The Government must not be allowed to save money for a "pre-election splurge", the main Opposition parties warned today.
Responding to the latest ESRI Quarterly Economic Commentary which forecast a significant increase in growth in the short term, both Fine Gael and Labour highlighted the need to prevent the Government from using fiscal policy "to further its own political interests".
Fine Gael said the Government must show that it has learned from the mistakes of the last general election, when it used public finances in a "reckless manner".
The party's finance spokesman, Mr Richard Bruton said: "Spending was increased at break-neck speed without any emphasis on providing value for money. The end result was that Government policy fuelled inflation.
He said: "The economy, businesses and the taxpayer had to pay the price through the imposition of stealth taxes, while the Government failed to adjust tax credits and bands in accordance with inflation as it sought to claw back the money it had squandered."
Mr Bruton said: "The country needs a successful fiscal policy which is based on stability in the tax code and value for money in public spending."
Labour's spokeswoman on finance, Ms Joan Burton said serious questions had to asked over the Minister for Finance's supervision of the public finances.
Ms Burton said: "He continues to depress spending on badly needed infrastructure while building up significant sums of money for a pre-election splurge."
She said: "The pre-2002 general election 'splurge' was bad value for money and was more about winning votes for Fianna Fail and the Progressive Democrats than addressing the country's infrastructure deficit".
"Ireland cannot afford to allow the Government to make the same mistake again", she warned.
Ms Burton said the Quarterly Economic Commentary by the ESRI "provides conclusive evidence that there is more than enough room in the budgetary arithmetic to relieve the situation of hard pressed PAYE workers, more than half of whom are paying PAYE at the top rate of 42 per cent".
"The next budget must restore equity to the PAYE sector," she said.
In yesterday's commentary the ESRI raised its gross domestic product (GDP) growth forecast for this year from 3.5 per cent to 4.6 per cent, and lifted its gross national product (GNP) forecast from 3.3 per cent to 4.3 per cent.
While warning against taking the resulting strength in public finances as a justification for large-scale tax cuts, the report said the public purse could support tax cuts worth up to €500 million next year.
It concluded the Government has scope for some "measures to help bolster take-home pay" by raising the tax bands and lifting the average industrial wage of €27,900 out of the higher 42 per cent band.
The standard rate threshold is currently €28,000, meaning that an average industrial worker earning even the smallest of overtime payments will often be pushed from the 20 per cent band into the 42 per cent band.
