The Government now has the resources to deliver a Budget this year unlike any before and to plan for longer-term investment under the new national plan. There is now such an abundance of riches at our disposal that we simply cannot spend all the money in the short term.
The funds will pay for whatever programmes we choose for the forthcoming National Development Plan and could also allow significant tax cuts in the 2000 Budget, perhaps paving the way for a new agreement to replace Programme 2000.
As Dr Dan McLaughlin, chief economist at ABN AMRO pointed out, it is very difficult to see where the Government can spend the money. The construction sector is already working at full capacity and there is little logic in paying off the national debt to a very serious extent, particularly given the new programme launched by the National Treasury Management Agency over the last couple of months.
"Ironically, in the 1980s we had the resources to build infrastructure but no cash, now we have the cash but no resources."
He added that we could fund all the tax cuts we wanted just by relying on tax buoyancy - the natural rate of increase in tax due to economic growth. Revenue now exceeds spending to such an extent that we could afford significant tax cuts without even affecting the surplus, he said.
"We are now in a virtuous circle which means there is no reason that the Government's targeted tax rates of 40 per cent and 20 per cent could not be bettered significantly. And with capital likely to be taxed at 12.5 per cent, there is no good reason to tax individuals at far higher levels."
Goodbody Stockbrokers chief economist Mr Colin Hunt also believes this is proof that the Government has an abundance of funds, with few barriers to how much can be spent on capital projects or tax cuts.
The economy is still growing so rapidly that, yet again, the Department and, indeed, many other commentators have been caught with forecasts which now appear to wildly off the mark.
Department officials say consumer spending has been rising far more quickly than they first estimated, as has employment.
The Budget figures were based on employment rising by some 3 per cent, but it now appears from the Quarterly Household Budget Survey that employment rises of almost 5 per cent are closer to the mark. In addition, the Department underestimated the growth in retail sales which are running some 11 per cent ahead of last year. Officials admit that they did not even pencil in the possibility of a 24 per cent growth in car sales, happening despite tax rises on cars in the last Budget.
According to Mr Hunt, the consumer is set to be the main driver of the economy in 1999 which is now set to be yet another "spectacular year".
The figures demonstrate clearly that far from slowing down, the economy is continuing to motor ahead and the Exchequer is benefiting. For the moment, at least, the party can continue.
