There was a time when budgets were motivated by purely political goals. But with the public purse brimming with funds - making it easier to reconcile political and economic objectives - the electorate now demands a higher standard of economic competence.
And euro membership requires the Minister for Finance to explain budgetary plans in a realistic economic framework. This has prompted a greater sophistication on the part of Government, with the hikes in spending and tax reductions that preceded the last election forgone in favour of calculated measures directed at key sectors of the electorate.
In Budget 2006, Brian Cowen set his sights on lower- income earners, families with young children and pensioners. In doing so, he will not please everyone but he did deliver on expectations. Rises in both the standard rate tax band and in tax credits will remove those on the minimum wage from the tax net. They will also remove from the higher rate of tax those on average incomes who should never have been there in the first place. And they should help to ease wage pressures at a time of declining competitiveness. But the challenge of fundamentally addressing the tax base, as recommended by the National Competitiveness Council, remains unanswered. And house buyers continue to pay more to the Exchequer in stamp duty than the sums paid in capital gains tax and capital acquisition tax.
As regards children, increases in child benefit are balanced by a five-year strategy to provide childcare. This combination seeks to recognise the social value of the contribution of women who work in the home as well as the need to facilitate the entry of women into the growing labour force. On top of that, rises in capital grants to private providers and exemptions from income tax, levies and PRSI are intended to increase supply and lower the cost of childcare. Mr Cowen also increased the old age pension and announced his intention to assist those on lower incomes to provide for their retirement. Full details of the latter proposals will emerge when the Finance Bill is published.
But the overall cost of yesterday's measures remains modest compared to far greater increases in the cost of public sector pay. As a result, it is planned that gross voted spending - the dominant component of public expenditure over which the Government has control - will rise by 11 per cent next year. This exceeds anticipated revenue growth in a year when inflationary pressure will already be strong due to the impact of SSIA funds and rising private sector credit.
In assessing a budget, it is important to judge quality as much as quantity. In this regard, Mr Cowen announced changes to the process of budgetary formation. From January, the Oireachtas will be able to scrutinise more effectively the revenue assumptions and efficiency of spending of future budgets. This is a welcome, if modest, step in attempting to reduce the gap between the growth in public spending and the quality of public services.