The publication yesterday of a secret memo from the Minister for Finance, Mr McCreevy, in which he warned Cabinet colleagues shortly after the general election of the need for major cutbacks, has led to calls from the Opposition for his resignation.
In the Department of Finance memo, sent only weeks after the election, Mr McCreevy warned his Cabinet colleagues that income taxes would have to increase slowly over the next three years, along with major rises in taxes on petrol, cigarettes and alcohol.
He said "significant extra taxation" would have to be imposed if spending next year exceeded his target increase of 7.9 per cent.
Members of the Opposition last night called for the Minister's resignation for allegedly deceiving voters in the run-up to the general election on May 17th. Leading the calls, Labour's deputy leader, Mr Brendan Howlin, said: "I do not believe that the public can have any confidence in anything that Minister McCreevy says."
Fine Gael charged that the secret document proved that Fianna Fáil and the Progressive Democrats indulged in "deception on a massive scale" before the election.
The publication of elements of the memorandum in yesterday's Sunday Tribune is likely to provoke an immediate investigation.
"This is very serious. I can't ever remember a document like it being published," said a Government spokesperson.
In the memo, the Minister told the Cabinet that they would have to cut €900 million worth of existing services if he was to have €1.9 billion available to meet health, social welfare and public pay increases.
The arithmetic threatens to put the Government into conflict with the public service trades unions, since the €1.9 billion will not cover all of the benchmarking pay increases. However, the figures are dependent upon tax revenues rising by 8.75 per cent next year, even though tax revenues this year are far behind expectations. New Exchequer figures due in 10 days are set to hold further bad news.
Tax bands, the Minister warned, could only be widened if they were funded by increases in excise duties on alcohol, cigarettes and petrol. The overall tax burden will rise by 0.33 per cent of Gross National Product every year up to 2005. Under the McCreevy plan, current spending could rise by 7.9 per cent next year, before falling off to 6.1 per cent in 2004 and 5.9 per cent in 2005 - far short of the 27 per cent level reached in the first five months of this year.
If spending growth next year is not reduced "well into single digits", the Government will be faced with "major and continuing deficits" the memo warned.
Everything in the paper is based on Ireland's economic growth hitting 5 per cent annually up to 2005.
"This is achievable provided that there are no major economic shocks and that the international economic pick-up and Ireland's competitiveness are sustained . . .There are substantial risks to this prospect," said the memorandum, which particularly warned that Ireland's competitiveness would be damaged if the euro, as expected, strengthened against the dollar.
Calling for Mr McCreevy's resignation last night, Mr Howlin said that every week since the election, new evidence had emerged showing that the Government had planned significant cutbacks while reassuring the country that none was planned. "A Government elected on a platform of lies and deceit is a Government without a shred of moral authority. This memo reveals an unprecedented level of deceit and duplicity on the part of this Government," he charged.
Fine Gael's finance spokesman, Mr Richard Bruton, said: "Three days before the election, the Taoiseach and the Minister for Finance gave a solemn assurance that their budget was fully on target and no cutbacks were planned, secretly or otherwise. Within three weeks of the election, these same people had a detailed menu of cutbacks and new charges for public services on the Cabinet table, demanding their immediate implementation."
