The Government has abandoned its limit on capital spending, announcing a 17.5 per cent rise in investment in roads, education and other major projects next year in yesterday's Estimates.
But the Minister for Finance, Mr McCreevy, has kept a tighter rein on day-to-day spending. He will have ample funds on Budget day for tax cuts and social welfare increases.
The main Opposition parties accused the Minister of manipulative accounting.
Announcing the Estimates for 1998, Mr McCreevy said Government capital spending would rise by 17.5 per cent next year - over three times the Coalition's 5 per cent limit.
The self-imposed limit had been highlighted in the Programme for Government as a critical part of controlling spending growth.
The increase was "wholly justified" Mr McCreevy said, as the Government invested £100 million in technology education and also put funds into other areas of social and economic infrastructure to underpin economic growth.
In detailing spending plans for 1998, he refused to indicate what tax reductions people can look forward to on Budget day, December 3rd.
But the figures confirm the Minister will have wide scope for tax cuts of around £400 million. And last night the Taoiseach, Mr Ahern, said reducing the burden of personal and corporate tax was a main plank of Government policy.
He also strongly indicated the Government would aim to record an overall surplus on the Exchequer finances next year. The case for doing so was "compelling", he said.
Even though he is set to aim for this surplus, Mr McCreevy will have substantial leeway to increase spending on Budget day. This will be used to increase social welfare payments above inflation, as well as directing some extra funds towards health service priority areas.
The 1998 Estimates show overall current spending on providing Government services will increase by 4.1 per cent over this year. But the Government will also benefit from falling national debt payments, which will reduce the overall growth in total current spending to 1.8 per cent, well below the 4 per cent ceiling for current spending.
Opposition parties strongly criticised Mr McCreevy for the way he adjusted the figures in presenting his spending plans.
The Fine Gael Finance spokesman, Mr Michael Noonan, said that even a cursory glance at the Estimates revealed that the Minister, Mr McCreevy, shifted £409 million of current expenditure from 1998 to 1997 to meet his spending targets.
The former minister for finance, Mr Ruairi Quinn of Labour, said Mr McCreevy's first Book of Estimates represented a major departure from the rhetoric of his opposition days. He said the Minister had sunk to new lows to massage his figures.
Mr McCreevy brought forward a range of spending items due in 1998 and spent the money from the 1997 figures. These included payments to the An Post and Telecom pension funds, the small savings fund, and some salary payments due to teachers. The Minister insisted that by doing this he was prudently using the strength of this year's finances.
Overall, current spending on Government services will increase from £10,385 million this year to £10,811 million in 1998, an increase of £426 million.