Brian Lenihan said that in the past ten years, a huge increase in the public services has been seen - financed by taxation. However, he added that public spending can only increase in line with available resources.
He said that the country must continue on a path of bringing spending in line with resources. But he said that the Government is determined to safeguard key public services, protect the vulnerable, re-focus spending to enhance our productive capacity, regain export competitiveness, re-skill our labour force, retain the substantial gains already made and continue to build a fairer Ireland.
The Minister said the Efficiency Review of all public service spending in last year's Budget had the intention of achieving overall savings of €440m this year and €1 billion next year as a first step in addressing the emerging difficult fiscal position.
Today the Minister said these savings have been achieved and the payroll deductions intended to deliver €190m will actually give savings of €260m. The savings achieved have already been used to relieve pressures in areas such as health and education.
Despite the challenging fiscal context, Mr Lenihan said the Government will make significant allocations to social welfare, education and health. It has agreed that gross current spending will grow by no more than 3.6% in 2009. Within this overall figure, spending on social welfare will grow by 8.4% to €19.6 billion, education will see an increase of 2.8% to €8.7 billion while spending on health will rose by 2.1% to €15.8 billion.
The Minister said that the old age pension will increase by €7 a week for all pensioners. This will bring the State contributory pension to €230.30 a week and the State non-contributory pension to €219 a week.
He also said that the allowance for the fuel allowance is being increased by two weeks from next April, with the rate of payment is going up by €2 a week to €20 a week from January 1. The average period for the payment of fuel allowance will be increased from 30 to 32 weeks from next April.
The personal rate of all working age payments, including both Carer's Benefit and the Carer's Allowance, will rise by €6.50 a week from 1 January. This will bring the lowest full adult social welfare rate to €204.30 a week.
The Government will also increase the qualified child rate by €2 a week to €26 a week and increase the Family Income Supplement thresholds by €10 a week per child.
The Minister said the full year cost of all these measures is €515m.
Mr Lenihan said he has decided to abolish the automatic entitlement to a medical card for those over 70 who are above the eligibility criteria. He said that support will be available to this group to help them meet their healthcare costs.
An annual cash grant of €400 per person will be paid to those over 70 who do not quality for a medical card or a GP visit cared - subject to an income threshold.
He also said that the Commission on Taxation will examine options relating to the tax treatment of universal child benefit payments. But at this stage, he said that he has decided to limit the entitlement to Child Benefit and to the early Childcare Supplement.
Child benefit payment will cease for 18-year-olds from January 2010 and will be halved for that group to €83 a month from 1 January.
Early Childcare Supplements will cease at five and a half years of age. It will also be paid monthly instead of quarterly.
