Budget copperfastens progress, says Harney

The Tánaiste, Ms Harney, said the Budget had consolidated and copperfastened the progress made in the past five years. She added that the rate of long-term unemployment in Ireland now stood at just 1.2 per cent.

"Given that long-term joblessness is one of the most important contributors to persistent poverty, getting the rate down to such a low level represents a remarkable achievement in terms of social progress," she said.

Ms Harney said some of the more cynical commentators questioned whether the boom years of the Celtic Tiger had left any monuments.

"I would say that the achievement of full employment and the effective elimination of long-term unemployment are the real monuments to our recent economic success.

"Those achievements are not necessarily permanent. We live in a very competitive and challenging world. Unless we pursue the right policies we can easily slip back into the economic mire from which we have only recently emerged. There can be no room for complacency."

She said it had taken the Government just two years to bring the unemployment rate down from 10 per cent to 5 per cent, to shift Ireland from mass unemployment to near full employment.

"But if the right policies can drive us forwards very quickly, the wrong ones can drive us backwards with equal rapidity.

"That is why it is vital for the Irish economy that we persevere with the pro-enterprise, pro-employment policies that have served us so well over the last five years."

Ms Harney said the Government had reached its target of getting the standard rate of corporation tax down to 12.5 per cent.

"We have maintained the incentive to invest and take risks by holding the standard rate of capital gains tax at 20 per cent. And we have held the rates of personal income tax at 20 per cent and 42 per cent.

"The increase in tax credits in this year's Budget ensures that 90 per cent of the increased minimum wage is kept out of the tax net, a very significant achievement at a time when resources are limited."

Ms Harney said the issue of competitiveness went beyond fiscal policy. A coherent approach to economic management was essential if Ireland was to protect prosperity and sustain success.

"We are asking the taxpayer to fund a very generous and very significant increase in public service pay in 2003. The public service pay bill will increase by the order of a billion euros next year.

"The Government has a duty to taxpayers to ensure that full value is secured for that money. And the report of the public service benchmarking body made it clear that implementation of its pay awards - apart from the first quarter - should be made conditional on agreement on modernisation and change issues in the public service."

She said Ireland needed a public service which was efficient, flexible and responsible to the needs of a fast-changing and rapidly developing modern economy.

"The Government will, therefore, be vigorously pursuing a reform agenda with the public service unions in the context of the benchmarking negotiations."

The Fine Gael leader, Mr Enda Kenny, said the Budget was more notable for what it had not said than for what it contained.

"It is a vivid and livid example of how soulless, gutless and bankrupt of decency and morality the Government is. Fianna Fáil and the PDs used and abused the public purse - the people's money - to bankroll their political survival and last night the Minister for Finance revealed how the people, particularly those with no power, have been chosen to pay again.

"Not for this Government the open and honest route. Yet again the pain has been hidden. The Minister did not announce how much extra the ordinary taxpayer is going to pay as a result of this Budget. He will not, but we can.

"Failure to index tax credits and tax bands will cost ordinary taxpayers €502 billion next year, or €400 for every household. That is one impact of this Budget."

Mr Kenny described the Budget as "a silent killer." He added that it put education, "the best and final escape hatch of the disadvantaged," tantalisingly and shamefully out of reach, reinvented health care as a luxury commodity and put the State's infrastructure, on which the future of Ireland incorporated critically depended, in jeopardy.

"It is clear this is a blueprint born out of dishonesty and desperation for power at all costs," Mr Kenny said.

"It turns social exclusion into deliberate social eviction. It guarantees, if not outright economic extinction for the weakest, at least endangered status.

"It leaves people on the minimum wage in the tax net."