The Government has moved to counter public disaffection by significantly increasing social welfare payments, tax bands and credits, and spending on disability in Budget 2005, writes Mark Hennessy, Political Correspondent
In a Budget speech designed to avoid creating new problems, the Minister for Finance, Mr Cowen, repeatedly emphasised the Government's social credentials.
Workers on the minimum wage will be taken out of the tax net following the decision to increase employee tax credits by €230.
Tax bands will rise by €1,400 next year in line with inflation, but the Minister has done nothing to compensate workers for the lack of movements on bands over the last two years.
Unemployment payments will rise by €14 per week for a single person, exactly in line with the pre-Budget demand by the Conference of Religious in Ireland.
Saying that old age pensions would rise by €12 a week to €179.30 per week, Mr Cowen said the Government was "well on its way" to reaching its €200 target in 2007.
Given nearly €900 million extra, the Minister for Social Welfare, Mr Brennan, has softened some of last year's unpopular cutbacks, including curbing rent supplement.
The Budget provoked cheers from the Government benches, though some of the more pessimistic worried that it could create unrealistic expectations.
The lack of contentious issues in the Budget was illustrated shortly before 8 p.m. when the Dáil adjourned debate for the evening. Usually it runs until midnight.
Questioned last night, Mr Cowen declined to give a commitment that minimum wage earners would stay out of the tax net in future. The minimum wage is due to be increased next year.
"We will look at that issue then," said Mr Cowen in his traditional post-Budget press conference.
Fine Gael TD Mr Richard Bruton said: " is crafty and cunning. It has been designed to press the right buttons. It has been designed to bury the McCreevy image."
Labour TD Ms Joan Burton warned that one-third of workers would still pay top-rate tax because tax bands had not been increased sufficiently.
However, Mr Cowen said he could have removed all low-earners from the tax net or "progressively moved" to have 80 per cent of all workers paying less than the top rate. "I could not do both. I had to make a choice, and I am very happy with the choice that I made," he told The Irish Times last night.
In his Dáil speech he said: "This gives the lie to those who claim that this Government is indifferent to the needs of some of the most vulnerable members of our society."
The Minister, who has been in office for just two months, sought to silence sources of opposition by carefully-targeted concessions.
First-time home buyers will pay no stamp duty on second-hand homes worth up to €317,000, and reduced rates on purchases up to €635,000.
Smokers, some of whom are still angered by the smoking ban, will not face higher prices for the first budget in decades.
Defending the move last night, which was criticised by the Office of Tobacco Control, the Minister replied: "I wanted to be humane.Give them a break. It is a cold winter out there."
Excise duties on alcohol and petrol have, likewise, been left alone, though this is partly because of the Government's desire to restrain inflation.
Defending the lack of moves to improve childcare, Mr Cowen said child benefit for the first child would rise by €10 to €141.60 per month.
Displaying considerable caution, he has stuck rigidly to the existing borrowing figures. Despite 5 per cent expected growth, he will still borrow €3 billion next year.
A special three-year €900 million package will be put aside for disability services.
Next year the Government will spend €6.3 billion on infrastructural projects. "Five-sixths of that is coming from our own resources. Just one-sixth is borrowing," said the Minister.
Warning that tax shelters would be examined closely over the next year, Mr Cowen said "unlimited or unrestricted reliefs" are "no longer viable or acceptable".