The next budget in December will decide whether the Taoiseach wants a change of substance or merely style from Finance, writes Cliff Taylor, Economics Editor

A different style, but will anything really change? As Charlie McCreevy departs for Brussels, all the money is on Brian Cowen moving across St Stephen's Green from Iveagh House - the home of the Department of Foreign Affairs - to Merrion Street. His arrival would certainly trigger a change in the Department of Finance's public profile and in the general Government "message" about its economic policy. The "spin" will certainly change, but what about the substance?

The new Minister for Finance will face a crucial first few months in office. His first budget, due to be delivered in December, will go some way to answering a key question. It is whether the Taoiseach "offered" Mr McCreevy the job in Brussels because he wants to change the substance of policy, or just the way it is presented.

The Taoiseach will surely be aware of the risk in moving Mr McCreevy just as the economy and the public finances are coming right again. And as a former Minister for Finance himself, Mr Ahern will realise that the simplistic solution of spending more money to try to improve public services may do little for the Government's popularity.

The problem Fianna Fáil and the Progressive Democrats have had for most of their time in Government is not a lack of money. It is a seeming inability to translate higher spending into better service - or to plan and deliver improved infrastructure.

Mr McCreevy leaves behind him a legacy of a tax system transformed and this has had a major impact on the economy. However, despite the boom many services remain sub-standard and infrastructure improvements have been slow and expensive.

Of course throw enough money at a problem and inevitably some improvement will be evident. So the crucial question for Mr Cowen - or whoever takes over in Finance - is whether to loosen the purse strings a little, now that the Exchequer is reasonably flush with cash.

The new Minister won't have much time to make a decision on this. The Cabinet reshuffle is due at the end of September, when the estimates season - the discussion on spending plans for next year - will be well under way.

Not only will the Minister be new in Merrion Street, but he will also be dealing with other Ministers fresh to their portfolios, quite possibly including changes in big-spending departments such as Health and Education.

Mr Cowen - if he is the man - would not be likely to lose the run of spending completely. His economic instincts, in as far as we know them, would not be dissimilar to Mr McCreevy.

Nor is he a man noted as a soft touch - and he would not be short of encouragement from Finance officials to hold the spending line. Having brought spending back under control after the pre-election spending spree, senior officials in Merrion Street will be determined to hold the line.

Mr McCreevy said that ministers would have to live within annual spending increases of 5 to 7 per cent. The question now is whether in the run up to the next election, this level of increase is going to be allowed to run back into double figures.

The outgoing Minister allowed spending to rise by 21 per cent in 2001 and paid the price by having to take on the "Mac the Knife" role after the election.

This involved slowing spending growth sharply, rather than actually cutting expenditure. However, because the brakes had to be applied so dramatically and because it was made more difficult by the pressure of large benchmarking pay increases, it did turn into actual "cuts" in some areas. In turn this led to a considerable political cost for the coalition.

Despite this lesson of the cost of profligacy, the pressure will be on the new Minister to loosen up. Tax revenues are buoyant and there may be €1 billion or more to "give away" in tax reductions or higher spending come December.

The public are crying out for better public services and in health, in particular, the Minister will be looking for funds to ease the path to the planned reform programme.

The pressure will also be on to provide tax relief and push up welfare.

Given that borrowing here is low and the debt level is one of the smallest in the EU, the new Minister could be generous, while still making a nod towards fiscal rectitude. Politically, the risk is that letting spending rise more sharply could backfire, if it does not lead to better public services. And reform programmes in areas like health still have a long way to go.

Economically, the key thing will be whether the spending disciplines put in place over the past year - underpinned by envelopes for each area and a pressure on the different departments to prioritise - are maintained.

The danger if they are not is that borrowing could head sharply higher and put pressure on the public finances come the next downturn.

Those who know Mr Cowen say that if he gets the job, his style would be to focus on a couple of big priorities and try to make an impact on these. His style would be more consultative than Mr McCreevy, but he is also a determined politician.

With the tax cutting agenda effectively over - future budgets are likely to do little more than adjust for inflation - the question is where "biffonomics" might focus.

There is certainly scope to push up capital spending, if it can be guaranteed to lead to faster delivery of improved infrastructure. And the reform agenda in terms of public spending in general remains, even though it will be a long haul which crosses all departments.

Getting the proper bang for the exchequer's buck and focusing on "delivery" in key areas would be a good starting point for the new Minister. The public will no longer be impressed by promises - they now want to see delivery.

It would also inform decisions on key State assets such as Aer Rianta and Aer Lingus, in which the finance minister will have a crucial say.

In terms of "ideology", the future of State companies is a big issue for the Cabinet. And the appropriate approach is a purely pragmatic one, driven by the goal of increasing competition and efficiency and achieving key strategic goals.

In the case of Aer Rianta, for example, the vital issue is securing low-cost access to and from the State and much of the recent debate is a distraction.

And then there is the decentralisation hook. Coming from outside Dublin, Mr Cowen would be acutely aware of the dilemma posed by the welcome in many regional centres to the prospect of extra investment and jobs set against the considerable ire across the public service.

Again, achieving the most efficient public service should be the key goal.

Whatever about the principle, the attempted implementation of the programme as outlined has turned into a mess. But it is a political mess and, whatever the economic and efficiency considerations, the solution will also be driven by political considerations.