Minister for Finance Brian Cowen yesterday announced a significant change in the presentation of the annual budget. Next December, the 2008 budget will be a fully co-ordinated event. For the first time, all spending and taxation decisions will be announced in a unified manner, on the same day. This is a logical, necessary, and long overdue change. For, as at present structured, the financial timetable for the production of the budget is too long, its presentation too disjointed and therefore difficult for the public to understand.
To date the annual budget process has amounted to a series of piecemeal announcements made over many months. Spending is considered in isolation from the revenue, or borrowing, needed to pay for it. No business organisation, indeed no household, would plan its affairs in such a cavalier manner, where revenue is the residual item in the budget calculation. Mr Cowen's belated conversion is welcome.
The practice has been for the government to publish in November an abridged pre-budget estimate of spending, while disregarding the tax implications. In December, the minister, in his financial statement on budget day, sets targets for government borrowing and announces tax changes. Invariably, he adds to the government's spending plans. In February, with publication of the government's revised expenditure estimates, further spending increases may be made. Mr Cowen, in his reform of the process, is proposing to simplify matters.
Now, all will be revealed on budget day: how much the government is spending, how much it is raising in tax, and how much it may need to borrow. And nothing will be changed later. This unified form of presentation establishes a clear and direct connection between revenue and spending which can only prove helpful. It should enable government ministers involved in budget-making to take better decisions. It should also enable the public, who must pay for those decisions, to have a clearer understanding of the spending and revenue decisions that are made.
Over the last two decades we have seen many small incremental changes in the timing, presentation and consideration of the budget. Successive governments have moved away from a political legacy that owed much to the influence of William Gladstone, and to a 19th- century style of budget management. Some 20 years ago the government, in a further departure from the British model, changed the financial year, which for budgetary purposes was April, and aligned it to the calendar year. This latest reform marks a similar departure from inherited British practice. And yet, rightly, the Opposition parties give Mr Cowen's latest reform a muted, but qualified, welcome. Fine Gael's deputy leader, Richard Bruton, noted the absence of any proposal for "improved scrutiny by the Oireachtas" to ensure "better delivery of services or fairer taxes". A more extensive budget reform might well have won three cheers from the Opposition. It merits the one cheer it has got.