Since 1999 budget documentation has contained an extensive section entitled Stability Programme Update. This annual presentation was required by the EU Stability and Growth Pact as part of the process of preparing for and participating in the euro, writes Garret FitzGerald
Because popular and media interest at Budget time is, understandably, concentrated on tax and spending changes, this report never seems to receive any publicity. That is a pity, because it is an important public document in which the Government is required to explain its budgetary objectives.
During the McCreevy years these "budgetary objectives" were always couched in purely economic terms: eg, securing continued economic growth and stability, competitive wage developments, low inflation, prudent budgetary policies, confidence in the public finances, and, after a few years, improvements in the public services.
Of course, none of these were in any real sense genuine policy objectives. All of them were merely means to an end: economic tools the employment of which could contribute eventually to societal goals.
However, the nature of these goals was left completely unspecified until Brian Cowen replaced Charlie McCreevy, when a reference to an actual societal objective - "delivering further improvements to those on low incomes" - was tagged on to the phrase about "making improvements in the public service".
Last Wednesday, however, this situation substantially changed.
In this year's Stability and Growth report the Minister revealed some of the ultimate objectives of our budgetary policy, the very first of which is "improving equity and opportunity". Another, no longer tagged on to public service reform, is "delivering further improvements to families [the first time they have been mentioned] and to those on low incomes".
It is fair to say that this re-statement of our budgetary objectives is a new approach to public policy well reflected in the actual social content of Wednesday's Budget.
It may have taken several years for the post-2002 change of minister for finance to take full effect, but under Brian Cowen we have moved into a new phase of public policy.
Although between 1997 and 2002 the "objectives" of budgetary policy were set out in economic terms, the policy actually pursued by Mr McCreevy was markedly at variance with his stated aims. For his budgetary policies were not "prudent"; they undermined stability and generated an exceptionally high rate of inflation.
In 1997 we had just committed ourselves to the euro. As a consequence, if we failed to control inflation we would no longer be able to recover competitiveness by devaluing our currency.
Moreover, we were then also moving rapidly towards full employment - a situation in which an excess of demand over supply was liable to create an inflationary threat of a kind we had never previously experienced.
More than at any time in our history we needed to pursue budgetary policies that would damp down inflationary pressures.
Instead, in successive budgets over the following five years, our minister for finance accelerated the annual rate of increase of current spending by half - from under 7 per cent a year to 10.5 per cent.
And he almost trebled, from 3 per cent a year to 8 per cent, the rate of increase of the volume of public consumption - the rate at which the public authorities use up resources in the process of running the country, as distinct from transferring resources between different social groups.
At the same time as current spending was allowed to get out of control, personal tax rates were further slashed; the higher rate from 48 per cent to 42 per cent, and the standard rate from 26 per cent to 20 per cent.
All very popular but hugely inflationary. The weight of money unwisely released just as we were moving to full employment boosted our inflation rate by no less than 26 per cent over this five-year period - at a time when in the rest of Europe prices rose by only 12 per cent.
On the face of it, this suggests that in terms of consumer prices a totally misplaced public policy had reduced our competitiveness by 12.5 per cent.
OECD purchasing power data for this five-year period actually shows a 19 per cent deterioration in Irish purchasing power vis-a-vis a weighted average of the purchasing power of western Europe's big five: Britain, France, Germany, Italy and Spain.
Is it any wonder that, with such a sharp fall in competitiveness between 1997 and 2002, the volume of Irish exports has since the latter year been virtually stagnated for the past three years?
While the growth of spending since 2002 - and in particular the growth of public consumption - has to some degree been reined in, it is difficult to see how we can ever recover the competitiveness lost during that unfortunate 1997-2003 period.
The 2006 budgetary figures project an 8.7 per cent increase in current spending, although in national accounts terms the increase is somewhat smaller.
It is estimated that this level of spending will turn last year's small surplus in our General Government Balance - the criterion used by the EU to judge our performance in relation to the Stability and Growth Pact - into a deficit of just over 0.5 per cent.
In itself this is not worrying for it will leave us far below the 3 per cent deficit we would be entitled to run. Yet when private consumption is already growing at a rate of well over 5 per cent a year, we simply do not need such a stimulus.
Yet, by comparison with Charlie McCreevy's performance, I suppose this is a venial sin which, with a general election only 18 months away, a Minister for Finance can be forgiven for committing.
Even though the Budget may have been slightly more generous than is wise, inevitably some of those with an interest in particular budget lines may express disappointment. However, the overall social balance of spending increases seems reasonable, and well in accord with the new budgetary objectives referred to earlier.