Public spending, particularly on infrastructure projects, must be kept under firm control, the Minister for Finance, Mr McCreevy, warned today.
Giving the clearest hint to date of his plans for next month's Budget, Mr McCreevy said he would focus particularly on competitiveness in the economy while maintaining the present taxation and long-term fiscal strategy.
"Cost containment in the private and public sector is vital," he said.
He said the downturn in Exchequer returns must be matched by a slower rate of growth in spending on public services.
"In 2001 spending increased by 23 per cent and in 2002 by a further 14 per cent. This year spending has been limited to an increase of 7 per cent and we have to continue on this path," he continued.
He said the Cabinet would consider last week's Economic and Social Research Institute (ESRI) report that recommended considerable changes in the emphasis and substance of the National Development Plan (NDP).
The report was not well received by the biggest-spending Ministers who are in the process of the usual pre-Budget lobbying of Mr McCreevy for cash for their respective departments.
The Minster today said the ESRI report had raised "serious issues" in relation to the implementation of the NDP, "particularly the persistent divergence between project cost estimates and outturn costs".
Speaking at the Construction Industry Federation (CIF) conference, Mr McCreevy warned that massive cost overruns in infrastructure projects, strongly criticised last week by ESRI, would no longer be tolerated.
He said the State was the construction industry's biggest customer and that they must deliver better value. He asked CIF members to consider whether private clients would tolerate "lots of further increases" after a contract price had been agreed.
"I am not willing to continue with the current regime," he scolded. He would accord priority to infrastructure investment but would follow a cautious borrowing policy, he said.
Next month's Budget would be strategic, not "populist" or "short-term", and his taxation strategy and long-term planning in the shape - particularly of the National Pension Reserve Fund and easing of the debt-burden - would continue, he added.