Tánaiste Mary Harney has acknowledged that Ireland’s economic success has been driven by private enterprise and has warned that flexibility and an acceptance of change must become the norm in the public sector.

In a major speech to PD supporters in Limerick, Ms Harney said that the Government had made a major contribution in keeping tax rates low.

She said when politicians spoke about rebalancing the tax system they meant that they intended to pick people's pockets but were not prepared to tell them up front.

Ms Harney said that, while there had been economic success, Ireland now faced major challenges. She said these would involve recognising that the role of manufacturing in employment creation would diminish and that of the services sector would grow.  

She said the country could only reap the opportunities that these challenges presented if it remained flexible and competitive, and central to that was keeping taxes low.

The Tánaiste said productivity in the public sector - where pay had significantly increased in recent times – also had to be improved.

She added that Ireland had to get away from a situation where initiatives to improve services to the public were treated as an opportunity to mug the taxpayer.