Taoiseach Bertie Ahern has ruled out using tax cuts to help secure a new social partnership agreement in the autumn.
Mr Ahern said yesterday there was no argument for cutting tax rates and he agreed with a suggestion that, with the possible exception of those on low pay, the era of tax cuts was over. The focus in future would be on developing public services such as health and education and making them "top quality", he said.
Mr Ahern used a meeting of the social partners in Dublin Castle to set out the Government's broad objectives in negotiations on a new agreement.
The meeting was called to review implementation of Sustaining Progress, but much of the focus was on the possibility of a successor programme being agreed before the end of the year.
Wage levels, he said, remained a critical issue at the heart of the partnership process and would absorb "appropriately large amounts of energy" in negotiations.
The best way to protect high incomes, he said, was by setting wage growth "at a sensible and affordable level". In the past, the Government combined cuts in personal taxation with moderate wage increases to help secure trade union support for partnership deals.
Tax cuts were not a feature of Sustaining Progress, however, so the Taoiseach's indication that they remain off the agenda is unlikely to be an obstacle in the autumn discussions.
Irish Congress of Trade Unions general secretary David Begg said any new agreement should focus on a small number of priority issues. These included health, pensions, care, the role of the State in the economy and the need to avoid a "race to the bottom" in employment standards.
Ibec director of industrial relations Brendan McGinty said the employers' body saw merit in this approach, although it might not agree with trade unions on the issues to be addressed.
There was sharp disagreement between the two, however, on a suggestion by Mr Begg that the focus on maximising economic growth might need to be reconsidered.
Mr Begg said it was worth asking whether growth at all costs, "almost as a mantra", was appropriate to current circumstances.
For the economy to continue to grow at 5 per cent per annum, 50,000 to 60,000 immigrants would be needed every year, he pointed out.
This in turn would require the provision of extra houses, hospitals and schools.
"Given our obvious failures to provide to date, the question must be asked: do the relevant authorities have a coherent plan and strategy on this issue?", he asked.
Mr McGinty said Ibec would urge caution "about that kind of rationale", as economic growth was needed to fund the kind of social development that Mr Begg was talking about.
"We need to keep the production engine of the economy running very smoothly," he said.
