Government figures due to be published tomorrow will show that pressures on public-sector pay will contribute to a rise of about 8 per cent in the cost of running government departments next year. Spending increases will also pay for improved services in areas such as the health service.
However, a fall in the cost of servicing the national debt will help to lower the overall rise in current Government spending to around the annual 4 per cent figure targeted by the coalition.
The figures will be published tomorrow by the Minister for Finance, Mr McCreevy, in the 1999 spending estimates.
The 8 per cent rise in current departmental spending over 1998 levels will bring the total bill for providing Government services to close to £12 billion next year.
The other main component of Government spending is the capital budget, which covers funding for investment projects. Here, the Minister is expected to announce a rise of some 13 per cent in the amount of Exchequer resources provided.
Meanwhile, to provide further resources towards Government-supported capital spending, proposals for the involvement of private investors in a multi-million-pound public road development project are to be brought forward shortly, according to senior Government sources.
The estimates will show that among the major spending departments, Health - which will spend about £2.7 billion this year - has secured an increase of around 11 per cent in its current spending allocation, resulting from a higher pay bill and new measures to reduce waiting lists. Its capital budget for investment in hospitals will rise by 5 per cent.
Another major spending department, Education, has secured an 8 per cent increase in current spending and is also to receive an injection of capital funds to boost building of primary and secondary schools.
The third major spending department is Social Welfare, but its spending allocation for next year will not be announced until Budget day, when a sharp increase in the old-age pension is expected to feature as part of a social inclusion programme.
"We cannot have a situation like last year when we were accused of providing a rich people's Budget. The view is that this one must be done in such a way as to clearly benefit the worse off", one senior Government source said yesterday. The tax package, meanwhile, will focus on middle-to-low-income earners.
Among the smaller departments, Public Enterprise will receive a 15 per cent increase in current funding, while Arts, Culture, Gaeltacht and the Islands will receive a strong 17 per cent increase in overall funding. The Arts Council is understood to have received 7-8 per cent extra, after a 25 per cent rise this year, despite the reluctance of the Department of Finance to grant extra funding in this area.
Meanwhile, the International Co-Operation Vote for the Department of Foreign Affairs - a major component of the overall overseas development aid budget - was originally pencilled in to rise by just 1 per cent from this year's £112 million. However, following public complaints by the Minister of State, Ms Liz O'Donnell, this may now be revised upwards.
The Cabinet was briefed on the estimates yesterday by Mr McCreevy. Also, with the Government increasingly worried over the political implications of traffic gridlock, the Minister for the Environment, Mr Dempsey, yesterday briefed the Cabinet on progress in the development of public/private partnerships for road-building infrastructure. It is estimated that Ireland needs to spend £6 billion on national roads between now and 2019, a sum which cannot be matched by European funding.
Traffic congestion was among the issues discussed during the sixhour Cabinet meeting.