Brian Cowen introduced his first Budget yesterday, in circumstances more favourable than at any time since the heady days of the late 1990s and 2000. That mainly reflected the benefits of a very significant €2.3 billion overshoot in tax revenues in 2004.

It left the Minister in a position to give away as much as €2.5 billion and still target a deficit for the General Government Balance (GGB) less than 1.5 per cent of GDP and less than half of the 3 per cent ceiling imposed by the Growth and Stability Pact.

In the event the net "giveaway", at €1.1 billion, was a good deal less than this. Not surprisingly it was targeted on three main areas - income tax, social welfare and higher capital allocations.

The basic tax credits and tax bands, unchanged for two years, were increased by 4 and 5 per cent respectively, though the employee tax credit was increased by more than 20 per cent. However, the overall package is only about half of what would be required to catch up on the failure to index over the past two years.

Not surprisingly, the social welfare rate increases were well ahead of the prospective rate of inflation and in line with the Government's newfound caring image. But perhaps the biggest challenge is managing and getting value for money for the very substantial increases projected for capital spending, now projected to increases by 20 per cent in the current year. Much of the 1990s capital programme was frittered away in overruns and cost inflation. One hopes the structures have improved so that more value for money can be extracted. I have my doubts.