When Brian Cowen took over in Finance, the question was whether a change in the general direction of Government policy would follow. On the basis of yesterday's Estimates, the answer is no.
Any thoughts that the Government would let rip on spending were dispelled by a conservative set of Estimates and the way is now clear for a generous Budget, while still holding borrowing at a relatively low level.
On Budget day Mr Cowen will present a package of extra capital spending, social welfare increases and tax cuts which will be easily the most generous of the current Government's term.
Perhaps the most telling comment from Mr Cowen was when he said that the Estimates would "dispel the myth that I'm trying to buy the next election". The style has certainly changed - the Government is using the comfortable Exchequer position to try to focus on some key problems in health and education, which together got more than €1.4 billion of the extra €2.5 billion of offer. The Government is hoping for "quick wins" in these areas and to dispel the impression that nothing is being done to improve service levels. To deliver this, however, reform programmes and better value for money will be essential, as much of the increase in spending is going to extra public sector pay, reducing the amount available to spend on non-pay areas.
While this targeted approach is a shift, the substance in terms of the overall direction of policy remains on the same track as set by the departed Mr McCreevy over the last couple of years.
Before the last election, the coalition partners pushed spending up very sharply, reaching a peak in 2001 when spending rose by 20.7 per cent, twice the rate of nominal economic growth. Over the past two years spending growth has been brought down - sometimes painfully - to around the level at which the economy is growing and there is a commitment in the Sustaining Progress national agreement to keep it that way.
Next year the economy is likely to grow by around 8 per cent in nominal terms (5 per cent real growth and inflation of about 3 per cent). Yesterday Mr Cowen announced plans to increase spending on services - so-called current spending - by 6 per cent over this year's levels. This leaves up to €750 million to be spent on a Budget day - mainly on social welfare - while still holding current spending growth to around 8 per cent next year. This would be a welfare programme, well ahead of last year's €350 million and would represent the first leg of a three-part Budget package.
The second part of the Budget package will be extra capital investment spending. Here things are a little complicated, because of the new approach being taken by the Government in laying out spending plans for a period of years in "envelopes".
This is an eminently sensible idea, but muddies comparison between one year and the next when all the money is not spent on schedule.
The bottom line here is that capital spending is going to come in well below expectations this year at €5.2 billion in cash terms, but the Estimates provide for a rise of 14 per cent to €5.9 billion next year. More will be put in the pot on Budget day, mainly to account for a shortfall in planned public private partnership projects - the area where the public and private sectors are meant to co-operate in co-funding projects.
The existing plan was for capital spending of €6.3 billion next year. While it is not clear whether Mr Cowen will aim for precisely this figure, the Budget day package will push spending in this area to well over the €6 billion mark, allowing no doubt for the announcement of a couple of high-profile projects on December 1st.
The third piece of "good news" on Budget day will come in the shape of a relatively generous tax package. We are not talking about the kind of bonanza seen in the late 1990s, when soaring growth allowed for major cuts in tax rates. However Mr Cowen made clear yesterday his commitment to the concept of low taxes and he can be expected to at least index tax credits and the standard rate band on Budget day and probably go a bit further.
Helped by some very modest revenue raising from excise duties (a key goal will be to hold down inflation, so the Budget will go easy here), the Minister should be able to present a reasonably generous tax package.
A substantial increase in tax credits is a good bet, as this would deliver significant benefits to lower income taxpayers and lift some of them out of the tax net completely. No doubt the standard band will also be increased to please middle income earners by making less of their income liable at the higher 42 per cent rate.
With up to €1.5 billion available for budgetary largesse in the three key areas, the Minister will hope to build a feelgood factor about Government economic policy, while still having to borrow a relatively low amount. In cash terms, Mr Cowen could plan to borrow €2 billion to €2.5 billion next year - the target for this year was €2.3 billion, though the outturn is now forecast to be just €700 million.
By pursuing a conservative course at the moment, Mr Cowen and his colleagues will hope to keep the Exchequer finances on track for two more generous Budgets in the run-up to the next general election.
Whether this strategy comes good will depend largely on whether the current strong economic performance can be maintained.