The Minister for Health, Mr Martin, is expected to secure an increase of €500 million for his Department for the year ahead. Health and Education have secured the biggest expenditure increases in the Budget Estimates now agreed by the Government, The Irish Times has learned.
The increased allocation to health is likely to bring Mr Martin's budget to some €9 billion next year. The increase is far short of the €900 million cited by the Department of Health last June as the minimum required to maintain the same level of service next year.
The increases secured by Mr Martin and the Minister for Education, Mr Dempsey, will be used by the Government to defend its position after sustained Opposition pressure over health cutbacks and delays in the school refurbishment programme.
However, other Cabinet members will have to place severe constraints on their spending plans. In addition, the continuing pressure on the public finances means that there will be limited scope for radically improving the health and education systems.
The Government's exact financial position will not become clear until November 13th, when the Estimates are published. However, Exchequer returns, due to be published next Tuesday, are expected to reveal some recovery in tax receipts, the Minister for Finance has indicated. Revenues for the first half of this year were below expectations.
Mr McCreevy confirmed in recent weeks that the fall in tax revenue had halted during the third quarter of the year. Although he is expecting to see further improvements in the October figures, to be released shortly, these will in part reflect the income tax impact of benchmarking pay awards for public servants, which kicked in during the summer.
Mr McCreevy has insisted that a tough Budget is on the cards. It was learned last night that he had set a limit of some 5 per cent on the overall increase in public expenditure next year. Only marginally above the inflation rate, estimated at 3.7 per cent this year, this limit means the real increase in Government expenditure could be as low as 1.3 per cent.
The limit is at the bottom of the 5 per cent to 7 per cent range mooted in private by the Minister at the outset of the Estimates campaign. But he will have room for manoeuvre in the run-up to Budget day, on December 3rd, when any social welfare increases will be factored into the figures.
Mr McCreevy received good news this week when it emerged that the economy had grown at a much faster rate than expected during the second quarter of the year. Although he has consistently said the Budget will be designed to boost competitiveness, a new study has shown that Ireland's global ranking of competitiveness has fallen to 30th place from 23rd.
The increased allocation for education could not be determined last night.
When Mr Dempsey conceded earlier this year that the Government would not reintroduce college fees, he made clear that he would have to fight during the Estimates campaign to secure support next year for the €42 million package to increase access to third level.
