Analysis: With benchmarking taking such a big chunk of the Minister's resources. Government Departments may find there is not a lot of money left in the pot, writes Cliff Taylor.
There will be little joy for most Government Departments in the estimates of spending for 2004, due to be published next Thursday.
Pressure on public sector pay will mean tight restraint on non-pay day-to-day spending, meaning few new programmes or initiatives will be possible. Overall the Minister for Finance, Mr McCreevy, is likely to target an increase of some 5-6 per cent in gross voted departmental spending.
It is thought likely that some new charges to consumers will be announced in areas such as health, which would help to hold down the net increase in spending - the figure that takes into account receipts from such charges which go directly into departmental coffers.
The main pressure on Mr McCreevy comes from increasing public sector pay, with 50 per cent of the benchmarking award and the first phase of the new national agreement due to be paid next year.
Pay accounts for more than 40 per cent of current spending and the estimated €1 billion rise in the bill next year - a 7.5 per cent jump - will eat up much of Mr McCreevy's cash.
The two big spending Departments - health and education - have relatively high pay costs as they employ so many people, so both are set to receive increases well above the 5-6 per cent average.
The Department of Health may secure an extra €700-€800 million, representing a rise of 7.5-9 per cent on this year's budget.
However, even in these Departments, spending on areas other than pay will be not far above the expected inflation rate of close to 3 per cent.
Mr McCreevy is likely to try to maintain capital spending roughly at current levels as a percentage of gross domestic product, suggesting a modest rise after the capital budget was cut this year. This will allow continued progress on investment in transport and the national roads network.
The Government is understood to favour outlining capital investment budgets for a period of years - possibly up to 2007, to move away from the year-to-year budgeting uncertainty. However, full costings of this are unlikely to be ready for estimates day.
The recent mid-term review of the National Development Plan recommended such a multi-year approach and the Minister has been moving the budget in this direction in recent years, partly due to the requirement to forward overall multi-annual budget projections to the European Union.
Tense negotiations have been under way over the autumn between the Department of Finance and other Government Departments over the estimates. Substantial savings are believed to have been secured from the overheads of a number of State bodies, while others have been pressed to accept lower grant support or contribute more in dividends.
The estimates will be designed to clear the way for what may be a largely uneventful Budget. Extra spending will also be announced on Budget day for social welfare and other areas.
There are signs of a recovery in the economy but tax revenue growth next year may be in the 5-6 per cent range and spending will have to be held roughly in line. Further pressure comes from a continued rundown in receipts from the EU, which will put upward pressure on Exchequer borrowing next year.
Mr McCreevy is likely to seek some additional revenue on Budget day, but how much he will need is not yet clear. He has already indicated that there will be no increase in headline tax rates, but a key consideration will be whether he indexes tax credits and the standard tax band to account for inflation.
