Finance press conference: Exchequer figures for the third quarter, to be published on Monday, will confirm the improving trend in the public finances, according to the new Minister for Finance, Mr Cowen. However, he said it was vital that the finances be kept on a tight rein and that the Government stick to its commitments on current spending control.
It was important "that we don't get involved in spending through borrowing in good times", the Minister said, speaking on his first day in office. The Government had made commitments in its programme and in the national agreement, which must be adhered to, he added. Sustaining Progress commits the Government to keeping the rise in current spending in line with economic growth.
Depending on the Department of Finance predictions for growth and inflation next year, this would restrict current spending growth to about 8 per cent in 2005 over this year's levels.
While not referring directly to this commitment, Mr Cowen said the Sustaining Progress commitments were very important. "I am a great believer in social partnership" and he pointed out that the terms of it were agreed by Government, unions, employers and the "social pillar" representing community, religious and voluntary groups.
Giving a "steady as she goes" message, Mr Cowen said the policies which had created growth and jobs in recent years must be continued. Much of the debate about whether the purse strings were about to be loosened in the run-up to the next election was "facile", he said.
The key thing was to generate economic growth and revenues for the Exchequer. Pushing up spending rapidly, particularly when growth was already buoyant, would risk reigniting inflation and pushing up wage demands, and this would damage competitiveness.
The Minister was relatively upbeat on the outlook for growth, on the day when CSO figures showed that the economy grew by close to 5 per cent in the first six months. It should continue to grow at between 4 per cent and 5 per cent, he said, and Government policy must underpin this.
"You have to grow the economy to continue to improve the services," Mr Cowen said.
The Exchequer finances have benefited from the improving economy this year, and the Minister confirmed that third-quarter figures, due on Monday, would continue the trend seen in the first half of the year.
Discussions on spending estimates for 2005 would start shortly, Mr Cowen said, and the approach would be "to identify key priorities in . . . areas where we can prioritise."
Ministers would have to live within spending allocations, meaning that they would have to identify areas where they could save money, as well as where they wanted to spend more.
Value for money must also be improved. "We need reform, and we need better delivery of services," Mr Cowen said.
The Government would also continue to invest in major capital projects, as set down in the multi-annual investment programme presented along with this year's Budget. This involves investment of almost €35 billion in the period 2004 to 2008.
The Minister declined to comment on the likely shape of a Budget tax package, or on specific issues facing him in his new position, such as the future of Aer Lingus or whether the Government would consider any successor to the SSIA scheme.
However, he reiterated the Government's commitment to decentralisation and said the structures were in place to make this happen as a voluntary process.