Figures become curtain-raiser to National Development Plan

The publication of the Estimates is normally a significant pointer to Government economic strategy. But yesterday's was a relatively minor event compared with the publication of the National Development Plan for 2000 to 2006, scheduled for next Monday.

The National Development Plan, December's Budget and the current social partnership negotiations will have a huge impact on determining the level and quality of economic and social change in the State for the next decade and more.

Yesterday's data largely confirmed what was already known: the economic figures are again outstanding; spending next year will be the highest in the history of the State; and the Exchequer will from now on provide a much higher proportion of the State's capital spending than before as a result of the reduction in EU funding.

"Missed opportunity" is the most common phrase used in Opposition statements reacting to the Estimates or the Budget. However, criticising a Minister for Finance who is producing the most favourable economic figures in history is a thankless task.

Fine Gael's Mr Michael Noonan pointed to the one most glaring problem: that most of the additional current spending will go to public service pay.

But Mr McCreevy was more than keen to make the point himself yesterday afternoon, and to strike a tough pose on the matter as the new social partnership negotiations open.

"Leapfrogging and special claims" would have to stop, he said. "A system which is performance driven offers the best, if not the only, way of reconciling the pay aspirations of public servants, responsible management of public expenditure and society's demands for improvements in public services," he said.

The Minister then tossed out a few of his trademark straight-talking soundbites which will doubtless irritate public service unions.

Asked why queues for health services were getting longer despite increased recruitment of health staff and increased pay in the sector, he said: "I have often asked that question myself."

Warming to his theme, he went on: "We have increased the number of people working in the health services, given them pretty good increases. I don't see the increase in the quality of services. But I'm only the Minister for Finance."

Staffing in the health services had gone up from 64,000 to 75,000 since January 1995, he said. "It's not the numbers, it's not the money. It must be something else."

Asked tongue in cheek whether the substantially increased Department of Justice estimate for childcare meant that the new children's prison might shortly have some children in it, he remarked: "You know prisons are not for prisoners, they are for prison staff."

Mr Noonan produced public sector pay figures which were indeed stark. Of the £825 million extra going on current spending, £527 million is going on public service pay, £106 million is going to offset reductions in EU funding, and £83 million is for the extra health levy collected from taxpayers. That leaves just £109 million, or 13.2 per cent of the increase, for actually improving services.

The capital spending programme, up by 25 per cent, by its nature offers more long-term benefits. It is difficult to assess without seeing the entire National Development Plan, as yesterday's figures are for just year one of a seven-year plan.

However, it shows spending on housing rising by 53 per cent to £759 million, spending on roads by 32 per cent to over £1 billion for the first time, on public transport more than doubled to £350 million, and capital spending on education up 73 per cent to £413 million. While much of the current spending increase in the health area goes on pay, there is to be an 80 per cent rise in capital spending on hospitals.

In initial rapid responses to the complex document, the Opposition parties took different approaches. Mr Noonan picked out allocations to specific programmes for criticism.

Despite Dublin's traffic problem, the allocation for the Dublin Transportation Office had been reduced by two per cent, he said. Despite the obvious crisis in the provision of services to asylum-seekers, the allocation under this heading has been reduced by four per cent.

He criticised as too small the increases for the National Disability Authority and the grant for People with Disabilities - of £300,000 - and the increase for the Combat Poverty Agency of £90,000.

Labour said that the Government's ceiling for increases in public spending of four per cent - however artificial - was too small. The party's finance spokesman, Mr Derek McDowell, did not nominate an alternative figure, but said in the Dail last Tuesday that it should be equal to the rise in GNP or the rise in tax revenues, whichever is the greater.

The rise in tax revenues is the greater, amounting to some 15 per cent this year. Mr McDowell said last night that he was not suggesting a 15 per cent rise in current spending, but was outlining the principle that the Budget surplus should be small, rather than large. A more detailed position would be outlined in the party's budgetary strategy, to be published next Sunday.

The first leg of a three-stage unveiling of Government economic strategy is complete. The Budget in three weeks' time will outline tax cuts and social welfare increases. But the National Development Plan will reveal all.