Most economists agree that the turnaround in the public finances in the late 1980s was a pivotal event in shaping Ireland's outstanding economic performance of the 1990s.

In the first instance, a seeming crisis was averted and the fears that accompanied the crisis were dispelled. Shattered confidence was rebuilt, interest rates fell sharply from very high levels, and the willingness of firms and households to spend and invest was restored.

Subsequently, as the pace of activity picked up and, with it, the buoyancy of Government revenues, there was a steady reduction in tax rates. This provided a further stimulus to activity, and in particular to labour supply.

By the late 1990s, scarcely a decade after the fiscal correction commenced in earnest, the Government was running large budget surpluses. More recently, these surpluses have declined dramatically, partly because of runaway growth in public spending, partly because of economic slowdown.

Together with the extravagance of some of the election promises being made in the current election campaign, this has prompted some commentators to wonder whether a reversion to the "bad old ways" might bring about a renewed decline in economic performance.

There are some key respects in which Irish fiscal history cannot repeat itself. Under the terms of the Stability and Growth Pact, which Ireland is bound to observe by dint of EMU membership, budget deficits of the magnitude that brought about the fiscal crisis of the 1980s cannot occur.

Moreover, adherence to the Pact will probably mean that the burden of Government debt (the ratio of debt to GDP), already lower than it has been since the 1960s, will fall further in the years ahead. This is because the Pact requires members to aim for a budgetary position that is close to balance or in surplus over the medium term.

Membership of EMU, therefore, implies a discipline in relation to fiscal policy that prevents excessive deficits and debt accumulation. However, the disciplines involved do not extend to the levels of spending and taxation. In the matter of the overall size of the Government budget, EMU members enjoy total discretion.

Of course, the Pact has implications for the way in which the size of the Government sector might grow. Precisely because it rejects recourse to borrowing other than in cyclical downswings, it requires that increases in spending in general be paid for by contemporaneous increases in tax revenue.

The option of raising spending now and deferring the requisite tax increase in taxation is no longer available. The link between increases in public spending and taxation is immediate and direct.

In this respect, Ireland is at something of a crossroads. On the one hand, there appears to be a broad measure of political agreement with the proposition that the tax burden should not be raised, on the grounds that doing so would risk undermining the economic success of the last decade or so.

On the other hand, there is an equal measure of agreement among political parties about the need to extend the scope and improve the quality of public services, enhance social welfare payments and pensions, and provide for an extensive programme of infrastructural investment.

Given a reasonable set of forecasts of how the economy will perform over the coming five years, and in particular how tax revenue will evolve, public expenditure growth would have to be capped at 8 per cent to 10 per cent per annum in order to avert an increase in the tax burden.

Is it possible to deliver the big investment in infrastructure that is required, as well as the increases in the scope and quality of other public services that are expected, while remaining within this envelope?

The record of the last few years would suggest that some things would have to change radically in order to make it so. The national accounts data published on Tuesday suggest the same. These data indicate that the rate of price increase in respect of Government current spending was running at close to 10 per cent at the end of last year.

Crudely put, what this means is that nominal spending increases of 10 per cent are required just to keep the volume of Government spending (that is the actual amount of goods and services purchased) unchanged.

At this rate, to secure appreciable volume growth in spending would require that spending in money terms might have to continue rising at the scary rates of the last couple of years - in which case chunky tax increases would be inevitable.

It is tempting to conclude that the two sets of aspirations in relation to taxation and public spending that feature prominently in election manifestos are mutually incompatible, and that the political parties concerned are being quite disingenuous in espousing them.

However, there is another, more charitable interpretation possible. It is this: that the commitments to improve services and invest in infrastructure are sincere; that the promises not to raise taxes are also sincere, and that the apparently yawning gap between the two will be bridged by a massive efficiency drive throughout the public sector. Now there's a thought . . . a thought worthy of at least another article.

Jim O'Leary is currently lecturing at NUI-Maynooth