The government will require special legislation to permit it to take substantial funds from the Central Bank and the Social Insurance Fund to pay for spending rises, tax cuts and social welfare increases without borrowing in 2002, an election year.
The Minister for Finance, Mr McCreevy, yesterday announced the surprise addition of over €2 billion (£2.54 billion) to Exchequer funds in three separate budgetary and accounting manoeuvres.
The moves allow for politically astute measures including a historically high Budget rise in health spending, significant increases in child benefit, social welfare payments, pensions, spending on roads as well as modest tax cuts disproportionately benefiting the lower paid.
The Budget therefore manages to fund popular measures while avoiding the need to borrow in an election year. The new funds allow the Minister the remarkable feat of raising capital and current spending by 10.5 per cent, cutting tax during an economic downturn and still running a Budget surplus.
However, the sourcing of the extra money was denounced by the Opposition last night as dodgy accounting and even "illegal". But Mr McCreevy insisted last night: "These funds are owned by the State", and that his plans to take money from the Social Insurance Fund and the Central Bank would be underpinned by legislation.
He said the Social Welfare Bill would include a legal basis to do what was planned, and that future ministers could do the same if they chose to.
Fine Gael's spokesman, Mr Jim Mitchell, said the Minister was engaged in "voodoo economics". It was a "sham Budget", and the Minister was not spending his way out of a recession "but into a crisis".
The increase of €425 million for health on top of the Estimates of a fortnight ago represents by far the largest ever such rise for what may be the key election issue. Mr McCreevy has fulfilled his promise to increase child benefit by a further £25 a month for first and second children to £92.62 and by £30 a month for third and subsequent children to £116.
He has also maintained his commitment to putting one per cent of GNP into the National Pension Reserve Fund and given €550 million for roads and other infrastructural projects.
The Minister's third new revenue-increasing measure - bringing forward corporation tax payments - was criticised last night by Mr John Dunne of Chambers of Commerce of Ireland.
"The Minister has managed to get business to pay for the Government's re-election campaign", he said.
Increases in tax credits will take a further 68,000 people out of the tax net.
Those earning up to 90 per cent of the minimum wage now will pay no tax, short of the Government's objective of removing all on the minimum wage. Widening of the standard rate tax band will also take 57,000 more people off the higher tax rate.
The rates of 20 per cent and 42 per cent remain unchanged, as expected.
The Minister has added just 10p to the price of cigarettes and 5p to a litre of petrol or diesel.
The old age pension goes up by a further £10 per week, bringing it to £105 for non-contributory and £116 for contributory pensions. All other full rate social welfare recipients will get £8, with £9.50 going to those receiving the lowest payments.
The Taoiseach acknowledged last night that the appropriation of the Central Bank and Social Insurance funds was "once-off". "It is certainly legal, legitimate and proper to do it this way", he said.