The Government will have €2.7 billion to spend on budget day, delegates attending a conference on the forthcoming budget will be told today. The conference, Budget Perspectives 2007, is being held by the Economic and Social Research Institute (ESRI) and will address the economic outlook underpinning the last budget before the election.
Speakers are expected to criticise the present system of combating child poverty as well as the lack of control exercised in paying disability payments.
Analysis conducted by institute economists Alan Barrett, Ide Kearney and Yvonne McCarthy suggests that Minister for Finance Brian Cowen will face another strong year of tax revenue growth in 2007.
In a paper to be presented to the conference, they estimate that strong domestic growth will raise Government tax revenues by 11 per cent next year, an increase of €5 billion.
The Government is also planning to increase the size of the so-called capital deficit - the amount by which spending on capital infrastructure exceeds capital-related revenues - by €900 million. Against this increased margin, the Government will need to spend €3.3 billion to maintain the existing level of welfare services, leaving the remainder to fund tax cuts and additional spending measures, the authors maintain.
But while remaining supportive, the paper warns that the global economy is slowing down and that the Republic's growth rate remains strongly reliant the domestic demand.
It predicts that euro-zone growth will fall to 1.9 per cent in 2007, compared with 2.6 per cent this year, and that US growth will fall to 2.5 per cent, compared with 3.4 per cent this year. "Consumption is forecast to grow strongly in 2007, at a rate of 7.4 per cent. This is partly as a result of the spending of funds in SSIAs," the paper states.
It also expects support for consumption growth from employment, which the authors expect to grow by 3.5 per cent next year, with wages increasing at a nominal rate of 5.5 per cent.
In a paper on child poverty and child income support, ESRI economists Tim Callan, Kieran Coleman, Brian Nolan and John Walsh argue that the Republic's system of increasing child benefit payments to combat child poverty is not working.
"Stronger income supports for adults as well as children, accompanied by measures to encourage welfare recipients to take up employment opportunities are the key to better outcomes", the paper states.
Disability payments have increased significantly, according to NUI Galway researcher Brenda Gannon in a separate paper. Where 1 per cent of the population was in receipt of disability allowance in 1995, the figure had risen to 1.8 per cent by 2004.
Citing Dáil Committee of Public Accounts assessments, another paper argues that only 10 per cent of people reporting back pain truly need payments.
