Economics: Brian Cowen - for surely he is the anointed one - will not be long in the Department of Finance building before the reality hits him (if it hasn't already). Budgets are never easy to frame. And the expectation built up each year around the great event is rarely matched by the reality.
In calmer times, Budget 2005 would be a straightforward task. There will be enough money to index tax bands and credits for inflation, allow spending to rise a bit ahead of inflation and still hold borrowing at a respectably low level.
The problem is that such is the hype surrounding the economy and the recovery in tax revenues that public expectations have been raised. And with the Taoiseach talking about a more caring approach and the Tánaiste setting down a position on taxes, talk of budgetary goodies will only build in the weeks ahead.
There is no cause for dismay, of course. An analysis published by Davy Stockbrokers yesterday said that the outlook for the budget was the best for some years and that the Minister might be able, to use the time-honoured phrase, "to give away" as much as €1.5 billion", on budget day. In other words he will be able to introduce budgetary measures which add this amount to borrowing.
One key to understanding the budget situation is to understand that the Exchequer finances start from zero every year.
The tax-revenue overshoot of this year will help, in so far as it increases the base from which projections start for 2005. However, extra cash collected this year can not be carried forward and spent in 2005.
There is a further complication this year. It is that part of the buoyancy in taxes is due to the Revenue scheme to collect undeclared offshore money, which brought in more than €600 million. This is a once-off gain and will not be repeated next year - so it does not even increase the base.
Tax experts warn that other one-off factors are also in play. Pat Cullen of Deloitte points out that a change in the payment date for capital gains tax - which yielded a big once-off boost to the exchequer last year - may continue to boost revenues into 2004.
He also highlights a more significant boost coming to the exchequer from the gradual bringing forward of payments dates for corporation tax, taking place over a five-year period.
He estimates this is boosting the exchequer cash-flow by around €1 billion a year, but that this timing effect will wash out of the figures by 2007. This would be just in time to cause a headache in Budget 2007, the pre-election package if the Government runs its full term.
For next year, if the Government sticks within the guidelines it has set down, then it is only a slight exaggeration to say that the budget almost writes itself. The terms of Sustaining Progress, the national agreement, are that current spending must not increase more rapidly than nominal economic growth. Nominal growth is the overall growth in the economy before adjustment for inflation.
This should allow current spending to rise by about 8 per cent next year. Some of this will go on maintaining the existing level of service.
The Department of Finance estimated last December that €1.1 billion would need to be added to 2004 spending levels to maintain the same service levels next year. Since then, extra spending commitments in pay and other areas have probably increased this total closer to €1.5 billion.
An analysis recently presented to the Progressive Democrats' parliamentary party suggested that, taking an 8 per cent limit for current spending growth next year, this might leave a further €1.4 billion to spend on additional spending programmes, above and beyond the €1.5 billion mentioned above.
This is a significant amount, but not a king's ransom, especially when increases in welfare payments are factored in. The PD's case is that spending must be held within this range and this would leave room for income tax measures on budget day, including an increase in the standard rate band and measures to remove those on the minimum wage from the tax net. This should all be afforded, they reckon, while maintaining capital investment and holding borrowing to a respectable level.
The PD calculations would suggest total budget "giveaways" of some €2 billion, a bit above Davy's €1.5 billion. But either way, if these parameters are held to, the budget decisions come down to where to direct a modest amount of spending and where to aim a reasonable tax package.
What will be interesting will be the colour of Fianna Fáil's money. The party has been sending out signals of a more "caring" approach, while at the same time insisting that the overall direction of policy will not change. And it remains to be seen whether the Government will keep its nerve in trying to push through reforms to try to achieve better value for money in areas such as health.
The danger is that we are seeing the start of a long run-in to the next general election when the main objectives of the Government will be to avoid upsetting people and to try to win a few popularity contests. If this is reflected in a rise in spending by double figure percentages, then the risk is that any slowdown in growth will again put the exchequer finances under pressure.
With tax revenues vulnerable to a slowdown in growth and particularly to any hit to the the housing market - which would hit stamp duty and VAT- some caution is called for.
