The transfer of 10,000 civil servants out of Dublin, the key element of Budget 2004, will be completed by 2007, the Minister for Finance, Mr McCreevy, said. Mark Hennessy, Political Correspondent, reports.
The decentralisation programme, the biggest in the history of the State, overshadowed other elements of the Budget, including the Minister's decision not to increase tax bands.
The tax package was aimed at lower earners, while social welfare increases exceeded the rate of inflation. There were across-the-board increases of €10 a week in all social welfare payments and an increase in child benefit of €6 a month for first and second children and €8 a month for third and subsequent children.
However, the increases were criticised by a number of campaigning organisations, with anti-poverty groups saying the Budget had ignored child poverty.
With the local elections six months away, the Minister gave €30 million to the schools' building programme and the same amount to local authorities.
Committing the Government to the 2007 decentralisation timetable, Mr McCreevy said last night: "It can be done, and it will be done." The entire eight Departments designated, and the Office of Public Works, will move out of Dublin, although staff will transfer voluntarily. "I believe that over time decentralisation will lead to a radical change of culture. No longer will policy be made entirely in Dublin on the basis of a Dublin mindset," he told the Dáil.
He rejected charges that the selection of the 53 towns had ignored the Government's own National Spatial Strategy.
"There is a logic to this," he said.
Just €20 million has been put aside next year to fund transfer costs. Mr McCreevy has insisted the project will be largely self-financing. Developers could be offered "swaps" by the Office of Public Works if they provide offices in provincial towns, in return for Dublin premises.
The Minister has ruled out demands already voiced by trade union leaders for relocation expenses for their members.
"No, there won't be," he said. Large numbers of civil servants will jump at the chance of moving "rather than traipsing into and out of Dublin every day of the week".
The clustering of related Government offices in different areas would ensure that promotional opportunities still exist for civil servants, unlike previous decentralisation schemes. Fine Gael TD Mr Richard Bruton described the decentralisation plan as a smokescreen to cover broken promises.
Defending his decision not to increase tax bands, the Minister said he had made it clear last year that the era of major tax reform is over for now. His decision means that 33.4 per cent of all taxpayers will pay the top rate of 42 per cent next year - the highest percentage for nearly 20 years.
The employee tax credit has been increased by €240 to €1,040, although no changes have been made to the largest element of any individual's total tax allowance, the personal tax credit. Mr McCreevy rejected the temptation to abolish the PRSI ceiling, although the income ceiling for the charge rises from €40,420 to €42,160.
Emphasising that efforts to control inflation take precedence, the Minister raised cigarette prices by 25c a packet of 20, rather than the expected 50c, and petrol by 5c a litre.
Companies will be able to qualify for a 20 per cent corporation tax credit up to 2008 in return for research and development investment.
Despite his previously stated opposition, Mr McCreevy has bowed to demands to continue film tax relief until December 2008 at a cost of €25 million a year.
Just under a quarter, 24.2 per cent, of all State spending next year will go on health, 28.7 per cent is earmarked for social welfare and 15.4 per cent for education.
The Minister announced that State employees hired after April 2004, including teachers and nurses, will retire at 65. Acknowledging that the changes were being introduced without union agreement, he said talks dating back to 1997 had failed to reach a conclusion. The minimum pension age for gardaí and prison officers recruited after April 2004 will be 55, while soldiers will not qualify for pension until they reach 50.
The changes will save the Exchequer €300-400 million a year in current monetary values in 30-40 years' time, the Department said.
Labour TD Ms Joan Burton said the Budget was "silent on healthcare, silent on education, silent on crime, silent on medical card holders, silent on housing".
Key changes
Decentralisation: 10,300 public sector staff will move out of Dublin to 53 centres in 25 counties.
Welfare: €10 a week increase in most basic schemes, including old age pension, with child benefit up €6 a month on first and second child.
Income Tax: Employee tax credit raised €240 to €1,040 a year while standard rate band stays unchanged.
Cigarettes: Excise duty on cigarettes rises by 25 cents a packet of 20 from midnight last night.
Fuel: Five cents a litre added to excise duty on both petrol and diesel from midnight last night.
Film Relief: Intense lobbying wins three-year reprieve with investment ceiling raised to €15 million.
Capital spending: Investment on public programmes switches to five-year €33.6 billion rolling programme.
Research: New tax credit on R&D allows 20 per cent of such spending to be offset against corporation tax.
Tax Incentives: Business Expansion Scheme extended for three years with most property scheme incentives remaining open until end-July 2006.