The report of the group advising the Government on public spending says it has identified savings of up to €5.3 billion, along with a cut of 17,300 in the number of people working in the public service.

The body known as An Bord Snip Nua also proposes a general cut of 5% in social welfare payment rates, savings up to €850m a year. It says this would reflect development in prices and pay across the economy.

Read a department-by-department summary of the main findings

Read the full report

Read the detailed proposals

It says rates of child benefit should be cut and simplified to give a 20% saving in the annual cost, while €100m in savings could come from revising and simplifying qualification criteria for the medical card.

UCD economist Colm McCarthy, who chaired the spending cuts group, said the Government was borrowing €400m a week and paying a substantial rate of interest on that borrowing - and this could not continue. On the News At One, he said the board had to look to the big items of spending, which are health, education and social welfare.

The body identifies these three as areas where significant savings could be made. 'A range of outdated and restrictive working practices and allowances add greatly to the cost of providing public services,' the report said, referring to these three sectors.

It also calls for the Department of Community, Rural and Gaeltacht Affairs to be closed down, and adds that the need for a Department of Arts, Sports & Tourism should be 'critically examined'.

The report says the number of special needs assistants and English language support teachers should be reduced, and that Exchequer support for private fee-paying schools should be reduced.

The report also suggests further reforms to the system of allowances for TDs and Senators.

The group also proposes wide-ranging changes in the structure of state agencies. It says all support for Irish companies should be channelled through Enterprise Ireland, while regulators' offices and Ombudsman's offices should be merged.

It says the number of local authorities should be cut from 34 to 22, with the number of VECs should fall from 33 to 22.

The group also says payments of 1% of economic output a year into the National Pensions Reserve Fund should be suspended.

Report calls for shake-up of State agencies

The report says Sports Campus Ireland and the Irish Film Board should be discontinued. It says ComReg should be merged with the new Broadcasting Authority of Ireland, and the Digital Hub Development Agency should merge with Enterprise Ireland/IDA.

It says the Western Development Commission and the Dormant Accounts fund should go.

The report says Shannon Development's business functions should transfer to Enterprise Ireland and IDA Ireland 'as appropriate', while all support and marketing functions for Irish companies should move to Enterprise Ireland. It also calls for a rationalisation of industrial relations institutions such as the Labour Court.

The report says the Irish Takeover Panel should merge with the Competition Authority, while the Ombudsman for Children and Office of the Data Protection Commissioner should be merged with the Office of the Ombudsman.

The Health Insurance Authority should merge with the Financial Regulator, while the Pensions Ombudsman should merge with the Financial Services Ombudsman. The report also says the Railway Procurement Agency should merge with the National Roads Authority.

Call to tackle public pension costs

The report says that a review of pensions is beyond its scope but the cost implications of public service pensions is an area of concern.

It urges the Government to implement the recommendations of the Green Paper on Pensions in September 2007, which says the minimum public service pension age should be raised and there should be an increase in the rate of pension contribution from staff.

The report further recommends revising upwards the age at which people qualify for a pension in both State and social welfare schemes. The report also says those reforms will not yield any immediate savings for the public finances unless they are applied to existing public servants.

The report also says that the measures proposed to address the problems in the public finances will affect all sectors of society, except those who currently receive public service pensions.

'Bearing in mind that such pensioners in many cases have earnings-linked pensions at present, the Group believes there is a case for the Government to consider how best to secure an appropriate contribution from this sector of society,' it says.