By 1989 the unsustainable level of Exchequer borrowing precipitated by the disastrous economic policies of the 1977-81 period had been brought under reasonable control. As calculated for EU purposes, the overall budget deficit had been reduced to about 2.5 per cent of GNP, although in our own national accounts terms the figure appeared slightly higher - around 3 to 4 per cent.
In the early 1990s such a level of borrowing was still regarded as acceptable, despite the fact that it involved a continuing annual addition of about £1 billion a year to our national debt.
However, in the conditions of rapid economic growth that emerged after 1993 it was entirely appropriate to apply a considerable share of the resultant revenue buoyancy to converting this overall deficit into a budget surplus that would enable a future government to handle any eventual downturn in the economy. From 1999 onwards, as a participant in EMU, such a prudent approach was in any event going to be required of us.
At the same time it was also going to be necessary to increase substantially the grossly inadequate share of national output which in the aftermath of the crisis of the 1980s was being allocated to public investment, and also to provide for lack of buoyancy in non-tax revenue.
Assuming no change in the tax burden, all this would require a decline of about 10 percentage points in the proportion of GNP (43 per cent at that time) still being absorbed by public spending in 1993. That sounds a most formidable cut, but in fact with the kind of economic growth that we have had during the past eight years, it was achievable without pain. How?
First of all, with the national debt declining gradually from 1995 onwards, and with the average rate of interest on that debt also dropping by over a fifth following our entry to EMU, the proportion of our greatly increased GNP absorbed by debt interest has fallen dramatically, from 7.5 per cent eight years ago to about 2 per cent this year. That factor alone has been responsible for over half of the 10-point drop required in the share of GNP absorbed by public spending.
Two other equally painless factors have helped. The first has been the huge drop in unemployment which, in conjunction with the growth of GNP, has reduced by over three-quarters the proportion of our national output absorbed by payments to those out of work.
The second factor has been the fact that today's greatly increased volume of public activity is being handled by a public service whose numbers have risen by less than a quarter. This has meant that the proportion of national output absorbed by public administration has been reduced by as much as a third.
The effect of these three beneficent consequences of our economic growth has been to reduce the burden of public spending by the 10 percentage points required to produce a 3 per cent overall budget surplus, while at the same time increasing by two-fifths the share of national output available for public investment.
Meanwhile, the growth of the economy has produced a big increase in the yield from corporate taxation. Together with a drop in the proportion of national output absorbed by subsidies, this has left room for a reduction of almost one-tenth in the burden of personal taxes.
However, during these eight boom years, governments have not been content with a reduction of one-tenth in the tax burden. Instead, even after this year's one-off pre-election spending splurge, current spending as a share of GNP has been reduced by almost one-tenth below its 1993 level - in order to double the amount available for tax cuts.
This persistent squeezing of the public sector, which has been responsible for the current state of our health services as well as for the intensification of inequality, the persistence of avoidable poverty, and the failure to tackle illiteracy among the young, is no accident. It is the product of deliberate government policy decisions designed to almost double the scale of the tax cuts that had been made possible by the higher yield of corporate taxes and the reduction in subsidies as a share of national output.
Some of the tax cuts of the past eight years have been needed in order to secure trade union agreement to the moderation of pay claims during this period. But the visible scale of the social damage inflicted by the sharp shift to the political right that we have seen during these recent years of rapid growth is such as to make it clear that a radical reversal of these perverse public policies is now overdue - a fact that, from recent press reports, it would seem even Charlie McCreevy and Mary Harney now accept.
For, in terms of the share of resources allocated to public services and to social action to reduce poverty, Ireland has now become the most right-wing country in Europe. And because of the scale of the increase in the after-tax incomes of one section of our people, and the simultaneous reduction in the share of national resources allocated to public services and to social action during this period, we have succeeded in making ourselves in key respects the most unequal society in Europe.
Now is the time for a radical shift in public policy. It is not too late to mend our hand. True, our growth rate in the years ahead is likely to be very much lower than in the 1990s - perhaps 5 per cent a year at first, dropping back eventually to 4 per cent. But, because the level of national output to which this growth rate will be applied is almost twice that of 1993, the volume of increased resources that this lower growth rate will yield during the next eight years is likely to be as large as, or perhaps even larger than, that of the recent past. The resources required for a belated shift towards a society of social justice will thus be available.