The cost of running the State will rise by €2.25 billion next year to €37.85 billion, according to the Estimates announced yesterday. The Minister for Finance, Mr Cowen, is expected to announce another €1 billion, or so, of spending on Budget day, writes John McManus.
Spending on infrastructure and other capital items of €5.72 billion will bring total Government spending next year, not including the measures to be announced on Budget day, to €43.57 billion, compared to €41 billion this year.
The Minister for Finance, Mr Cowen, is expected to announce another €1 billion, or so, of spending on December 1st, most of which will relate to annual increases in social welfare payments, additional capital spending and a multi-annual package of measures for the disabled.
The Minister said yesterday that the increased spending next year would be paid for through unexpected tax buoyancy this year, when the Government collected €2 billion more than expected, and a similar out-turn next year, driven by steady economic growth.
The bulk of the increased day-to-day spending, some €1 billion, will be accounted for by the rise in the public-sector pay and pension bill to €15.2 billion. Pay will remain constant as a proportion of current spending, accounting for 40 cent in every euro spent by the State.
The pay figure includes the final tranche of benchmarking payments and pay rises due under the national pay agreement, Sustaining Progress.
It also allows for the recruitment of another approximately 2,000 staff in education and health and extra gardaí.
Despite these increases, Mr Cowen said yesterday that he remained committed to the target set by his predecessor, Mr Charlie McCreevy, of reducing the number of public servants by 5,000. The number currently on the State payroll is 284,000.
Health was the biggest winner among the high-spending Departments, getting a 9 per cent increase in its allocation next year to just under €10.1 billion. Some 51 per cent of the increase, €471 million, will go on pay rises for existing employees and the recruitment of new staff. The number employed in the health services will rise by around 1,000 to 98,000.
The Minister for Health, Ms Harney, has pledged to increase the number of people with free access to GP care by 230,000 through an extension of the medical-card system and the introduction of a new card that covers GP visits.
Other high-profile items include funding for 300 more acute hospital beds and a €70 million package of measures to alleviate congestion at accident and emergency units. ...
Ms Hanafin, the new Minister for Education, secured a 9 per cent increase in her budget to €7.2 million. As with Health, much of the €530 million increase, some 59 per cent, will go on new and existing staff. The numbers employed by the Department will swell from 80,000 to 81,000.
Although funding for third-level institutions has been increased by 9 per cent, there was widespread disappointment on the part of the universities and colleges, which claimed that when research funding is stripped out the increase is nearer to 6 per cent.
Justice, Equality and Law Reform got a 4 per cent increase to €2.01 billion.
This includes €55.6 million more for the Garda Síochána, part of which will go to the recruitment of 1,100 additional members of the force, according to the Minister for Justice, Mr McDowell, and brings total expenditure on the force to €1.1 billion in 2005.
The Department of Transport saw a 7 per cent increase in its budget to €2.144 billion. The Minister for Transport, Mr Cullen, yesterday outlined plans to spend it on rail, road and bus transport next year.
This includes €9 million for integrated ticketing on public transport in Dublin and a new rail station in the capital's docklands.
Mr Cullen also indicated that there will be a "significant capital transport package" in the coming Budget. Transport, along with the other big spending Departments will get new five-year capital-spending envelopes on Budget day to replace the five-year envelopes announced last year by Mr McCreevy.
The envelopes allow the Departments to carry over unspent capital allocations from year to year.
But the envelopes need to be reviewed, according to Mr Cowen, because of the lack of progress on encouraging private-sector investment via public-private partnerships.
The Minister said yesterday that the current five-year plan announced last year by Mr McCreevy envisages a total capital spend of €6.3 billion in 2005, of which €585 million was to come from the private sector through PPPs.
The 2005 envelopes will now have to be adjusted to reflect a shortfall in funds from this source.
Mr Cowen said he would use the €250 million carry-over from this year's envelopes and an unallocated reserve of €120 million in last year's budget to offset the deficit.
This complex book-keeping exercise allowed Mr Cowen to say yesterday that, on a like-for-like basis, Departments will have €730 million in additional cash to spend in 2005, not including Budget day allocations.
Even allowing for his fancy footwork yesterday, Mr Cowen may have to find up to another €400 million for investment on Budget day if he wants to meet the €6.3 million target for 2005 set by his predecessor.
Enterprise, Trade and Employment received an increase of €80.5 million, or 7 per cent, on its budget for 2004.
In addition, €332.6 million, an increase of 13 per cent, is to be provided from the national training fund to support a number of initiatives.
This brings the total funds available to the Department to €1.625 billion. The key areas identified by the Department are increased funding for on-the-job training, which is one of the recommendations of the Enterprise Strategy Group and the National Competitiveness Council. The Competition Authority's funding has been increased by 28 per cent, and €243,000 has been allocated to the Consumer Strategy Group, which is due to report in the new year. Full details of spending on social welfare will not emerge until Budget day, and the Minister for Social and Family Affairs, Mr Brennan, is believed to be looking for between €800 million and €1 billion on top of the €11.42 billion contained in the estimates.
Yesterday, Mr Brennan promised to reverse or modify many of the so-called "savage 16 cuts" introduced last year by his predecessor, Ms Mary Coughlan.