings scheme was a good idea back when it was announced, and it's still a good idea."
The SSIAs are estimated to cost the Exchequer €500 million for a full year, but this could rise to around €1 billion per annum if all the 1.2 million SSIA holders paid the full monthly contribution of €254.
He also defended his decision to invest in the pension scheme. "Putting the money into the national pension scheme is a long term investment in order to ensure that in 20 years time when the Irish demographic situation is more in tune with rest of Europe, that we will be able to provide for them," he said.
The first-time buyers' grant was being abolished because "it is an inefficient use of resources" and it "is not up for negotiation". He said it was brought in 25 years ago to prop up the ailing building industry and was now unnecessary.
On the health service, he said the Department of Health has a budget of over €9 billion, over €6 billion more than when he became finance minister in 1997. "If money was going to solve the health service, we would have solved it a long time ago," Mr McCreevy insisted. But he conceded "there are structural changes needed within the health service to ensure effective delivery".
