Fiscal reality shines through McCreevy's low-key performance

Charlie McCreevy was not at his ebullient best. Laryngitis muted the voice of the Minister for Finance and got in the way of a chirpy performance.

Presenting the convoluted figures was hard going.

Nevertheless, the fiscal reality behind his low-key performance shone through - the State was still on a roll and the Government would give economic growth a further lash.

Day-to-day spending in administering Departments and providing services might indeed increase by a further 6 to 8 per cent next year, but that figure would be pegged back to 4 per cent when averaged out over two years.

There was even more elasticity where capital spending was concerned.

Having bumped the Estimate from 4 to 23 per cent last year and received plaudits, Mr McCreevy was not going to stint on infrastructural spending, especially when the State's traffic was grinding to a halt.

So he unveiled a package that would produce a 27 per cent increase.

But when account is finally taken of new CIE borrowing, the sale of Telecom Eireann and other elements in the Budget, that figure could shrink to well below 20 per cent of voted resources.

The Opposition response was predictable. Michael Noonan of Fine Gael, Derek McDowell of the Labour Party and Pat Rabbitte of Democratic Left were appalled by the accountancy procedures adopted.

And, in their various ways, they faulted Mr McCreevy for both the style and the substance of the Estimates.

The Fine Gael spokesman laid a two-way bet by criticising the Minister for not improving public services while, at the same time, spending too much on public service pay. And his parliamentary colleagues joined the chorus by demanding higher spending on health, education and agriculture.

Mr McDowell followed suit by blaming the Minister for not spending enough on transport, health and other major infrastructural projects.

Inadequate infrastructure was holding up growth and threatening our economic boom, he said, while the "astonishing cutbacks in foreign aid" were unacceptable.

Mr Rabbitte recognised hooky figures when he saw them. He maintained the Minister's "smoke and mirrors" operation, which gave him a 3.9 per cent average current spending figure, hinged on £400 million he had artificially pumped into the 1997 out-turn.

Given the two-pronged nature of the Government's housekeeping arrangements, with the Estimates in November and the Budget on December 2nd, it was all a little premature and contrived.

After all, details of social welfare spending, taxation measures and Government sell-offs would not be announced for three weeks.

Only then would the broad outline of Government economic and social policy become visible. But the indications and leaks pointed to a change of Coalition direction.

Having been elected on an income tax-cutting platform in 1997, Mr McCreevy removed 2 per cent from both the top and marginal rates of tax in 1998. And he followed up by unexpectedly slashing capital gains tax by a whopping 50 per cent.

It was a bridge too far.

To Mr McCreevy's chagrin, the Budget was transformed in the public mind from being a response to a clear electoral mandate into an unashamed "pay-back-time" for the Government's backers.

It was seen as a Budget for the rich, rather than for the needy. And it drew sustained fire from ICTU and from what the Minister disparagingly called the "poverty lobby".

Since then, some things have changed. The social partners formally supported demands that the next raft of tax concessions should be granted to low and middle-income earners.

Mary Harney and Bertie Ahern agreed that what money was available should be spent on the low paid, the disadvantaged and the elderly, even as the economy overheated and demands grew from financial gurus to limited tax concessions and Government spending.

As the Dail parties played out their adversarial roles yesterday under the gimlet eye of the financial markets, the National Economic and Social Forum prepared to present its work programme for the next three years.

Later today, the NESF - which includes representatives of the unemployed, women, disadvantaged, youth, people with disabilities, along with members of the Oireachtas and traditional social partners - will announce a programme designed to strengthen social partnership and cohesion within the community.

At a time when disillusionment with the evolving Celtic Tiger society is growing, the NESF will seek to broaden the social partnership contract and ensure decisions taken on poverty, deprivation and development at national level translate into local action.

Given Mr McCreevy's projection that unemployment will average 210,000 next year, before any serious downturn in the world economy is factored in, the Government will need all the help it can get.

Social cohesion, in terms of partnership arrangements, resource-sharing and problem-solving, is the only way to go.

When Mr McCreevy presents the second prong of the Government's fiscal programme, on December 2nd, we will know whether recent Coalition commitments to tackle deprivation and poverty meant anything at all.