The Government will raise €91 million through new "stealth taxes" and save €58 million through cuts in social welfare schemes in an attempt to retain tight control over public spending in 2004, writes Mark Brennock, Chief Political Correspondent.
The amount spent on capital projects including roads and other transport projects will increase by a modest 2 per cent over 2003, according to the Government spending Estimates for next year, published yesterday by the Minister for Finance, Mr McCreevy.
Stressing the need to limit public spending in the current economic climate, Mr McCreevy warned: "If we fail to do this we risk either an early return to higher levels of taxation or excessive levels of borrowing".
The total spending increase shown in the Estimates is 5 per cent, and the politically sensitive areas of health and education receive the highest increases. Total health spending will increase 8 per cent and education spending by 11 per cent over the total forecast for 2003.
However as in other areas, pay will eat up much of these increases.
The Department of Health's capital spending programme includes €63.5 million "towards restructuring of the Voluntary Health Insurance Board".
Department of Health officials said last night they could not explain the provision, which is seen as a precursor to privatisation of the state-owned company. A Department of Finance official confirmed that the allocation had been made. The VHI was itself surprised at the injection of cash, but welcomed it.
The Estimates show overall Government spending increasing by 5 per cent or €1.9 billion next year. Some €1.1 billion of this going in pay rises due to benchmarking and social partnership.
The cost of attending an A & E department and the hospital bed cost per night for uninsured patients rise from €40 to €45. The amount patients must pay monthly for prescription drugs before the Drugs Refund scheme kicks in rises from €70 to €78 per month.
Motor tax will increase by 5 per cent from January 1st raising €34 million, all of which, according to the Minister for the Environment, Mr Cullen, will be spent on regional and county roads.
The annual Exchequer allocation to local authorities will leave them with a €42 million shortfall as they try to meet the benchmarking and Sustaining Progress pay awards. This is expected to result in increases in commercial rates, development levies and other charges.
The Minister for Social Welfare, Ms Coughlan, responded sharply last night to criticism from Labour's Mr Willie Penrose of the cuts in eligibility to various social welfare schemes. Mr Penrose said that while Ms Coughlan depicted herself as the Government's human face "these cuts show a mailed fist behind the smiling face".
Ms Coughlan responded that such personal remarks were "unbecoming" of Mr Penrose. The cuts were in the context of an increase in the social welfare budget to the record level of €0.65 billion "with a further anticipated increase at Budget time", she said.
Earlier, the Minister announced 16 separate reductions in eligibility for various allowances, thus saving some €58 million in 2004.
Mr McCreevy said yesterday that despite the modest reduction in capital spending, the €5.5 billion figure for next year was twice the rate of public investment spending in the EU generally. The spending increase of 5 per cent may rise to 6-7 per cent when budget day increases in social welfare payments and other changes are announced.
Fine Gael's finance spokesman Mr Richard Bruton said next year would see "a further deterioration in the quality of public services accompanied by a rash of further stealth taxes". Sinn Féin echoed this criticism, saying the Government "is charging more for less". Labour's finance spokeswoman Ms Joan Burton said the Estimates showed the Government's "complete lack of vision and its flawed economic management". The Green Party said capital spending increases amounted to just 2 per cent.