The provisional Estimates are based, as the Budget will be, on maintaining four factors vital to a strong economic performance: social partnership; low income, corporate and capital tax rates; limited recourse to borrowing; and a sustained public investment programme, writes Martin Mansergh.
Social partnership self-evidently involves delivery of benchmarking, the alternative to the relativities that bedevilled industrial relations, which has already delivered the best year for industrial peace in 2002 for over 30 years.
Benchmarking in 2004 will cost €305 million, just 2 per cent of the public service wage bill. IBEC was party to Sustaining Progress. Fine Gael is simply throwing shapes on the issue.
There will be a lot of extra pressures on civil servants in main Government Departments during Ireland's EU Presidency. It is a good year for it to be paid. People are central to the delivery of services. Nurses and teachers are just as productive, even if this cannot be as easily measured as that of their private-sector counterparts.
Many issues of concern to Government backbenchers and others last year have been at least partially addressed. Community employment schemes, despite expert reports, are being maintained. They are invaluable to local communities and particularly to older people in places where there are few alternative sources of semi-skilled employment.
Sub-standard primary school buildings are being given more urgent attention. While the vote goes up from €168 million this year to €190 million in 2004, if a little more could be found at Budget time it would be all to the good.
Research funding has been restored, and improvements in third-level maintenance grants provided for, but otherwise the universities are being squeezed, not just on the capital front, where there has been enormous development, but on current expenditure. The arguments in equity have to be balanced against longer-term effects on the economy, and I can see pressure building up to have the stringency on this relaxed a little.
There is far more artistic and cultural activity in almost every sizeable town in Ireland. I am glad to see the Arts Council budget substantially restored, and I believe that film relief, shorn of abuses, will be reinstated.
Two very positive developments in agriculture are the reintegration of forestry with increased funding into the Department of Agriculture and Food, and a big increase for the Reps scheme, which keeps many Irish farms in environmentally friendly order, while sustaining both income and investment.
The priority given to social welfare is not fully revealed till Budget time. Attempts to depict the resilient Mary Coughlan, Minister for Social and Family Affairs, as a surrogate for Charlie McCreevy and to replicate Labour's politically successful "dirty dozen" campaign of 1992 with a "savage sixteen" of 2004, is unlikely to catch on in the same way. It has to be open to any Minister to adjust schemes and reorder priorities.
The large increases in old-age pensions and child benefit were two major reasons for the Government's re-election in May 2002.
The development co-operation budget, which will increase by about €30 million to €480 million next year, remains at 0.41 per cent of GNP. While faster progress would be desirable, it presumably must await a more full-scale economic recovery.
During our campaign for membership of the UN Security Council, we made a solemn commitment, reiterated recently by the Taoiseach, to achieve the UN target of 0.7 per cent of GNP by 2007, and many of us will not be happy till that is done.
A further increase in infrastructure spending may be announced in the Budget. One reason we have been able to maintain a high level of spending, while keeping taxes low, is because relatively little is now wasted on debt-servicing. Borrowing is deferred taxation, and there is little merit in closing up to the growth and stability pact limits, if the resultant loss of confidence would outweigh the benefit of the extra spending. A lot of new projects come on stream over the next 12 months, and we are already starting to see the benefits of the sustained effort.
Low tax rates do not necessarily mean low revenues. Far more revenue is collected from a pool of nearly 1.8 million at work at lower rates than could be collected from a workforce of 1.1 million at penal rates 16 years ago.
High rates of capital and corporation tax raised only a revenue trickle, about €400 million in 1986, compared to €10 billion today. One can moralise as much as one likes, but the culture of rampant tax evasion in the 1970s and 1980s had a great deal to do with excessive tax rates.
When we were negotiating the Fianna Fáil-Labour Programme for Government in December 1992, a senior Labour adviser admitted that most of them knew nothing about agriculture. If in doubt, they would consult the late Labour TD for Tipperary South, Michael Ferris.
Before making any more jibes about the horse-racing industry, Pat Rabbitte might care to refresh his memory on Michael Ferris's Dáil speech of October 15th, 1997, where he recommended that the tax incentive on stallion fees be continued, because horse-breeding was the highest risk capital investment of all.
"If we interfere with this system, nothing can stop the movement of these animals to another jurisdiction," he argued, with disastrous consequences for employment. Charlie McCreevy has sensibly followed Labour's more informed advice, based on a study by Joe Bermingham.
I hope there will be enough room in the Budget to adjust tax credits for inflation, and continue removing those on the minimum wage from the tax net. Net indirect tax increases should be lower this year so as to hasten inflation back to the EU average.
In the interests of competitiveness, the Minister should remove the highest excise duty on wine in Europe highlighted in New Horizons for Irish Tourism - An Agenda for Action.
Martin Mansergh, who received a Seanad nomination from the Irish Thoroughbred Breeders' Association, is Fianna Fáil finance spokesman in the Seanad