A year into office, the Government is facing obvious difficulties in a number of areas from health to education to the need to push forward with major investment projects. Its ability to address all these issues is affected by the amount of money it has to spend.
The latest Exchequer returns - covering the first five months of this year - show that the public finances are under pressure as the economic slowdown starts to bite into tax receipts. How the Government tackles this issue will now have a central bearing on whether it can carry through its programme, which is now seriously delayed in many areas.
It is important to keep the current state of the finances in perspective. The national debt remains low by international comparison and the overall level of borrowing is also modest.
That said, however, the Government does face difficulties. Even if the economy starts to recover later this year, the budgetary borrowing target for 2003 will come under pressure and difficult decisions await in framing Budget 2004. If the slowdown continues, or intensifies, then the Government will be forced to consider spending cutbacks if it wants to meet its borrowing targets - and the outlook for next year will be very problematic.
Some of the Coalition Government's problems spring from the lack of control on spending over recent budgets and the decision to grant major tax reductions in a number of years. The awkward situation facing the Government is thus, partly at least, of its own making, though the sharp international slowdown is also a key factor.
In addressing this issue, the Government needs to take a strategic approach. At the heart of this must be a drive across all areas of spending to secure better value for money and a clear prioritisation of spending areas in the months ahead, both in terms of day-to-day spending and investment programmes. The current review of the National Development Programme needs to contain a straightforward assessment of where the programme stands and a strategy to get major investment projects moving in the years ahead. And the Government should publish the three studies it has commissioned on the health service and indicate how it plans to proceed.
There is also a need to look at the medium-term picture. One of the failings of Irish budgetary strategy, as highlighted by the recent OECD report, is the lack of proper multi-annual planning and fund allocation. The Government needs to set out systematically what it plans to achieve in areas such as health, education and investment over the next few years, how it will ensure the greatest efficiency in spending in achieving these goals, and how much money will be needed. This information could then properly inform a debate - and decisions - on spending priorities and how money should be raised to pay for them.