The Cabinet will today rule out demands by Fianna Fáil backbenchers for extra money for community employment schemes in advance of tomorrow's Budget.
This is despite the fact that Minister for Finance Mr McCreevy's situation has been eased by an upsurge in capital taxes. In the Estimates, the Government agreed to spend €351 million next year to keep 25,000 people on community employment schemes - the same as this year. The refusal of the Minister to concede extra resources will raise difficulties for the Minister of State for the Department of Enterprise, Trade and Employment, Mr Frank Fahey.
The controversy will be the subject tonight of a Dáil debate sparked by the Labour Party, which hopes to force Fianna Fáil backbenchers into opposing the Government. However, the Government's own amendment, ruling out extra money but not change, will be put to the Cabinet by the Taoiseach, Mr Ahern, at its meeting this morning.
Last minute discussion about Mr McCreevy's Budget centres on speculation that he will impose fundamental reform of Pay Related Social Insurance, which he has long promised. It is believed workers may have to pay PRSI on all of their salary, not just on the first €40,000, although the rate would be cut by 1.5 per cent, according to some sources.
The Minister, who was urged yesterday by the National Competitiveness Council not to increase VAT, excise duties and State charges, may adopt a conservative approach.
Comparing Ireland with 15 other EU states, the council said the Republic is now the second most expensive, alongside Finland, for consumer goods and services. Irish insurance premiums are the fourth highest, while landfill and industrial electricity charges are the third highest.
Fine Gael TD Mr Phil Hogan said the Minister must resist giving "into the temptation" of raising charges and fees on foot of the council's findings.
"This is a clear warning about budgetary policy. Perhaps Minister McCreevy and the Government will heed the warnings about loss of competitiveness on this occasion by introducing measures that will not add higher costs to employment and consumption generally," he said.
The Government cannot be sure that an international economic recovery will benefit the Republic. There is evidence that the global economic upturn is already leaving Ireland behind on our high public utility costs, lack of infrastructure investment, and high insurance costs," said Mr Hogan. Meanwhile, Labour TD Ms Joan Burton said the NCC report was "a shocking indictment" of Mr McCreevy's record as one of the country's longest-serving Ministers for Finance.
"His decisions to impose a series of stealth taxes and systematically increase the cost of many public services has fuelled the rate of inflation," she said.
