The 25 per cent VAT rate pays for "eight years of burnt money, which was burnt by every member of the (former) HDZ-led government, through (the) Fimi Media (corruption scandal), the signing of collective agreements in education under the table, the application of regulations that weren't in force for a long time," Linic was quoted as saying.

"Some people in government plundered, some received salaries even though they weren't at work, all off citizens' backs," Linic said, adding that citizens had to understand that nobody from outside would pay for Croatia's debts and failures.

It's time to speak the truth in this country and this is the government's obligation, he said. "We are in a situation in which the government, which is politically dependent on citizens, on voters, is telling the truth even though this can cost it dearly, but nobody but us is telling the truth."

Linic said he was appalled by the morals of the union leaders in the education sector, saying they had worked behind the backs of their colleagues by signing contracts "under the table."

"Those employed in the state administration won't get a Christmas bonus, but (those in the education unions) wanted theirs even though they receive salaries from the same budget. If we hadn't cancelled the basic collective agreement in public services, they would have received a Christmas bonus."

Linic said the union members were not responsible for anything, adding that "80 per cent of the unions which represent those who receive salaries from the budget have shown that they are aware of the situation in the country and they are working together with the government so that we spend what we have earned. They realise that we can't borrow forever."

"If the bulk of them make sacrifices, if they are aware of how the people in this country live, I can say that those who aren't for agreement don't care about Croatia."

Linic stressed that he would not let any minister spend excessively. He said the education, interior and justice ministries had exceeded their budgets, but that they employed the most people and it was not easy to cut revenues and be fair.

Their budgets have been exceeded by HRK 600 million in total and a dozen other ministries have exceeded theirs by HRK 10-20 million each, the minister said.

He went on to say that of the public companies, the Croatia Osiguranje insurer and the Croatian Postal Bank were on sale, but that the HEP power supplier and Croatian Waters were not and would not be.

Asked about a heating price increase announcement and citizens' complaints that nothing was being done in HEP, Linic said "people are right to complain... But when the government starts insisting on downsizing, on restructuring and changing collective agreements, when the unions go against us, will these people who complain support us to persevere?"

"We are a country that has been borrowing for 20 years, not to create, but to cover spending that is higher than the taxes we collect. We have been doing this for 20 years but we must pay the debts. That's why salaries in the public sector must be frozen, that's why prices must increase, because we can't have fuel prices below the market and HEP borrowing to cover that. We must start paying our debts."

"Nobody is saying that citizens have it easy, that it's easy to accept new price hikes ... but the government is telling them that all those who lived at their expense, who were a ballast because the political policy wanted it so, will now get less, they can't have more than them," Linic said.

He voiced confidence that by the end of this government's term it will be better, saying that "to live well means that a man has a salary and works, that he feels secure that he will get the pay he has earned and find a new job if he loses the old one."

"That's our government's main battle at the moment, to employe those out of work, and the standard won't go up much because all debts have to be paid," he said.

"In four years of (our) term you will see results - 1.5 million employed, less people at the Employment Service, all those who work will receive their pay, everyone will have health insurance, well-organised health care. But that doesn't mean a higher pay for everyone, it doesn't mean the possibility to buy what one doesn't earn enough for," the finance minister said.

He said it was necessary to have at least two million employed to service 1.2 million pensioners without it jeopardising the budget, voicing confidence this would be achieved in eight years.