The economy will be more vulnerable to future external shocks as a result of the Budget further stimulating demand, and this is more worrying than its inflationary consequences, Prof John Fitzgerald, of the Economic and Social Research Institute, told the Colmcille Winter School in Gartan, Co Donegal, at the weekend.
While he believed it was likely the economy would achieve a "soft landing", with growth slowing down gradually, there remained the danger that unexpected events in the outside world could produce a more sudden deflation of domestic activity.
By raising the level of economic activity and of prices higher, the Budget could make a future "hard landing" even harder, said Prof Fitzgerald.
The theme of this, the 11th year of the winter school, was "Systematic Inequality in Irish Democracy". Prof Fitzgerald was addressing inequalities in the Irish tax system.
What was meant by a hard landing was a situation where there would be a substantial rise in unemployment, and while he predicted it would be temporary if it did occur, it would be very unpleasant for those experiencing it. "It is the avoidance of such unnecessary misery that lies behind the recommendation to tighten fiscal policy by raising taxes in the short term," he said. A more prudent policy would have been to forgo some of the benefits of tax cuts this year, while according top priority to investment expenditure. On the housing crisis, measures in the Budget would "inevitably translate into substantial further increases in house prices".
Prof Fitzgerald said the failure to take money out of the economy would result in worsening the negative social impact of the exceptionally high cost of accommodation.
Outlining how the Budget favoured the well off over the less well off, he said the richest 20 per cent of families gained about 4 per cent compared to a gain of under 1 per cent for the poorest 20 per cent of families.
"Whether one's concern is with promoting increased labour supply or with moderating the current uneven distribution of income in Ireland, it would have been better to have targeted any tax cuts at the lower end of the income distribution."
Such an approach, Prof Fitzgerald said, was recommended by the social partners in the NESC report published in the run-up to the Budget.
On female participation in the labour market, rates were already very high for younger women with good education. Among younger people, it is women with only limited education who have low participation rates, and the Budget would not have substantially increased the attractiveness of returning to work.
In the light of the DIRT controversy, Prof Fitzgerald said there appeared to be "an apparent change in culture" towards tax compliance away from more anarchic attitudes of the past.
Referring to a conference held in 1989 when the issue was discussed and which was attended by, and reported on by all the national media, he said: "None of them felt that the issue of DIRT evasion was worth reporting at the time, presumably because they felt everybody already knew about it."
Mr Mike Allen, the general secretary of the Irish National Organisation for the Unemployed, who spoke on "Unemployment in a Full Employment Society", said that compared to 1990 when there were 1 million people at work in the State, there were now 1.6 million people at work.
He said it was also to be welcomed that as more jobs were created, rates of pay for low-paid jobs were going up, something which had not happened in either the UK or the US.
The issue that now had to be addressed was matching people to the jobs available, and problems such as low skill levels and educational disadvantage needed to be tackled, he said.
A problem still existed with the employment service, he said, as FAS did not enjoy the trust of either employers or the unemployed.