The Government has announced a sharp increase in public spending for next year, including a substantial increase for the health services, fuelling speculation that next month's Budget will be the last before a general election.
After announcing yesterday an increase in total spending by 13 per cent for next year, Mr McCreevy still has significant scope to introduce tax cuts, social welfare increases and other popular measures on Budget day on December 6th.
While Mr McCreevy yesterday called for "realistic expectations" in advance of the Budget, he is expected in political circles to again introduce a substantial tax-cutting package, large social welfare increases to compensate for 6.8 per cent inflation, further moves towards "individualisation" of the standard rate tax band and a number of other significant spending projects.
Day-to-day Government spending in 2001 will be some £14.8 billion, along with capital spending of £3.9 billion. This is a total increase in spending in 2001 over 2000 of £2.2 billion or 13 per cent, with day-to-day spending increases running at 10.9 per cent.
The 19 per cent increase for the politically sensitive area of health is seen as highly significant in the light of regular statements from Mr McCreevy, the Tanaiste, Ms Harney, and other Ministers that reform and not money was what was needed to improve the health services.
The 19 per cent rise, the largest for any Government Department, brings the increase in health funding since 1997 to 80 per cent. Mr McCreevy said yesterday that while the Government was "willing to make the necessary resources available . . . there must be effective management to ensure that increased resources lead to better services".
The bulk of the rise will be absorbed by pay increases, although spending on the building and equipment of hospitals will increase by 22 per cent while an additional 3,000 health agency staff will be employed in a range of areas.
The 10.9 per cent projected increase in day-to-day spending is before any negotiations are completed with secondary school teachers or the other public servants waiting to lodge pay claims. Mr McCreevy insisted yesterday there was no allocation in the Estimates for any public service pay increases above those agreed in the Programme for Prosperity and Fairness.
Already the public pay bill for 2001 is £7.62 billion, an increase of 11.3 per cent over the projected out-turn for 2000. The Minister said last night every additional one percentage point on the pay bill would cost a further £70 million.
Fine Gael's finance spokesman, Mr Michael Noonan, maintained last night the rises were unlikely "to make much of a difference in the delivery of a quality public service".
Labour's spokesman, Mr Derek McDowell, accused the Minister of engaging in "an election splurge" and said the Estimates were "an admission of the Government's failed policies over three years". The moving of the opening of the tax year from April 1st to January 1st, starting in 2002, means the next Budget is likely to take place on October 2001, earlier than usual. Should the Government choose to go for an election before then, June 2001 would be the likely date. However, the Taoiseach and his Ministers continue to insist they will continue in office into 2002.
Meanwhile, Mr McCreevy says the surplus available to him on Budget day is expected to be about £1.9 billion. Analysts say it could be as high as £2.5 billion. Either way, the Minister has significant room for manoeuvre.