February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — The government has announced a sharp increase in spending for next year, according to estimates published in advance of a December budget that will be make-or-break for the crucial incomes policy.
The planned 13 percent increase in spending is being seen as the Fianna Fail-Progressive Democrats coalition government priming the pump before the people go to the polls.
The economy is so buoyant that the government has wide scope to bring in a range of tax cuts and social welfare increases that may save the ailing Program for Prosperity and Fairness — a cornerstone of the coalition’s economic strategy.
Next year’s planned spending splurge is also been seen as an indication the government may decide to hold a general election next spring or summer if conditions are favorable.
However, the taoiseach continues to insist the election will be 2002 and that there will be another budget next year.
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The increase means the government has abandoned its commitment to limit current spending to 4 percent a year. The projected growth is now an average of 6 percent over the next four years, a 50 percent slippage on his earlier target.
In his budget on Dec. 6, Finance Minister Charlie McCreevy now has to satisfy increasingly militant unions, angered by the 6.8 percent inflation rate, while at the same time minimizing any additional inflation impact as a result of his giveaways.
The broad thrust of budgetary policy was discussed in a day-long special cabinet meeting last Saturday.
McCreevy spoke of the need for realistic expectations, prudence and ensuring Ireland remains internationally competitive when he addressed the Dail.
The public service pay bill is up 11.3 percent for this year and figures released by the Central Statistics Office last week revealed average weekly employee earnings increased by 8.1 percent in the year to last March.
The wages of industrial workers increased by 5.8 percent while clerical and managerial salaries rose by 9.2 percent. The average gross industrial wage in March stood at _8.12 per hour, or _330 per week.
Brewing is the best-paid sector of industry, with workers getting a gross average _622 a week, while those in oil refining and recycling earned _269. Managers got _617 a week.
The minister said the estimates showed the government had “struck a responsible balance” between allocating additional resources for the improvement of public services and adding too much to fuel demand in the economy.
The vast bulk of the _2.2 billion extra spending — almost 80 percent — is being allocated to improve health, education, social welfare, infrastructural and justice areas.
The health services and Minister Michael Martin are the big winners, with an increase of about 18 percent in manpower and capital spending — an extra _586 million — but wide-ranging reforms are expected in an effort to achieve greater inefficiencies.
However, it was good news all round, with virtually all ministers able to announce ambitious plans.
McCreevy hasn’t announced his tax and welfare package, but it is expected to be about another _1 billion.