MOST of what needs to be said about the Budget has been said already. Indeed, the pre Budget briefing was so extensive that much of this commentary preceded the Budget speech.
So I will use this space to place this Budget in the broader context of the 1990s as a whole - a process made easy by Ruairi Quinn's introduction of a multi annual budget process, with figures running forward to 1999.
The table below sets out the key budgetary parameters as they have developed in this decade, and are planned to develop in the years immediately ahead. I have divided the decade into three periods for which different governments were responsible, so that their various approaches, and performances, may be seen.
The first period, involving the budgets of 1990-1992, saw a Fianna Fail/Progressive Democrat government in office. This period was marked by a significant rise in current spending as a proportion of GNP. Almost two thirds of this increase was due to the growth of Public Service pay. During these three years this rose by more than 19 per cent in real terms - reflecting an annual increase of almost 2 per cent in numbers and more than 4 per cent in the rate of real pay. Also, in these years, the volume of current non pay spending also as a percentage of GNP.
How was the increase in public spending as a proportion of GNP between 1989 and 1992 paid for? Taxation was not increased - it remained at just less than 33.2 per cent of GNP. Half of the increase was financed by a fall in the proportion of GNP needed to service debt, and the other half was financed by an increase of almost one half in the current deficit as a proportion of GNP. This increased the rate of Exchequer borrowing temporarily to the highest level experienced between 1988 and today.
This was an undistinguished period of financial management. Both the parties governing then tend to be sensitive about it, because during those years some of the valuable ground that had been gained in the 1980s was lost.
THE budgets of 1993 and 1994, brought in by the Fianna Fail/Labour Government, saw the current deficit almost eliminated.
The rise in Public Service pay in real terms was slowed. But this was not enough to prevent a further increase in pay as a share of GNP, so that although non pay spending was held in line with GNP, there had to be a significant increase in the tax burden (to almost 36 per cent of GNP) to reduce the current deficit. This burden was considerably higher than any experienced in previous years.
But in the most recent two years, 1994-1996, with the Coalition of Fine Gael, Labour and Democratic Left in office, the burden of pay as a percentage of GNP has fallen by about one twentieth. Non pay spending has also dropped fractionally as a proportion of GNP. In these to years the benefits of these improvements were not seen in reduced taxation, but rather in a prudent conversion of the current deficit into a current surplus and in a reduction of almost three fifths in Exchequer borrowing as a proportion of GNP.
This year the pay bill is expected to rise somewhat faster than in recent years, so that the decline in the share of GNP absorbed by this will be small. But a drop in other spending as a percentage of GNP has made possible a noticeable reduction in the tax burden this year. However, because of a drop in non tax revenue, the flow of which is quite irregular, this Budget has had to provide for an increase in the current deficit and in Exchequer borrowing as a proportion of GNP.
In practice such a disimprovement in the Exchequer balance is unlikely to emerge, for the budgetary arithmetic is traditionally cautious, and while over spending sometimes occurs because of unexpected problems (Irish budgets have never made contingency provision for these), revenue tends to be under estimated even more than expenditure.
So, since 1992, when spending increases pushed Exchequer borrowing up to a disturbingly high 3.4 per cent of GNP, there have been improvements in our public finances - as would be expected in a period of extraordinarily rapid economic growth.
OF course it is always possible to argue more should have been done to reduce taxation and borrowing - but that raises the question of precisely what that something should have been. This is a question which no critic seems to have attempted to answer with any degree of specificity.
One of the most encouraging features of last Wednesday is the multi annual outline budget presented for the two subsequent years, 1998 and 1999. This is a hugely important innovation - and a courageous one, given the great uncertainties that always surround the future.
These outline budgets for coming years set out a policy direction that should prompt a constructive debate. They propose a spending plan that would reduce supply service spending as a proportion of GNP by from this year's projected 26 per cent of GNP to 24.3 per cent, cutting the tax burden by a similar amount. Provision is also wisely made for a £325 million contingency fund in 1999, and the Exchequer borrowing requirement for that year, after providing this contingency fund, is set at 1.5 per cent of GNP.
I would have been be critical of this figure, as being higher than desirable for the first year of EMU, but for the fact that once again these projections seem to be on the conservative side. For they are based on GNP growth rates of 4.5 per cent for both 1998 and 1999 - whereas, particularly with the European and global economies; now apparently on a recovery course, growth rates of 5 per cent or more seem likely.