THE Government use of EU funds for current expenditure could result in roads projects being abandoned, Mr Des O'Malley (PD) warned.

During resumed debate on the Budget, he said using EU funds in this way did not acknowledge the likely enlargement of the EU and diversion of funds to less developed central European countries.

Most of the major road developments scheduled to get under way in 1995 had not started at all, including the by passes for Nenagh, Arklow and Kildare.

"There must now be a serious question mark as to whether many of the projects listed in the national roads programme will ever by completed.

"We are clearly facing into a very tight fiscal situation over the medium term. We are vulnerable to a rise in interest rate cycle, we are facing into a major shortfall in European funding, and we need to close the gap in personal taxation between ourselves and the UK if we are to remain competitive as an exporting country.

"Everything points to the need for tight control of public spending so as to facilitate a reduction in the burden of personal taxation. It will be no use tackling this problem in 1999. It needs to be faced up to now." Three or four budgets were required to deal with these issues, and last week's Budget had completely failed to recognise their importance.

All the indications were that the funding available from 1999 onwards would be sharply reduced as a significant enlargement of the EU took place, with five central European countries, including Poland, Hungary and the Czech Republic becoming members.

The cost of extending existing EU programmes to these new states would add £22 billion a year to the Union budget, resulting in a severe squeeze on resources. All these countries were poor relative to Ireland and their needs for training and infrastructural development would be great.

"It follows that available resources will be targeted in their direction rather than in ours."

Many of the Republic's current spending programmes were dependent on EU funding. The Department of Education received £120 million a year from the European Social Fund and FAS received £70 million.

"We have no guarantee that this funding is renewable. We should treat it as a finite resource."

Was it proposed to increase taxation to fund these spending programmes when the EU transfers ran out or tailed off, he asked, or were we going to dispense with whale areas of Government activity currently funded by Brussels.

"The huge injection of EU funds provided us with a marvellous once off opportunity to remedy our infrastructural deficits in terms of roads, ports and airports. We seem to have missed that opportunity," added Mr O'Malley.

The Minister of State for Social Welfare, Mr Bernard Durkan, said many commentators were not comparing like with like in regard to social security in other countries when they spoke about the effect of payroll costs on job creation.

He agreed, however, there was a clear need to move further to maintain and increase employment here. The PRSI reforms announced in the Budget would cost £121 million in a full year. They amounted to a fundamental shift in the structure of employee PRSI.

Ms Frances Fitzgerald (FG, Dublin South East) said after the Budget changes, a married couple would have to earn £25,000 before paying tax above the 27 per cent rate, excluding mortgage interest and child benefit payments amounting to £58 a month for a family with two children.

The Budget changes in PRSI also reduced the cost of labour on business, encouraging job creation and helping to maintain jobs.

Mr John Mulvihill (Lab, Cork East) said the Budget provisions revealed a Government motivated by social justice which did not agree with just rewarding "the wealthy few".

Ms Roisin Shortall (Lab, Dublin North West) said the Budget had gone a long way towards tackling the most fundamental problem in the economy long term unemployment. It affected us all, costing money in a lot of areas beyond the direct payments to those involved.