The prospects for spending on Budget Day are assessed by Cliff Taylorand Irish Times correspondents
Social welfare will be the focus of extra spending on Budget Day, with little in extra resources likely to be allocated to other areas. The Minister for Finance, Mr McCreevy, is likely to resist demands for significant extra spending beyond that outlined in the recent Estimates, with the exception of the traditional Budget Day welfare increases.
In the Estimates, Mr McCreevy announced a 6 per cent increase in current spending on providing Government services to €34.921 billion next year. Last December, Mr McCreevy announced increases which cost €270 million this year and €530 million in a full year. (The full-year cost is higher because most welfare increases are paid in mid-year.) This time around we might expect a package adding €300- €350 million to 2004 spending plans.
With little - or possibly no - extra spending in other areas, this would mean that the overall annual growth in current spending is likely to be held to under 7 per cent. When capital spending on investment projects is added in, the total increase in Government spending is likely to rise from the 5 per cent announced in the estimates to a little under 6 per cent after the Budget.
A falling inflation rate and moderate unemployment will both help to hold down the cost of the social welfare package. A further significant increase in the old-age pension is expected from its current level of €157.30 for the contributory pension. A priority Government target is to eventually increase this rate to €200 per week.
Child benefit payments are also set to rise above inflation, as the Government has promised to complete the programme of increases promised in Budget 2001, but delayed by pressure on resources over the past couple of years. A range of other welfare payments are likely to rise in line with or slightly ahead of the anticipated 3 per cent inflation rate.
Extra spending in other areas will be limited.
Seán Flynn, Education Editor, writes:
In education, there is little optimism about the Budget. The Minister for Education, Mr Dempsey,enjoys very little room for manoeuvre. Some 80 per cent of his €6.5 billion budget is absorbed by payroll costs; this year the Estimates provided an extra €325 million just to cover the cost of benchmarking.
What the Minister for Finance, Mr McCreevy, would like to do, of course, is to set new charges in the education sector. Only 1 per cent of the huge education budget comes back in fees from the public. But the supposed "easy options" look politically unsustainable.
In recent weeks, the Department of Finance pushed for a student registration charge for third-level students of €1,500 up from €670. Poorer students would be excused from the charge. The thinking was that parents - relieved that the threat of tuition fees has receded - would pay up. But Mr Dempsey baulked at the notion. In the end, the charge was increased in the Estimates by €80.
The Government has already decided in the Estimates to boost exam fees by €10.
From the education sector, Mr McCreevy will find himself under pressure to find more money. Mr Dempsey managed to find an extra €25 million for dilapidated primary schools in the Estimates. This may be enough to ward off the threat of INTO strike action on the issue - so it seems unlikely that Mr McCreevy will be more generous.
The greatest pressure is coming from the third-level sector. While the universities and institutes of technology received millions in research funding, they got little extra in other areas and an effective cut in their day-to-day budget. But no one seems very optimistic that this will be reversed on Budget Day or that the Minister will provide extra resources for the running of hard-pressed primary and secondary schools.
Eithne Donnellan, Health Correspondent, writes:
After the furore created by increased health charges announced in the Estimates earlier this month, there are not expected to be any further hikes in health charges on Budget Day.
Instead the Department of Health will concentrate on December 3rd on setting out its plans for spending the €10.05 billion it was allocated on Estimates Day.
Some 70 per cent of the health budget automatically goes on pay so the Department will only be outlining its priorities for spending the remaining €3.015 billion.
It is expected it will prioritise funding for its health service reform programme, for the provision of extra acute hospital beds and the commencement of the State's first heart/lung transplant programme at Dublin's Mater Hospital, which is now running behind schedule.
Cardiac, cancer and renal services will also be prioritised. A specific sum may also be set aside to free up the 20 per cent of beds occupied at any one time in the major Dublin teaching hospitals by patients who are fit for discharge but have nowhere else to go.
Last year the increases in health charges, including the raising of the threshold for the Drug Payments Scheme, were announced on Budget rather than Estimates Day. By doing it the other way around this year, the Department will be hoping the worst of the criticism will be over.
