There is a pressing need to contain the growth of public service pay costs, the Minister for Finance, told the Dail. In a debate on the pre-Budget Estimates, Mr McCreevy also said that successive governments had failed to control pay and pension rises. The increase in the Exchequer pay and pension bill of £298 million demonstrated "in very stark terms" the necessity for controlled pay costs.

Opposition TDs accused the Minister of "manipulating" the figures, including spending for 1998 in the 1997 amounts, and of exceeding spending by £903 million when he said it would be £502 million.

Mr McCreevy, however, rejected assertions that he had "massaged the figures". He said: "Controlling public expenditure is a crucial element in our budgetary policies." He added that, based on the Estimates, "the total increase in current and capital spending in 1998 over 1997 is 3.5 per cent".

Referring to the pay costs the Minister said pensions and pay charges for the Exchequer would rise to £5,607 million, an increase of 5.5 per cent, or £298 million. This included £146 million under the Partnership 2000 agreement and £128 million to cover local bargaining cases under the Programme for Competitiveness and Work.

Detailing the Estimates, he said net current expenditure would rise by 1.8 per cent over the 1997 figure. "Budget day spending measures will increase expenditure, but I am confident that the post-Budget figure will remain below the 4 per cent limit."

The Government's programme also set a limit of 5 per cent on growth in capital spending up to 1999. "The figure reflected in Exchequer-funded capital for 1998 is 17.5 per cent," the Minister said.

One of the main reasons for the high figure, he said, was the provision of £100 million next year for the education technology investment fund.

He said the current expenditure for 1997 would be £10.385 billion, an increase of £237 million on the Budget figures for 1997 and 9 per cent higher than 1996.

Explaining the overrun, the Minister said the Government "has had to meet a number of significant costs on some important economic and social programmes". They included a higher than expected pay bill of £126 million, including £31 million for Garda and prison officer overtime and £27 million for local bargaining settlements.

Additional health spending of £59 million included £42 million for hepatitis C compensation and £17 million for drugs refund schemes. A further £22 million more than budgeted for might be needed for Army hearing loss awards, and £33 million for agriculture, he said.

Fine Gael's finance spokesman, Mr Michael Noonan, described the Estimates as an "incomplete illusion". He believed that current spending increased, on a pre-Budget basis, by £903 million to £13.912 billion. The Minister's own commitment, he said, "is a spending increase of £520 million, post-Budget for 1998".

"You have already exceeded your own current spending target by almost £400 million before a penny has been provided for social welfare increases," Mr Noonan said.

"How can we have sensible and serious debate when the Estimates you have presented are such a hall of mirrors, deliberately drawn up to confuse? You are trying to tell the people that current spending can increase by £1.2 billion for 1998 and at the same time you are being prudent and approximating the 2 per cent real increase agreed in Partnership 2000."

Mr Noonan said: "We may allow latitude in this House but £1.2 billion does not approximate to £529 million in anyone's language. This is a betrayal of the highest order."

Criticising specific measures he said the Rainbow coalition had provided £10 million last year to support a programme tackling the demand for drugs. Despite the massive increase in spending, the Government failed to increase the allocation for 1998 in one of the best initiatives dealing with drugs.

Economic growth could very well be choked by traffic problems, yet the Government has given an increase of just £1.4 million for Dublin transportation, Mr Noonan said.

Democratic Left's finance spokesman, Mr Pat Rabbitte, claimed no other Minister for Finance had ever engaged "in such a scale of manipulative accounting" as Mr McCreevy.

The Minister who, in opposition, criticised the spending targets of the Rainbow government, had "contrived to add hugely to the spending out-turn" by dragging spending for 1998 into 1997.

The House deserved some answers he said "as to how this scale of manipulation conforms to the standard of accounting procedures required by the Department of Finance".

"Anywhere Minister McCreevy, the scrooge of opposition, can find someone to invoice him in 1997 for bills that would more properly fall due in 1998, they will get a cheque in the post".

Mr Rabbitte concluded that "it is not possible to address in a planned way an assault on poverty if the emphasis is on manipulating the figures for reasons of political expediency".

Labour's finance spokesman, Mr Derek McDowell, described the economic climate the Minister had inherited. The economy had grown by almost 40 per cent since 1992. More than 200,000 jobs had been created since then. Inflation had virtually ceased and the "Exchequer is awash with money".

He criticised the lack of openness and debate in how the figures were drawn up, citing the health figures as a case in point. The £2.1 billion estimates were dealt with under two headings - one referred to £1.442 billion in grants to health boards and another to £707 million given by the Department of Health to other health boards. No member of the public could understand these figures as dealt with in the estimates.