PRESS CONFERENCE:"DIFFICULT DECISIONS" agreed by the Cabinet will yield savings totalling almost €1.5 billion by the end of next year, the Taoiseach has told a press conference at Government Buildings.
Brian Cowen and Minister for Finance Brian Lenihan announced yesterday that the Government would implement a 3 per cent cut in the public payroll bill by the end of 2009 as part of a package of cutbacks aimed at saving €440 million this year and a further €1 billion next year.
Mr Cowen conceded the corrective measures were necessary following the publication of last week's exchequer returns, which raised the prospect of a €3 billion shortfall in revenue this year. However, he maintained that he would not "abdicate" his responsibility to take tough decisions.
"There is no disguising the fact that these are difficult circumstances. They require difficult decisions now and for 2009," he said.
"While the current circumstances are challenging, I want to be absolutely clear that I am personally determined to take decisive action that is in the best interests of the people of the nation."
The two departments with the largest salary budgets, health and education, are excluded from the mandatory 3 per cent target pending local negotiations. Mr Cowen said this was to protect frontline services in both departments while still striving for payroll cuts.
Mr Lenihan said his department and the Department of Health would also draw up proposals for a redundancy scheme in the HSE "as soon as possible".
"I've outlined a number of measures there in relation to a targeted redundancy scheme in the HSE and also in relation to a strict control in the numbers engaged in the public service, which will secure that 3 per cent reduction," he said.
The measures also included the anticipated announcement that Ministers will forgo the pay increases recommended by a review body last year. Mr Lenihan said none of the 2,000 senior office holders in the State - including judges, higher civil servants and other senior State employees - would now receive the recommended awards.
It has also been decided to stall any further acquisitions for the controversial decentralisation programme. When asked if decentralisation was being abandoned, Mr Cowen said there was "a pause" in the programme at the moment and it was prudent not to proceed with the acquisition of any further sites.
While there will be a reduction of €45 million in the funds provided for Overseas Development Assistance (ODA) this year, Mr Lenihan argued that it did not amount to a reduction in the Government commitment. Because gross national product (GNP) will be lower this year than anticipated, it means that the commitment to provide 0.54 per cent of GNP in 2008 will be "honoured", even though it is a lesser amount.
A number of State agencies would be abolished or merged under the cuts, Mr Lenihan said. While this had been signalled, the crucial decisions would not be taken until the autumn.
"The review will examine whether they can share services, whether it would be appropriate to absorb some of their functions back into their parent departments or whether some agencies should be amalgamated or abolished," he said.
Mr Lenihan also announced savings from a review of the cost operation of current tribunals, which he insisted would finish their work this year. However, he did not specify how much would be saved or how the savings would be achieved.
He dismissed speculation that major capital programmes such as Metro North and the Western Rail Corridor would fall under the axe.
Other savings will come from a 50 per cent reduction in expenditure for consultancies, advertising and PR. Minister at the Office of Public Works Martin Mansergh will also head up an initiative to save the Government €50 million when procuring contracts.
