THE Government must keep tight control of public spending and cannot cave in to the "huge demands" that are building up, according to the Minister for Enterprise and Employment, Mr Bruton.
Despite an expected substantial Budget surplus this year, "now is not the time to take our foot off the brake", he warned at the annual conference of the Foundation for Fiscal Studies' annual conference in Dublin. Growing public expenditure might provide a short-term boost to the economy but it was not the path to higher sustainable growth Mr Bruton said.
In the forthcoming talks on a successor to the Programme for Competitiveness and Work, headline pay increases would have to be in line with inflation, Mr Bruton argued. While there was some room for manoeuvre to improve take-home pay through tax cuts, "we must ensure that the `haves' do not gain disproportionately to the `have nots'", he said.
In making spending choices the Government would have to concentrate on productive areas which led to tangible gains in the structural performance of the economy and for society as a whole. The Government would place "heavy emphasis on the real needs of, on the one hand, fostering employment for our unemployed people, and, on the other, providing for those who are disadvantaged".
"I am determined that we should stay the course and bring in balanced budgets from now on. This can only be done if the strictest control is kept on the public purse. To build on our relative competitiveness, we cannot afford to squander the golden opportunity we have succeeded in securing. Clearly we are at the top of an economic cycle in Ireland at present. We cannot tell how long this plateau will last," he said.
For too long increasing public expenditure had been seen as the way to solve problems in the economy, the Minister said. Opening the conference entitled "Managing Public Expenditure: Choosing how much and for what?", Mr Bruton said he would have preferred the theme "Managing Public Expenditure: Choosing how little and for what?"
"However much an extensive `a la carte' list of demands for public expenditure grows, I can assure you that our response will be in table d'hote fashion," he warned. The Foundation for Fiscal Studies is an independent, non-profit- making body chaired by Dr Miriam Hederman O'Brien.
Oh the subject of speculation that there would be a "giveaway" election Budget next year because of the buoyancy in the economy, speakers in favour of tax cuts saw the Minister for Finance as having plenty of leeway to make significant reductions. But speakers who saw benefits from increased public spending in their areas urged the Minister to provide funds and argue he cannot plead lack of resources.
The foundation warned that the danger on the expenditure side was that the buoyancy, in part due to the flow of funds from Brussels which could not be expected in such volume after 1999, would take the pressure off the need for good fiscal management.
