Cowen to play Budget hand

The Minister for Finance, Mr Cowen, is due to get to his feet to deliver his first Budget around 3.45 p.m. today. He will begin by outlining his Budget objectives. Cliff Taylor reports.What to expect

These are likely to lay heavy store on maintaining strong economic growth and underpinning competitiveness and jobs. The Minister is also likely to underline the Government's commitment to social inclusion and the less well-off, which is likely to be a key element of Budget 2005. If he follows the pattern of recent years, he will then address the key issues in roughly the following order.

Economic Outlook: The Minister will be able to point to a relatively bright economic growth, with gross national product (GNP) growth of around 5 per cent likely this year and next. He is likely to underline the Government's commitment to hold down inflation. However, he will warn that dangers remain from factors such as oil prices and the falling US dollar.

Budgetary Projections: Here the Minister will give a snapshot of his Budgetary targets. He is likely to target an increase in current spending of 7-8 per cent and a general government deficit of €700-€900 million.

A lower deficit target would indicate a tight approach, while a higher target would give him a bit more latitude.

Capital Spending: The next thing on Mr Cowen's agenda is likely to be spending on big investment projects.

He will outline "envelopes" - or spending plans - for the next five years, likely to involve Exchequer funding of more than €30 billion. In the Estimates, he allowed for €5.7 billion in Exchequer spending for next year and is likely to increase this by allocating further amounts to transport, social housing, education and health.

Full details of how the money will be spent will be announced over the coming days.

The Minister will also outline how the Government plans to proceed on public-private partnerships, which have yielded a disappointing amount so far. Indications are of a move to more centralised control in this area, moving away from the situation where a range of Government departments are heavily involved.

Taxation: Many will sit up and listen as the Minister heads into the meat of the package.

On indirect taxes, all the signs are of minimal increases in excise duties. There may be a rise on cigarettes - 20 cent on a pack of 20 has been speculated - but alcohol and fuel may remain largely unchanged, as the Government bids to hold down the rate of inflation. There is also speculation of measures to reduce stamp duty payments on first-time buyers of second-hand houses.

On income tax, the Minister will spend several hundred million euro increasing tax credits and the standard rate band. It appears he will concentrate most of his fire on credits and the key thing to watch is whether he goes far enough to exempt all those PAYE workers on the minimum wage - €273 a week - from the tax net.

The Minister is also likely to address tax reliefs and allowances. He will say that the Revenue is accelerating the collection of information in these areas and that data on stallion relief will become available next year. He may also confirm that many property-based reliefs will end in mid 2006, but is unlikely to bring forward this date.

Social Inclusion: This will be a central focus of the package. The welfare package is likely to cost some €800 million, some of which will come from the Exchequer and some from the Social Insurance Fund. Many general payments are likely to increase by some €12 a week.

There will be a significant multi-year package aimed at people with disabilities. The respite grant for carers is set to rise from €835 a year to €1,000 or more. And there will be further increases in child benefit.

The Minister will then have a few concluding paragraphs, going back over the main goals of the Budget. At about 4.30 p.m. he will conclude with the traditional line: "I commend the Budget to the House."